What does stock premium mean?

2023-06-05
Summary:

Spot premium refers to the price of a certain commodity in the spot market being higher than the price of the commodity futures contract, while futures premium refers to the price of a certain futures contract being higher than the spot price of the commodity. Investors need to understand the market's expectations of the supply and demand situation and future trends of a certain commodity in order to make corresponding trading decisions.

What does stock premium mean? What does futures premium mean?

Spot premium refers to the price of a certain commodity in the spot market being higher than the price of the futures contract for that commodity. Surcharge usually occurs in situations of tight supply or strong demand in the spot market, as buyers need to quickly obtain spot goods, and the limited supply in the spot market leads to an increase in commodity prices.


For example, assuming the delivery date of crude oil futures is June 2022, the current futures price is $50 per barrel. If the actual crude oil price on the spot market is $55 per barrel, then it is said that there has been a $5 premium in the crude oil spot market. This means that if investors want to purchase crude oil immediately, they must pay a premium above the futures contract price, which is the premium.


Spot premium is one of the important price indicators in futures trading, which reflects the impact of factors such as market supply and demand, inventory levels, and logistics costs on commodity prices. Investors can make corresponding trading decisions by observing the spot premium situation and understanding the market's expectations of the supply and demand situation and future trends of a certain commodity.


What does futures premium mean?

Futures premium refers to the price of a certain futures contract being higher than the spot price of the commodity. In the futures market, premium usually occurs when there are concerns about future supply conditions or when demand is strong.

futures

For example, assuming that the spot price of gold is $1200 per ounce, and the price of gold futures contracts is $1220 per ounce, the premium of gold futures contracts is $20. This means that if investors want to buy gold immediately, they need to pay a premium higher than the spot price.


Futures premium usually reflects the market's expectations of future supply conditions and the differences between the spot market and the futures market. For example, if the market expects a tight supply of a certain commodity, the price of futures contracts may be higher than the spot price. In addition, premium may also be influenced by factors such as market demand, inventory levels, and logistics costs.


【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

What is the status of the volume-price relationship?

What is the status of the volume-price relationship?

The volume-price relationship is a key stock market indicator, revealing the correlation between trading volume and stock prices. Analyzing these changes helps investors understand market activity and potential trend reversals.

2023-12-01
What is delisting?

What is delisting?

Delisting removes a stock from public trading. It's either voluntary or mandatory, due to violations, financial issues, mergers, etc.

2023-12-01
What does the exchange rate mean?

What does the exchange rate mean?

The exchange rate, reflecting the relative values of two currencies, is influenced by factors like currency supply and demand, balance of payments, economic growth rate, interest rates, monetary policy, and inflation.

2023-11-29

EBC site region / language

Products & Trading

EBC Institute

Institutional

About EBC

EBC Financial Group is owned and operated by EBC Group.
EBC Financial Group (SVG) LLC is authorized by the St.Vincent and the Grenadines Financial Services Authority(SVGFSA),and the company registration number is 353 LLC 2020.
EBC Group Limited (BVI), with registered address at Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands is owned and operated by EBC Group.
Other Relevant Entities
EBC Financial Group (UK) Limited is authorised and regulated by the Financial Conduct Authority. Reference Number: 927552. Website： www.ebcfin.co.uk
EBC Financial Group (Australia) Pty Ltd (ACN: 619 073 237) is authorised and regulated by the Australian Securities and Investments Commission (Number: 500991). EBC Financial Group (Australia) Pty Ltd is a related entity of EBC Financial Group (SVG) LLC and are managed separately. EBC Financial Group (Australia) Pty Ltd provides general financial advise services in Australia.
Business Address: Level 17, Dashwood House, 69 Old Broad Street, London, England, EC2M 1QS,United Kingdom.Email Address : [email protected]. Telephone : +44 20 3376 9662
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website. The information on this site is not intended for residents of Canada, Hong Kong, Malaysia and the United States, or used by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

High Risk Trading Products Risk Disclosure: CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trading CFDs may not be suitable for all investors. Losses can exceed deposits.Consequently, you should consider the information in light of your objectives, financial situation and needs.We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
Disclaimer: Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer Contracts for Difference to residents of certain jurisdictions including: Venezuela, the United States, Afghanistan, Myanmar, Iran, Iraq, Lebanon, North Korea (Democratic People's Republic of Korea), Syria, Russia, Ukraine, and Crimea, Donetsk, and Luhansk Regions. For more information, please check out our FAQs.
EBC Financial Group is owned and operated by EBC Group.
EBC Financial Group (SVG) LLC is authorized by the St.Vincent and the Grenadines Financial Services Authority(SVGFSA),and the company registration number is 353 LLC 2020.
EBC Group Limited (BVI), with registered address at Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands is owned and operated by EBC Group.
Other Relevant Entities
EBC Financial Group (UK) Limited is authorised and regulated by the Financial Conduct Authority. Reference Number: 927552. Website： www.ebcfin.co.uk
EBC Financial Group (Australia) Pty Ltd (ACN: 619 073 237) is authorised and regulated by the Australian Securities and Investments Commission (Number: 500991). EBC Financial Group (Australia) Pty Ltd is a related entity of EBC Financial Group (SVG) LLC and are managed separately. EBC Financial Group (Australia) Pty Ltd provides general financial advise services in Australia.
Business Address: Level 17, Dashwood House, 69 Old Broad Street, London, England, EC2M 1QS,United Kingdom.Email Address : [email protected]. Telephone : +44 20 3376 9662
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website. The information on this site is not intended for residents of Canada, Hong Kong, Malaysia and the United States, or used by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

High Risk Trading Products Risk Disclosure: CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trading CFDs may not be suitable for all investors. Losses can exceed deposits.Consequently, you should consider the information in light of your objectives, financial situation and needs.We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
Disclaimer: Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer Contracts for Difference to residents of certain jurisdictions including: Venezuela, the United States, Afghanistan, Myanmar, Iran, Iraq, Lebanon, North Korea (Democratic People's Republic of Korea), Syria, Russia, Ukraine, and Crimea, Donetsk, and Luhansk Regions. For more information, please check out our FAQs.
Copyright © EBC Financial Group (SVG) LLC. All Rights Reserved.