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inverted market

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Financial Dictionary

Inverted Market

In the context of options and futures, this is when the current (or short-term) contract prices are higher than the long-term contracts.

Investopedia Commentary

This usually occurs because a good is currently in short supply, which drives up prices in the short term.

Related Links

Futures Fundamentals
Options Basics Tutorial

See also: Contango, Futures, Inverted Yield Curve

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Financial Dictionary

inverted market

In futures or options trading, a market with nearby contracts having a price that is higher than more distant contracts. This unusual situation may occur when the underlying asset is heavily in demand. Compare contango. Also called backwardation.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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