SPOT PRICE

Summary

Spot price is the real-time market price at which a commodity, currency, or financial instrument can be bought or sold for immediate delivery and payment. Unlike futures prices which reflect expected future values, spot prices represent what buyers are willing to pay and sellers are willing to accept right now. This price fluctuates constantly based on current supply and demand conditions, market sentiment, and immediate availability of the asset.

Usage Context

Understanding spot prices is crucial when studying commodity markets, foreign exchange trading, derivatives pricing, arbitrage opportunities, and real-time market analysis. Essential for comparing current market conditions with future expectations.

Common Confusions

• Confusing spot price with futures price - students often think they're the same
• Believing spot price guarantees instant physical delivery when settlement periods may vary
• Thinking spot prices are fixed for the day rather than continuously changing
• Assuming spot prices are always lower than futures prices (can be higher due to storage costs or convenience yield)