Communities

Writing
Writing
Codidact Meta
Codidact Meta
The Great Outdoors
The Great Outdoors
Photography & Video
Photography & Video
Scientific Speculation
Scientific Speculation
Cooking
Cooking
Electrical Engineering
Electrical Engineering
Judaism
Judaism
Languages & Linguistics
Languages & Linguistics
Software Development
Software Development
Mathematics
Mathematics
Christianity
Christianity
Code Golf
Code Golf
Music
Music
Physics
Physics
Linux Systems
Linux Systems
Power Users
Power Users
Tabletop RPGs
Tabletop RPGs
Notifications
Mark all as read
Q&A

How does 'contango' semantically appertain to (1) 'continue'? (2) Or 'contain' as in Spanish 'contengo'?

+0
−3

I know that in Spanish, contengo is the first person singular conjugation of contener "to contain". I surmise that English transcribed the Spanish /e/ into an "a".

Etymonline

1853, "charge made or percentage received by a broker or seller for deferring settlement of a stock sale," a stockbroker's invention,
[1.] perhaps somehow derived from continue,
[2.] or from Spanish contengo "I contain, refrain, restrain, check."
As a verb, from 1900.

What semantic notions underlie the 2 etymologies above, with contango's financial meanings in 2022 below? What do contango's financial meanings semantically relate — or have anything to do — with the notions of (1.) "continue" or (2.) Spanish contengo "I contain, refrain, restrain, check"? Please expound BOTH etymologies! English Stack Exchange doesn't expound the semantic shift.

A futures market is said to be in backwardation futures prices are below spot. It is said to be in contango if futures prices are above spot. As we will see in Chapters 3 and 4, in a typical commodity market with a positive cost-of-carry, the theoretical futures price is above spot, i.e., the market should be in contango. However, in some commodity markets (notably oil) futures prices are often below spot. This phenomenon is commonly attributed to the presence of a large “convenience yield” from holding the spot commodity, an issue we discuss further in Chapter 4.

Sanjiv Das, Derivatives principles and practice (2016 2nd Edn), p 46.

Normal Backwardation and Contango

When the futures price is below the expected future spot price, the situation is known as normal backwardation; and when the futures price is above the expected future spot price, the situation is known as contango. However, it should be noted that sometimes these terms are used to refer to whether the futures price is below or above the current spot price, rather than the expected future spot price.

Hull, Options, Futures, and Other Derivatives (11 edn 2022), p 125.

Contango A situation where the futures price is above the expected future spot price (also often used to refer to the situation where the futures price is above the current spot price).

Op. cit. p 809. Source for graph below.

Image alt text

Why does this post require moderator attention?
You might want to add some details to your flag.
Why should this post be closed?

1 comment thread

X-post https://www.reddit.com/r/AskEconomics/comments/t8a5ji/how_does_contango_semantically_appertain... (1 comment)

0 answers

Sign up to answer this question »