A spot price is the 澳洲幸运5官方开奖结果体彩网:current price at which an asset may be bought (or sold) for immediate ownership and delivery, after settlement.

In our global economy, the spot price of mosꦐt securities or commodities worldwide is fairly unifo🥂rm after accounting for exchange rates.

In contrast to the spot price, a futures contract price is an agreed-upon price for the 澳洲幸运5官方开奖结果体彩网:future delivery of an asset. 

The Basics of Spot Price

Spot prices are constantly in flux. Though you normally don't hear the term used for stock transactions, stocks always trade at the spot price.

As mentioned, that's the current quoted price determined by the market. You buy (or sell) a stock at the current price, and then exchange cash for the stock.

The transfer of cash and security takes place behind the scenes at your broker. If you look at your account online, you'll see the shares of stock as well as sufficient money, based on the spot price and any transaction fee, withdrawn to settle the trade.

Traders and longer-term investors can conduct stock transactions cost-effectively with 澳洲幸运5官方开奖结果体彩网:online brokers.

Note: Since the 澳洲幸运5官方开奖结果体彩网:U.S. Securities and Ex🐎change C🔴ommission (SEC) approved the first Bitcoin spot ETFs in January 2024, spot price is also used in reference to the market price of cryptocurrencies such as Bitcoin and to exchange-traded funds (ETFs) th𒐪at hold cryptocurrencies.

Spot Price and Futures

Spot prices are often referred to in relation to the prices of commodity 澳洲幸运5官方开奖结果体彩网:futures contracts, such as contracts for oil, wheat, or gold. That's beca💟use the spot price is a reference point for the prices of those futures contracts.

That is, a commodity futures contract price is commonly determined by the spot price of the commodity, expected changes in supply and demand, the risk-free rate of return for the holder of the commodity, and the cost🎉 of transportation or storage (the carrying cost) in relation to the maturity date of the contract.

Futures contracts൩ with longer times to maturity normally entail gre🀅ater storage costs than contracts with nearby expiration dates.

The Role of Spot Price For Hedging

While the spot price of a security, commodity, or currency is important for immediate buy-and-sell transactions, it also plays a major role for the large 澳洲幸运5官方开奖结果体彩网:derivatives markets.

Options, futures contracts, and other derivatives allow buyers and sellers of securities or commodities to lock in a specific price for the future delivery of an 澳洲幸运5官方开奖结果体彩网:underlying asset.

Using derivatives such as futures contracts, buyers and sellers can partially mitigate the ri🙈sk posed by constantly fluct♚uating spot prices.

This is called hedging and it's an important means for producers of agricultural commodities to protect the value of their crops against price fluctuations, when the products will be delivered at a future date.

So, as an example, if you own corn that you'll sell in the marketplace at a future date, you'd sell a futures contract for corn with a maturity that matches (as closely as possible) your sale date.

You're long corn and short futures for corn. That way if the market price for corn goes down, the loss you incur when you actually sell your corn can be offset to some degree by the profit you make on your futures contract.

The Relationꦏship Between Spot Prices and Futures 🌄Prices

The difference between spot ꧒prices and futures contr🐟act prices can be significant. Investors refer to the relationship as “contango” or “backwardation.”

Contango is used when the futures contract price of an asset—for example, a commodity—is higher than the asset's spot price. 澳洲幸运5官方开奖结果体彩网:Backwardation ꧟is used when the futures contract price is lower than the spot price.

Backwardation tends to favor net long investors. The futures price typical💫𒈔ly rises over time as the contract gets closer to expiration and it converges with the spot price.

So, if 🎶you bought the futures contract for a lower price than the spot price, you could offset it in the future at a 🏅higher price and make a profit.

Likewise, contango favors short sellers because the futures price decreases a🥂s the contract approaches exp🌃iration and converges with the lower spot price.

In this case, if you sold short at a price higher than the spot price, you🉐 could offset it in the future at a lower price and make a profit.

Futures markets can move from contango to backwardation, or vice versa, and may stay in either state for brief or extended periods.

Examples of Spot Prices

Here are some spot prices, as quoted on April 2, 2025:

Commodities

Gold: $3,121 per 澳洲幸运5官方开奖结果体彩网:troy ounce

Silver: $33.74 per troy ounce

Cotton: $0.68 per pound

Coffee: $3.89 per pound

Sugar: $0.19 per pound

Aluminum: $2,622 per ton

Stocks

Apple: $223.89

Microsoft: $382.02

Occidental Petroleum: $49.38

Costco: $965.08

Dollar Tree: $77.57

Tesla: $282.70

The Bottom Line

A spot price is the price that someone could pay to own an asset immediately. It's determined by supply and demand, as evidenced by marketplace activity.

Spot prices change constantly, as interest in asset𒅌s by buyers and sellers changes. That interest can be affected by a host of factors, from the weather and trade relations between countries to outbreaks 𓆉of war and disruptions to supply chains.