CONTANGO

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 (plural contangos or contangoes)

The situation in a futures market where prices for future delivery are higher than prices for immediate (or nearer) delivery.

The amount by which prices for future delivery are higher than prices for near delivery.

(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.

Synonyms

• forwardation

Antonyms

• backwardation

Verb

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

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

Source: Wiktionary

Con*tan"go, n.; pl. Contangoes. Etym: [Prob. a corruption of contingent.]

1. (Stock Exchange)

Definition: The premium or interest paid by the buyer to the seller, to be allowed to defer paying for the stock purchased until the next fortnightly settlement day. [Eng.]

2. (Law)

Definition: The postponement of payment by the buyer of stock on the payment of a premium to the seller. See Backwardation. N. Biddle.

Source: Webster’s Unabridged Dictionary 1913 Edition