Which one shows the curve going from backwardation to super contango. Jun 21, 2021 · However, when googling contango and backwardation curves, I get conflicting results, with some images showing the contango curve as increasing and others as decreasing (see image 2). Usually, a curve in contango encourages inventories to Apr 1, 2023 · 跟我们的交易有什么关系呢？ 01 什么叫contango结构、back结构？ contango结构、backwardation结构 (简称back结构)，属于期限结构中的概念。 那什么是期限结构呢？ 除了现货和期货之间有价差外，不同的合约月份之间也有价差。 Learn what contango and backwardation mean in relation to the futures or forwards market. Find out more about what this means, how it happens, and how it impacts the market. Jun 26, 2025 · Backwardation vs Contango Backwardationimplies a slope where near-month or front-month futures contracts trade at higher prices than longer-dated ones, leading to a downward sloping futures curve. Feb 18, 2020 · Spot market prices for oil fell so much in February that they briefly became cheaper than contracts for delivery in six months’ time, a phenomenon known as “ contango ” that usually Mar 6, 2025 · Contango is normal because we are more uncertain about the future than the present. Backwardation and Contango define the shape and structure of a forward curve in future markets. It also helps identify commodity's demand supply pattern. The Wikipedia graph has maturity on the right side of the graph so it shows a downward sloping line. According to this graph, are the futures in contango or backwardation? Backwardation Contango Dec 1, 2020 · 4. Sep 3, 2024 · Contango is when the futures price of an asset is higher than its current spot price. A market is said to be in Contango (also known as bold action) when the spot price is way lower than the forward price of a futures contract, whereas a market is said to be in Backwardation when the spot price is higher than the forward price of the futures contract. 在商品语言中， 有两个与日历价差相关的术语用来描述市场状况：contango和backwardation。 Contango 并不是新鲜事儿 当商品交易者提到contango时，这种市场状况是指远期交割月份的价格高于即期交割月份的价格。 以下是使用 COMEX黄金期货 的示例： 2014年12月：1192. Oil futures Example The following table below shows a snapshot of oil futures prices from August 2023. This often happens when there is a great demand for the commodity, and traders are willing to pay a premium to get it now rather than wait for delivery in the future. On the previous sugar chart, however, you could see exactly the opposite situation – the term structure curve was falling. Mar 28, 2024 · Traders use backwardation to profit by selling short at the current price and buying at lower futures prices. When a market is in contango, the forward price of a futures contract is higher than the spot price. Apr 30, 2025 · Conclusion Understanding backwardation and contango helps oil futures traders anticipate pricing pressure, structure trades more efficiently, and manage rollover strategies. Sep 5, 2024 · We want to look more closely at contango and backwardation. Step-by-step solutions Search our library of 100M+ curated solutions that break down your toughest questions. Contango If prices are higher with each successive maturity date in the futures market, it's described as an upward sloping forward curve. May 15, 2024 · The difference in the negative roll yield for commodities in contango, like copper and corn, had the biggest effect on returns compared to the smaller effect from commodities in backwardation like As such, a market in contango will see gradual decreases in the price to meet the spot price at expiration. Backwardation vs Contango for Investors Contango and backwardation can occur in any commodities market, including oil, precious metals, or agricultural products. Contango is a market condition where the prices of long-dated futures contracts are higher than the spot or nearest-term futures contract price. The typical way to show contango is with an upward sloping curve with maturity of the contract on the left side of the graph close the origin. However, contango and backwardation were originally constructed to compare futures price vs expected spot price at expiry. Study with Quizlet and memorize flashcards containing terms like TRUE, DES GO, BOIL GO and more. Jul 17, 2023 · The line, or the forward curve, shows the futures market trend for all months between August 2023 and December 2035 Contango and Backwardation are terms used to describe this forward curve. When a market is in backwardation, the spot and nearest-term futures prices are higher than deferred contract months. In essence,a futures market expects higher prices at longer maturities and lower prices In periods of backwardation, does the existence of historical mean reversion in the VIX cause later contracts to be cheaper than near-term contracts (i. 01，欢迎咨询。 “Contango”和“Back”，其实就是期现升贴水的两种形态。 