Definition
The spot price is the current price at which an asset can be bought or sold for prompt delivery. For commodities and currencies it is the benchmark that futures and forward prices are compared with.
How it works
Spot prices come from trading in the physical or cash market, so they depend on grade, delivery location and timing. Many published spot figures are benchmark assessments or the nearest available contract rather than a single executable quote, which is why different sources can show slightly different values.
Futures prices relate to the spot price through the cost of carry: financing, storage, insurance and the convenience of holding physical stock. The gap between them is the basis, and it narrows toward zero as a futures contract nears expiry because its final settlement is tied to the spot market.
Formula / convention
Basis = futures price − spot price; basis as % of spot = (futures price − spot price) ÷ spot price × 100
Illustrative example
Illustrative: a fictional commodity has a spot price of 80.00 and a three-month futures price of 81.20 per unit. The basis is 81.20 − 80.00 = 1.20, or 1.5% of spot. If spot is still 80.00 at expiry, the futures price converges to 80.00 and a long holder who entered at 81.20 has lost 1.20 per unit from convergence alone.
What to watch for
A quoted spot price is not necessarily a price at which you can trade in size, and it says nothing certain about where prices will be later. Compare grade, location and delivery terms before treating two spot figures as equivalent.