Contango and backwardation

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kevinchou333
Posts: 12
Joined: Wed Dec 06, 2017 3:59 am

Contango and backwardation

Post by kevinchou333 » Sat May 26, 2018 2:08 am

Who can help me understanding contango effect, I know it is when the expected price of a commodity is higher than spot price and that people are willing to pay more than the actual price of the commodity. But is there any quantitative example?
if you are long future contract and the spot price is $19 right now but due to contango the future price is $29 isn't this benefit the contract holders?
Please help!

Thanks guys

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9-5 Suited
Posts: 240
Joined: Thu Jun 23, 2016 12:14 pm

Re: Contango and backwardation

Post by 9-5 Suited » Sat May 26, 2018 7:11 am

Khan Academy actually has great videos on these subjects. Google ‘Khan Academy contango’ and a few will come to the top.

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