Spot Price

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DEFINITION of 'Spot Price'

The current price at which a particular security can be bought or sold at a specified time and place. A security's spot price is regarded as the explicit value of the security at any given time in the marketplace. In contrast, a securities futures price is the expected value of the security, in relation to its current spot price and time frame in question.

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BREAKING DOWN 'Spot Price'

Spot prices are most often used in relation to pricing of futures contracts of securities, typically commodities. In pricing commodity futures, the futures price is determined using the commodity's spot price, the risk free rate and time to maturity of the contract (along with any costs associated with storage or convenience). Using the same inputs, a security's spot price can also be determined given the futures price.

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RELATED FAQS
  1. How are commodity spot prices different than futures prices?

    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>
  2. How do commodity spot prices indicate future price movements?

    Commodity spot prices indicate future price movements because commodity futures prices are calculated using spot prices. ... Read Full Answer >>
  3. What are common factors that affect a security's spot rate?

    The spot rate can be impacted by a number of factors including the bid-ask spread and the security's forward term structure. ... Read Full Answer >>
  4. What does it cost per barrel for an oil producer to store inventory on a supertanker?

    As of 2015, the average per barrel monthly cost for an oil producer to store its oil inventory on a supertanker ranges between ... Read Full Answer >>
  5. What are some securities that have spot rates?

    Commodities, currencies and bonds are among the many assets that have spot rates. A spot rate is the current price quoted ... Read Full Answer >>
  6. How is the spot price related to a derivative's notional value?

    A derivative's notional value is directly related to the spot price of the security. To calculate the total value of a derivative ... Read Full Answer >>
  7. How do S&P 500 futures work?

    S&P 500 futures are a type of capital asset contract that provides a buyer the right to a predetermined selection of ... Read Full Answer >>
  8. What is the difference between yield to maturity and the coupon rate?

    A bond's coupon rate is the actual amount of interest income earned on the bond each year based on its face value. A bond's ... Read Full Answer >>
  9. How are futures used to hedge a position?

    Futures contracts are one of the most common derivatives used to hedge risk. A futures contract is as an arrangement between ... Read Full Answer >>
  10. Why do futures' prices converge upon spot prices during the delivery month?

    It's a fairly safe bet that as the delivery month of a futures contract approaches, the future's price will generally inch ... Read Full Answer >>

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