contango

English

Etymology

The term originated in early-19th-century England, and is believed to be a corruption of continuation, continue or contingent. In the past on the London Stock Exchange, contango was a fee paid by a buyer to a seller when the buyer wished to defer settlement of the trade they had agreed. The charge was based on the interest forgone by the seller not being paid.

Noun

contango (countable and uncountable, plural contangos or contangoes)

1. The situation in a futures market where prices for future delivery are higher than prices for immediate (or nearer) delivery, indicating the expectation that the price of the underlying asset will go up.
   • 2005, Futures Industry Magazine‎^[1]:

     most of these other commodities are generally in contango

2. The amount by which prices for future delivery are higher than prices for near delivery.
   • 2003, Bill Murphy, “Kitco Bullion Dealers”, in (Please provide the book title or journal name)‎^[2], archived from the original on 18 December 2005:

     Normally new buyers would go after the March silver contract, especially with such a small contango.

3. (obsolete, London Stock Exchange) Fee paid by a buyer to the seller on settlement day when the buyer wishes to defer settlement until the next settlement day.
   • 1803 February 28, “York, &c. news”, in York Herald, page 2:

     Yesterday was Settling Day in Consols, and Monday next the Settling of Omnium. Owing to the great scarcity of money, the Contango on both is extremely great, nearly equal to 15 per cent. for money, from account to account.

Synonyms

• forwardation

Antonyms

• backwardation

Related terms

• contangoed
• contangoing
• contango day

Verb

contango (third-person singular simple present contangos, present participle contangoing, simple past and past participle contangoed)

1. (obsolete, London Stock Exchange, transitive, intransitive) To charge (a buyer) a fee to defer settlement until the next settlement day.

Further reading

• contango on Wikipedia.Wikipedia