A market condition whereby the current price of a futures/forward contract is trading below the spot price. Backwardation starts when the difference between the forward price and the spot price is less than the cost of carry.
Backwardation can occur in soft (perishable) commodities, for example, when the current supply is unexpectedly short (due to seasonal issues), but there is an expectation that future supply will be unaffected.
The opposite to Backwardation is Contango.
A point in time snap shot of a company’s accounts, split up into assets (things it owns), liabilities and equity (what it owes, how it has been financed).
Baltic Dry Index – tracks the cost of shipping numerous cargo on 4 different ship sizes across 22 sea routes. The cargo used is ‘dry’, (as opposed to ‘wet’ e.g Oil), and ranges from food-stuffs to iron core and steel.
A market distinguished by declining prices.
The amount you are betting on every single point movement of the market offered. For example if you BUY the FTSE100 at 5900 at £5 per point, your bet size is £5. Also known as the stake.
Spread bets are quoted in two parts: ‘buy’ and ‘sell’. Sell is always at the lower end of the two prices. This lower end price is called the bid price. For example a quote for the FTSE100: Buy 5505, Sell 5500, 5500 is the bid price.
A form of spread bet that only has 2 outcomes (hence binary). For example will the FTSE finish up at the end of the day? The outcome is either yes or no. The bet closes at either 100 points, or zero points, and you will be quoted a spread somewhere between 0-100. It is similar to traditional betting with the exception that the market remains open, so you can close your position before the final settlement of the bet.
For all intents and purposes, an IOU issued by from one party (the borrower - normally a company or a government) to another party (the lender,or buyer of bonds - normally an investor or investment fund). This 'IOU' will also include interest payments made to the lender over the agreed lending period. Bonds can therefore come in various forms, however the most common type of bonds traded are often fixed-interest securities issued by governments (e.g UK treasury bonds aka Gilts), with interest payments (at a fixed rate) being made twice yearly.
The break-even is the value on expiry at which no profit is realised on an option position. A 6000 FTSE Call bought at 15 means you will have a break even of 6015 (6000 + 15).
Equally, a 6000 FTSE Put bought at 15 has a break even at 5985 (6000 – 15), since the market ia required to fall in order for the Put to make money.
Ratings given by investment analysts for inidividual company stocks, depending on how they think the stock will perform in the future. Ratings are given as: Buy (ie they think it is good, so buy it), sell, or hold recommendations.
A market distinguished by rising prices.
Buy (Up Bet)
When you are quoted a spread bet, you are given a range of prices, known as the bid and ask price. For example the FTSE may be quoted as 5500 to 5505. You are given the option to either ‘buy’ the higher end of the this range (ie 5505), or sell the lower end. If you think that the market being quote will finish higher than the top end of the spread (in this case 5505), you can ‘buy’ the spread at 5505. However many points the FTSE finishes above this price, you then win that multiplied by your stake.