What does Spot Market mean?
A market where the securities or commodities are traded for immediate settlement and physical delivery. Since the transactions are settled at the same time, this market is known as spot market. It is a market where actual physical products, instead of futures contracts or options, are sold and delivered. It is also known as cash market.
Futures Knowledge Explains Spot Market
In a spot market, the exchange of goods and money between the seller and the buyer takes place on the spot. In practice, settlement happens in t+2 working days, i.e., delivery of cash and commodity must be done after two working days of the trade date. On the other hand, in the futures market where such an exchange takes place on a specified future date say after a month or even after six months or later as specified in the contract.