现货之于期货，其实就是一个超近期的合约之余相比它更远期的合约，因此现货与期货、近月和远月… To see why backwardation and contango are important, look at the chart below, showing the spread between the current near month crude oil contract and the one that is 11 months out. 40 and higher each month into the future going out to 240 days to expiration. Jul 4, 2025 · Contango and backwardation might sound technical, but they show us the market’s outlook. Backwardation generally indicates immediate demand or tight supply, while contango reflects oversupply and weaker demand expectations. Jul 30, 2020 · At the end of June, backwardation was only seen for the next two to three months, but analysts expected the full Brent futures curve to be in backwardation by the end of the year thanks to A market that has steep backwardation — i. Jan 12, 2024 · Contango and backwardation are trailing indicators that give you a snapshot of what is currently happening without offering a clear view of what will happen in the future. Another name for this upward sloping forward curve is forwardation. One possible explanation for this is the mean reverting nature of volatility where volatility can spend longer periods of time at lower or stable levels with occasional but mostly short-term spikes. And similarly, the definition of backwardation is when the futures contract price of a commodity is less than Apr 15, 2024 · Implications of Super Contango for Traders and Investors Super contango in the futures market can have significant implications for both traders and investors. If oil has a relatively low gravity, what are the implications? With the spread of coronavirus, the crude oil curve went from backwardation to a super con tango. We will make three arguments: 1) That contango trades helped to create fake demand in 2009 I think most people in the oil markets define backwardation as future months below prompt month (downward sloping) and contango as future months above prompt month (upward sloping). Which one shows the curve going from backwardation to super contango? Instead, they fell prey to the super contango in the WTI crude oil market. When this is flipped to Backwardation(As the above; contract prices decreasing into the future): it's a Dec 20, 2017 · Backwardation Contango is therefore clear – with the increasing time to expiration, the prices of contracts are rising. Apr 17, 2020 · The forward curve in the NYMEX WTI crude oil futures market highlights the contango in the energy commodity. If in contango, the forward price is higher than the spot price. This is what each term means in itself: Contango: When future prices on the forward curve are higher in the future than they are in the present. Futures prices reflect the anticipated increase in volatility, driven by factors such as storage costs, geopolitical events, or inflation expectations, which influence market pricing and trading strategies. These distinctions are necessary because they tells traders which direction the futures price must move towards in the long-run. Right now, oil futures are in an extreme condition of contango which implies that oil prices are oversold and bottoming. Backwardation in commodity markets (including backwardation in gold) originates from the supply demand balance, to an extent; in fact, supply demand determines the shape of the forward curve. Unterschied zwischen Contango und Backwardation Beim Contango handelt es sich um die gegenteilige Situation zur Backwardation. Which one shows the curve going from backwardation to super contango? Innovative learning tools. The reverse, when future prices are lower and the curve slopes downward, is called “backwardation. 【前言】关注老白，带你更懂期货，交所+0. Carrying charge (contract prices increasing into the future) = normal, representing the costs of carrying/storage of a commodity. In this comprehensive article, we’ll explore the definition, causes, and examples of backwardation, along with its pros, cons, and differences from contango. Backwardation signals panic, as short-term fear dominates. Apr 11, 2023 · Contango and backwardation refer to the shape of the structure of a forward curve. Jul 12, 2023 · Contango and normal backwardation are two different market situations in the futures market. This is how a normal market prices future risk. I don't agree with MMs diagram as Backwardation implies lower futures prices. Backwardation and contango What is Contango? Contango market pricing structure where prompt crude oil prices are below those in the future. , one where there is a very steep premium for material available for immediate delivery—often indicates a perception of a current shortage in the underlying commodity. e. What Are Contango and Backwardation? Contango and backwardation get used to describe the forward curve in commodity markets. It helped me gain more understanding about futures and the stock market. Super backwardation is a term used in finance to describe a situation where the futures price of a commodity is lower than the spot price. Découvrez les différences entre les situations en contango et en backwardation, exprimées en points de déport et point de report sur les marchés à terme. Khan Academy Khan Academy Contango and backwardation are terms used to