Spot Price (2024)

FAQs

How to determine spot price? ›

There is no mathematical formula for expected spot price. It is more of an economic concept rather than a mathematical part. At any point in time, forces of demand and supply play an essential role in determining the market price.

What is a Spot Price? The spot price is the current market price of a security, currency, or commodity available to be bought/sold for immediate settlement. In other words, it is the price at which the sellers and buyers value an asset right now.

Examples of Spot Prices

An asset can have different spot and futures prices. For example, gold may have a spot price of $1,000 while its futures price may be $1,300. Similarly, the price for securities may trade in different ranges in the stock market and the futures market.

In investment terms, spot prices are the current market price of a security, currency, or commodity to be bought or sold at a specific location and time. In layperson's terms, it's the price sellers and buyers currently value the asset. This is different from a futures price, which is sold with a future delivery date.

Spot price is determined from polled prices using Trimmed Mean methodology wherein mean is computed after discarding those falling outside pre-determined boundaries on either sides.

The SP is more economical than a mathematical value as there is no formula to calculate the spot price. Its demand and supply can only calculate the SP. When there is more demand than supply, the value of SP will increase, whereas when the supply is more than the demand, its value declines.

Example of a spot price

In forex, the spot price is sometimes referred to as the spot rate, and it is the quoted exchange rate between two currencies in a forex pair. For example, if the quoted exchange rate for EUR/USD was $1.2354, then that is also the spot rate.

The difference between the futures price and spot price of a currency pair is referred to as the basis. Basis can be either positive or negative. It will depend on the current relationship between the short-term interest rates of the base and terms currencies being considered.

The spot price is the price at which an asset can be bought or sold for immediate delivery of that asset. Convergence is the movement of the price of a futures contract toward the spot price of the underlying cash commodity as the delivery date approaches.

A commodity's spot price is the current cost of that particular commodity, for current purchase, payment, and delivery. In commodity spot contracts, payment is required immediately, as is delivery. The deal is done "on the spot"—hence, the name "spot price."

What is spot price standard? ›

Spot Price Standard

if there is no single price published for such location for such day, but there is published a range of prices, then the Spot Price will be the average of such high and low prices.

The exchange rate between two currencies that is anticipated to prevail in the spot market on a given future date. It differs from the current spot rate primarily by the extent to which inflation expectations in the two currencies differ.

The spot price is the current market price of an asset, like a stock, commodity, or currency. It's the price the buyer pays on the spot. The spot price of an asset is important in determining its future price: the price of an asset agreed upon by a buyer for delivery in the future.

The company's goal is to offer Spot, or even packs of them, to inspect industrial sites, carry out hazardous missions, and make deliveries. In 2020, the robot went on sale with a price tag of $74,500.

Commodity exchanges rule the market

Where the spot price more accurately originates from the ever-changing market price used as the underlying value for futures contracts on the COMEX.

(fair price + future value of asset's dividends) − spot price of asset = cost of capital. forward price = spot price − cost of carry.

The spot rate is calculated by taking the mid-point between the bid and ask prices for a currency in forex trades. That's why it's also called the mid-market rate — it's the midpoint between the price brokers are looking to sell a particular currency for, and what buyers are willing to pay.

The Spot Price: Typically, when you buy and sell gold bullion the price is agreed on the gold commodity spot price. This is a theoretical price for a set weight of gold prior to being refined, and fluctuates according to supply, demand, and currency strength.

The formula for computing futures prices can be expressed as: Futures Prices = Spot Price * [1 + (RF * (X/365) - D)], where: The risk-free return rate, RF, signifies the rate one can earn throughout the year in a perfect market.