DEFINITION of 'Backpricing'

A pricing method used in specific futures contracts whereby the price of the commodity to be delivered is priced by the purchaser at some future date after entering into the position.

BREAKING DOWN 'Backpricing'

The price at which the purchaser can set the deliverable commodity must be relative to any monthly or periodic price found in the futures market for that particular actual.

  1. Delivery Point

    In futures contracts, the delivery point is the place where the ...
  2. Actuals

    The physical commodity that underlies a futures contract or is ...
  3. Assignable Contract

    A futures contract with a provision permitting the contract holder ...
  4. Current Delivery

    A type of futures contract that requires the delivery of the ...
  5. Certificated Stock

    The stock of a commodity that has been inspected by qualified ...
  6. Back Months

    The available futures contracts for a particular commodity that ...
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  1. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  2. Can mutual funds invest in commodities?

    Mutual funds can invest in commodities. In fact, mutual funds may provide a better way for investors to gain exposure to ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  4. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  6. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

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