backwardation

American  

[bak-wer-dey-shuhn] / ˌbæk wərˈdeɪ ʃən /

noun

1. (on the London stock exchange) the fee paid by a seller of securities to the buyer for the privilege of deferring delivery of purchased securities.

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backwardation British  

/ ˌbækwəˈdeɪʃən /

noun

1. the difference between the spot price for a commodity, including rent and interest, and the forward price

2. (formerly, on the Stock Exchange) postponement of delivery by a seller of securities until the next settlement period

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Etymology

Origin of backwardation

First recorded in 1840–50; backward + -ation

Compare meaning

How does backwardation compare to similar and commonly confused words? Explore the most common comparisons:

• contango vs. backwardation

Example Sentences

“The commodity landscape is littered with backwardation vs. contango trades gone bad. Now the Department of Energy is out there rolling the dice.”

From The Wall Street Journal • Mar. 13, 2026

At times of extreme stock market anxiety the VIX often jumps above VIX futures, pushing the VIX curve into a condition known as backwardation.

From MarketWatch • Feb. 6, 2026

A clue to how quickly options traders thought the latest volatility spike could dissipate was seen in VIX futures, which remained below the VIX over recent sessions, a condition known in trader parlance as backwardation.

From MarketWatch • Jan. 22, 2026

However, near-term supply remains tight, analysts said, with immediate oil prices trading above later-dated contracts—a market structure known as backwardation.

From The Wall Street Journal • Jan. 21, 2026

The market structure called backwardation occurs when spot prices are higher than future prices, giving energy firms little incentive to pay to store fuel for future months.

From Reuters • Sep. 28, 2023