describe the observed difference between the spot, or cash, price and futures prices for a commodity. Learn the difference between contango and backwardation in the commodity markets. Super backwardation can also be caused by a lack of supply of the commodity, which drives Mar 1, 2024 · Overall, contango and backwardation are simply terms that define the shape of the futures curve for commodities. When a commodities market is in contango it means that there is an opportunity to arbitrage because buying Jun 27, 2012 · All in all, one could dare to make the observation that as the WTI super-contango episodes became eliminated — perhaps because a perception that tightness had somehow been injected into the Feb 25, 2022 · Backwardation is a fairly rare condition that occurs in commodities and futures markets where it is cheaper to buy a commodity or other asset in the future than today. 2 days ago · Backwardation vs. Which is Better: Contango or Backwardation? Individual trading strategies and market conditions determine whether contango or backwardation is better. Read on for a more detailed contango definition and an explanation of how contango works in commodity markets. The market situation is described as backwardation if the forward rates decrease with time creating a Sep 25, 2023 · This article discusses about Contango vs Backwardation and how they differ from each other. Backwardation and Contango are The current dynamics of demand and production indicate the oversupply could persist for a while, a bad sign for oil investors. When a futures curve is in contango, investors pay to roll futures contracts. The opposite, backwardation, is the default scenario. The Nov 26, 2021 · The oil futures curve was pummeled on Black Friday as the wave of selling sparked by the new Covid-19 variant spread beyond headline prices. Which one shows the curve going from backwardation to super contango? See full list on investopedia. Aug 22, 2020 · Other Important Contango and Backwardation Considerations: ETFs Futures prices can change over time as traders’ and investors’ views adjust, so the forward curve can shift from contango to backwardation or the other way around. (C) the forward curve experiences backwardation. Learn more about contango vs backwardation. Distinguishing between backwardation and contango in a market is valuable for investors and traders to make informed decisions. The opposite is true for a holder of a short futures position, where contango offers positive results, a backwardation yields negative results. Backwardation结构则是和Contango结构相对应的一种期限结构；Investopedia上是这么解释的：Backwardation is when the current price—spot—price ofan underlying asset is higher than prices trading in the futures market. In a backwardated market, traders expect the asset to be cheaper in the future than it is now, which is represented by a downward-sloping futures curve. Contango is different from a "Normal Contango," which occurs when the futures price exceeds the anticipated spot price. com Feb 2, 2023 · Crude Oil, CL Plots Futures Curve: Futures contract prices over the next 3. This upward slope—known as contango—is the opposite of backwardation. What is a super-contango? Super-contango is when the spot price for a commodity is trading dramatically below the futures price. In contango, the volatility curve typically shows a steeper price rise over time. ). This means that there is a forward premium and the forward curve is upward sloping. If you trade futures, you’ll want to know what these curves are telling you. With the spread of coronavirus, the crude oil curve went from backwardation to a super contango 2 3 Click on the Bloomberg CCRV charts on the right. Super-contango usually occurs when the inventory space to store the physical commodity is running out due to excess supply – meaning that the cost of carry (the cost of storing a physical commodity) in a futures contract increases. Feb 18, 2022 · The phenomenon of backwardation illustrates one of the reasons why oil is in short supply right now. VIX Futures Curve Not Completely Back to Contango As pointed out in a recent VIX paper from the CFA Institute Research Foundation, the VIX futures curve is in contango about 80% of the time and usually goes into backwardation in distressed markets. , mean reversion is the driving factor behind the slopes in both contango and backwardation)? Oct 17, 2024 · Oil markets are in “backwardation” — we’ll explain Geopolitical conflict is interfering with crude oil futures, causing oil prices to be lower in the future than they are today. May 5, 2021 · Backwardation indicates the futures curve is falling, with spot markets and short-term futures contracts priced higher than longer-dated contracts. Sep 11, 2020 · The forward curve is a plot of forward rates against time to maturity. In the futures markets, the forward curve can be in either contango or backwardation. While contango refers to a situation where futures prices are higher than the spot price, normal backwardation is a condition where futures prices are lower than the spot price. 