That is 'The cash price' | Information 2019 - What is it?
The cash price - the current price in the market in which this asset - such as safety, goods or currency - can be bought or sold for urgent delivery. While determined cash prices both for time and for a place in world economy, the cash price of the majority of securities or consumer goods tends to be quite uniform international, making exchange rates. Unlike the cash price, the future price - coordinated the price for future delivery of an asset.
2019 - Cash price
Cash price, Information - 2019
Destruction of 'the cash price' | Information 2019 - What is it?
Most often refer to the cash prices concerning the price of contracts of commodity futures, such as contracts for oil, wheat or gold. It is caused by that stocks always trade in a spot. You buy or you sell a stock at the specified price, and then you exchange a stock for cash.
The price of the future contract usually is defined, using the cash price of goods, expected change in supply and demand, reliable rate of return for the holder of goods and costs of transportation or storage concerning date of repayment of the contract. Future contracts with longer times by a maturity usually involve big costs of storage, than contracts with the next expiration dates.
The cash prices are in a constant stream. While the cash price of safety, goods or currency is important to buy from the point of view of direct transactions - and - to sell, at it, probably, there is more importance concerning large markets of derivatives. Options, future contracts and other derivatives allow buyers and sellers of securities or consumer goods to take in determined price during future time when they want to put or seize a basic asset. Through derivatives buyers and sellers can partially reduce the threat posed by constantly fluctuating cash prices.
Future contracts also provide important means to producers of agricultural production to insure the value of their grain crops against price fluctuations.
Relations between the cash prices and prices of futures
Distinction between the cash prices and the prices of the future contract can be considerable. The prices of futures can be in contango or a discount. Kontango - when the prices of futures fall to execute lower cash price. A discount - when the prices of futures raise to execute higher cash price. The discount tends to approve blank long provisions as the prices of futures will raise to meet, the cash price as the contract become closer to the expiration. Kontango approves short positions as futures lose cost as the expiration of approaches of the contract, and meets with lower cash price.
The future markets can move from contango to a discount, or on the contrary, and can remain or in the state during short or during the long periods of time. Consideration and the cash prices and the prices of futures favourably to dealers in futures.
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