CoachA prompt date is a date on which an LME contract can be settled by delivery of warrants against payment. There is one for every business day from tomorrow (tom) to three months ahead, one every Wednesday from there to six months, and one on the third Wednesday of each month beyond, up to a limit that depends on the metal. The three-month price (3M) is the price for the prompt date about three months from the trade date; it is the most liquid LME contract and the reference for most hedging.
Voorbeelden
Example 8.2 (A carry as an interest rate)
Copper cash is at 9 800 dollars a tonne and three months at 9 880: an 80-dollar contango, 0.82% of the cash price for about 91 days, or 3.3% a year. A holder of metal who sells cash and buys three months (lends metal) gives up 80 dollars a tonne and saves the cost of financing and storing the metal for three months; if money and storage cost more than 3.3% a year, lending is the better use of the metal. A backwardation of the same size would pay the lender 80 dollars instead: the market pays for metal now.