24/7 support. 5 years; to easily visualize Backwardation Vs Contango(carrying charge) markets. Conversely, when a market is in backwardation, the forward price of the futures contract is lower than the spot price. Contango and backwardation are the terms used to define the structure of the forward curve. Jul 9, 2024 · Contango vs. (B) there is an upward sloping forward curve. It clearly shows an upward sloping VIX curve in contango, with the front month VIX at a low 18. It can provide insights into demand predictions and influence derivative strategies. By understanding these conditions, traders can identify arbitrage opportunities, optimize roll yields, and make informed investment decisions. Feb 22, 2022 · contango in the stock market occurs when spot prices or current prices are lower than the futures price. Backwardation is sometimes confused with an inverted futures curve. Backwardation and Contango Markets A contango market simply means that the futures contracts are trading at a premium to the spot price. Contango结构下做正套——买进近月期货，卖出远月期货。 盈亏比应该是月差比上基差，如果正套想要盈利，那需要现货市场回暖，现货和近月价格涨幅比远月的涨幅更大；所以我们可以用来测试Contango结构的底部或者Contango结构能否转为Backwardation结构。 5. May 24, 2019 · Backwardation was present 24% and Contango 76%. The opposite of contango exists when future prices show backwardation because supply limitations or strong immediate delivery needs drive down prices. By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity. Grasping these concepts is essential for comprehending the futures market. Contango, sometimes referred to as forwardation, is the opposite of backwardation. Contango, on the other hand, reflects a market where futures prices increase with maturity—like an upward sloping curve from front to back. Keep an eye on the futures curve shape as part of your market analysis — it’s more than just a chart, it’s a signal. The ideas are very clear and evidently well thought out. Click on the Bloomberg CCRV charts on the right. Question: Knowledge Check ? 2 With the spread of coronavirus, the crude oil curve went from backwardation to a super contango. The exaggerated upward sloping curve in super contango can lead to increased carrying costs and potential losses for market participants holding futures contracts over extended periods. The forward curve plots any asset price across time. later delivery contracts hit an 11-year high Mar 19, 2024 · Contango and backwardation both describe the slope of a forward-facing futures curve in the futures market. Apr 30, 2025 · What grabs their attention is the behaviour of the futures curve and whether the price slopes upward (contango) or downward (backwardation). Apr 22, 2020 · Even in more normal markets, the structure of the forward curve “backwardation” and “contango” is a source of confusion – mystery even. Mar 28, 2024 · Contango结构和Backwardation结构都是金融领域描述价格走势的术语，它们反映了期货合约价格（远期）与即期（现货）价格之间的关系。 Contango结构：现货价格<近月价格<远月价格，这种近低远高的结构，就称为contango结构。 Apr 17, 2020 · Commodities Corner Oil market in ‘super contango’ underlines storage fears as coronavirus destroys crude demand WTI price spread for front-month vs. An inverted futures curve will show a falling slope as the prices of futures contracts falls over time. Another critical consideration involves exchange-traded funds based on futures. 40美元 The two graphs are saying the same thing, they just show time in a different way. Jan 10, 2024 · Find out what contango and backwardation is and what is happening in the oil market right now, with technical and fundamental analysis. Nov 6, 2024 · Backwardation and contango are essential concepts in the crude oil market, each reflecting unique market expectations and economic conditions. Jul 26, 2022 · A state of contango represents the expectation that the VIX index will increase from its current level moving forward. Contango situations are rare. Mar 20, 2019 · Contango vs. At the other end of the table, stocks were 500 million or higher in only 2% of the weeks, and prices were in contango 2%. However, these two curves are often confused for one another. Traders either think future prices will be higher or lower than current prices. This often happens in markets where the asset’s supply is expected to increase or its demand is anticipated to drop. May 3, 2021 · When examples of backwardation and contango are presented on the same chart, you might find it helpful to envision each curve referring to a different asset, as one asset can only have one futures curve (barring the existence of multiple markets, etc. In other words, the more distant contracts were cheaper in February than the closer ones. May 21, 2020 · A few weeks ago, near-term oil-futures prices were far below those for oil to be delivered later in the year, but most of the gap has evaporated, a signal that supply and demand are more closely Jan 1, 2025 · Contango and backwardation are fundamental concepts in futures