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Contango VS Normal Backwardation

June 11, 2012

Contango is when the future price is above the expected future spot price, contango implies that future prices are falling over time as new information brings them into line with expected future spot price.

Normal backwardation is when the futures price is below expected future spot price. This is desirable for speculators who are “net long” in their positions: they want futures prices to increase. Futures Prices Are Increasing



From → Asset Valuation

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