Futures: Contango and Backwardation
Interactive

Futures: Contango and Backwardation

Intuition Publishing
Updated Sep 24, 2020

Many forwards and futures markets exist for assets such as oil or base metals. The futures price can trade above or below the expected spot price. Backwardation and contango are normal states for futures markets. Here we examine both concepts. We also look at consumption assets, convenience yields, and the basis of an asset.