markets that influence trading strategies. In contango, the price of the November futures contract is higher than October's, which is higher Jul 4, 2025 · Contango and backwardation might sound technical, but they show us the market’s outlook. In commodity trading, the terms 'contango' and 'backwardation' frequently emerge. Dec 12, 2024 · A confusing case of nomenclatureThis is a specific and informative article. Nov 24, 2024 · It shows the percentage of days the S&P 500 index is up and the percentage of days VX futures are in contango, where the front-month futures price is lower than the next-month futures price. The first picture is from MM slides/video notes and the other one I found online (from more than one source). Odd mid-curve bets and jagged structures can be red flags for hidden risks. The slope of a futures curve is influenced by various factors, such as seasonal demand, carrying costs, and market expectations. Where the forward rates increase along with time creating an upward sloping forward curve, the market is said to be in contango. Oct 5, 2022 · When future prices are higher than current prices, and the forward curve is sloping upward, it’s called “contango”. Mar 10, 2022 · The graph below shows the VIX futures curve from a random day in early November 2021. The shape of the curve can have a significant impact on returns which is why some ETFs look to mitigate the challenges by adopting a rolling strategy. The curve has two dimensions, and plots time across the horizontal axis and delivery price of the commodity across the vertical axis. Sep 10, 2024 · Backwardation is the opposite of contango and occurs when the futures price of an asset is lower than the current spot price. Aug 21, 2023 · By connecting these points, the curve’s shape—whether in backwardation or contango—reveals market expectations about future supply and demand, the cost of carry, interest rates, and other factors. 4 days ago · Contango and backwardation are terms used to define the structure of the forward curve. Which one shows the curve going from backwardation to super contango? 3 4 Chart 1 Chart 2 Chart 3 Chart 4 With the spread of coronavirus, the crude oil curve went from backwardation to a super contango 2 3 Click on the Bloomberg CCRV charts on the right. Normal Backwardation: An Overview The shape of the futures curve is important to commodity hedgers and speculators. Ein Markt befindet sich in Backwardation, wenn die Futures-Preise für einen Anlagegegenstand unter dem aktuellen Kassapreis liegen. After presenting the definitions for reference, we look at how they can affect trading strategies. The VIX futures curve is in contango more than 80% of the time since 2010. Commonly referred to as a negative roll yield, contango results in a significant drag on index performance. Sep 21, 2024 · However, backwardation can also signal potential supply issues or market instability. . Why is that? Oct 20, 2011 · A heads up — This is a three-part series attempting to explain the current backwardation in the market. May 24, 2018 · 各日期之间是否Contango或backwardation，没有固定规律，完全取决于市场。 天与天之间的差价 (spread)分布：各日期之间的差价分布一般没有规律可寻，差价的大小取决于市场多空力量的分布，该段时间内供需状况、突发事件、交货情况或提货情况、基金的参与等等 When the carrying cost exceeds the benefit of holding commodity: (A) the spot price is below the forward price. Investors must assess the reasons behind backwardation to make informed decisions. In this example, the price of crude oil for delivery in June 2020 was at $28. All in one place. A normal futures curve will show a rising slope as the prices of futures contracts rises in time. Discover strategies for contango and backwardation here. Help pls Aug 11, 2023 · In contango, often associated with a normal futures curve, investors agree to pay more for a commodity in the future. Click on the Bloomberg CCRV chats on the right. Apr 22, 2020 · When trading in commodities futures, a situation in which the future price exceeds the spot price is known as contango. Question: The graph above shows the futures curve for a specific commodity. 82 per Sep 14, 2022 · Contango is a theoretical term that describes the relationship between future prices and spot prices of underlying assets. The working definition of contango is when the futures contract price of a commodity is greater than the current spot price. A commodity shortage in the spot market serves as the primary factor that creates backwardation. Both care about whether commodity futures markets are contango markets or normal backwardation markets. Which one shows he curve going from backwardation to a super con tango? With the spread of coronavirus, the crude oil curve went from backwardation to a super contango. ” The forward curve is a form of forecasting. Apr 12, 2022 · That could in turn push the curve into contango, a market structure that signals oversupply where prices for prompt delivery trade at a discount to those for delivery in the future. yhmhef ncf reblm jzdr hjcx uuabyi iftje uxrxkqw oybepp ajfim