Spot Market

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DEFINITION of 'Spot Market'

1. A commodities or securities market in which goods are sold for cash and delivered immediately. Contracts bought and sold on these markets are immediately effective.

2. A futures transaction for which commodities can be reasonably expected to be delivered in one month or less. Though these goods may be bought and sold at spot prices, the goods in question are traded on a forward physical market.

BREAKING DOWN 'Spot Market'

1. The spot market is also called the "cash market" or "physical market", because prices are settled in cash on the spot at current market prices, as opposed to forward prices.

2. Crude oil is an example of a future that is sold at spot prices but its physical delivery occurs in one month or less.

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