spot price
n.
The market price of a commodity.
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The current price at which a particular commodity can be bought or sold at a specified time and place.
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In other words, the price that is quoted if you want to buy any commodity today.
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Examining this data on currency futures can help you confirm the strength of a trend. Gauging Forex Market Sentiment With Open Interest
Current delivery price of a commodity traded in the Spot Market. Also called cash price.
Current delivery price of a commodity traded in the Spot Market; also called cash price.
Price of a product available for immediate delivery.
The spot price or spot rate of a commodity, a security or a currency is the
Depending on the item being traded, spot prices can indicate market expectations of future price movements in different ways. For a security or non-perishable commodity (e.g., gold), the spot price reflects market expectations of future price movements. In theory, the difference in spot and forward prices should be equal to the finance charges, plus any earnings due to the holder of the security, according to the cost of carry model. For example, on a share the difference in price between the spot and forward is usually accounted for almost entirely by any dividends payable in the period minus the interest payable on the purchase price. Any other price would yield an arbitrage opportunity and riskless profit (see rational pricing for the arbitrage mechanics).
In contrast, a perishable commodity does not allow this arbitrage - the cost of storage is effectively higher than the expected future price of the commodity. As a result, spot prices will reflect current supply and demand, not future price movements. Spot prices can therefore be quite volatile and move independently from forward prices. According to the unbiased forward hypothesis, the difference between these prices will equal the expected price change of the commodity over the period.
A simple example: even if you know tomatoes are cheap in July and will be expensive in January, you can't buy them and take delivery in July, since they will spoil before you can take advantage of January's high prices. The July price will reflect tomato supply and demand in July. The forward price for January will reflect the market's expectations of supply and demand in January. July tomatoes are effectively a different commodity from January tomatoes (contrast contango and backwardation).
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