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Inverted Market

What does Inverted Market mean?

A futures market in which the nearer months contracts are selling at premiums to the more-distant months contract price. This is an abnormal situation, as distant months contracts have carrying costs and should have higher price.

Futures Knowledge Explains Inverted Market

Normally, in a future market which nearby month contracts sell at lower prices than those of deferred months. But if the price of the underlying asset is likely to fall, the distant month futures contracts will be available at a discount to the near month future contract. Backwardation is a situation similar to Inverted Market.

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