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Which one shows the curve going from backwardation to super contango.
Jul 9, 2024 · Contango vs.
Which one shows the curve going from backwardation to super contango. And similarly, the definition of backwardation is when the futures contract price of a commodity is less than In contango, the volatility curve typically shows a steeper price rise over time. Contango and backwardation are terms used to describe the observed difference between the spot, or cash, price and futures prices for a commodity. Traders either think future prices will be higher or lower than current prices. Guide to Contango vs Backwardation. Oil futures Example The following table below shows a snapshot of oil futures prices from August 2023. The values are from the CBOE and are delayed prices. When a commodities market is in contango it means that there is an opportunity to arbitrage because buying 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. The working definition of contango is when the futures contract price of a commodity is greater than the current spot price. The market has flipped from backwardation to deep contango with time spreads reaching levels wider than those during the 2008 global financial crisis. The opposite, backwardation, is the default scenario. Learn the difference between contango and backwardation in the commodity markets. Question: The graph above shows the futures curve for a specific commodity. In this example, the price of crude oil for delivery in June 2020 was at $28. The opposite of contango exists when future prices show backwardation because supply limitations or strong immediate delivery needs drive down prices. If you trade futures, you’ll want to know what these curves are telling you. Backwardation: The opposite scenario, where the futures price is lower than the spot price, resulting in a downward-sloping futures curve. The current dynamics of demand and production indicate the oversupply could persist for a while, a bad sign for oil investors. 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. Jan 4, 2024 · Two fundamental concepts in this realm are contango and backwardation. Read on for a more detailed contango definition and an explanation of how contango works in commodity markets. Question: Knowledge Check ? 2 With the spread of coronavirus, the crude oil curve went from backwardation to a super contango. Apr 11, 2023 · This curve is in contango. 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. An inverted futures curve will show a falling slope as the prices of futures contracts falls over time. Right now, oil futures are in an extreme condition of contango which implies that oil prices are oversold and bottoming. Odd mid-curve bets and jagged structures can be red flags for hidden risks. The vertical axis shows volatility. com 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. 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. What are Futures? Before delving into contango and backwardation, it’s vital to grasp what futures are. The volatility of subsequent months is higher than the previous months — with the slight exception of the July and August months. Demgegenüber beschreibt Backwardation, dass zukünftige Lieferpreise unter dem Jul 12, 2023 · Contango and normal backwardation are two different market situations in the futures market. If in contango, the forward price is higher than the spot price. 82 per Apr 22, 2020 · When trading in commodities futures, a situation in which the future price exceeds the spot price is known as contango. Oct 5, 2022 · When future prices are higher than current prices, and the forward curve is sloping upward, it’s called “contango”. The reverse, when future prices are lower and the curve slopes downward, is called “backwardation. Backwardation vs Contango for Investors Contango and backwardation can occur in any commodities market, including oil, precious metals, or agricultural products. Jun 26, 2025 · Backwardation vs Contango Backwardation implies 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. 40美元 Learn what contango and backwardation mean in relation to the futures or forwards market. Both care about whether commodity futures markets are contango markets or normal backwardation markets. Feb 17, 2024 · The forward curve in a contango market slopes upward, while in backwardation, it slopes downward. 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. Normal Backwardation: An Overview The shape of the futures curve is important to commodity hedgers and speculators. 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. 40 and higher each month into the future going out to 240 days to expiration. 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. Feb 4, 2015 · View Homework Help - Bloomberg Training Questions and Answers from FI 305 at Bentley University. The two graphs are saying the same thing, they just show time in a different way. Normal Backwardation: An OverviewThe shape of the futures curve is important to commodity hedgers and speculators. Nevertheless, they are good enough for our purposes. In essence,a futures market expects higher prices at longer maturities and lower prices Aug 11, 2023 · In contango, often associated with a normal futures curve, investors agree to pay more for a commodity in the future. Mar 6, 2025 · Contango is normal because we are more uncertain about the future than the present. Mostly, the situation from day-to-day does not change radically (but it can happen). Apr 30, 2025 · What grabs their attention is the behaviour of the futures curve and whether the price slopes upward (contango) or downward (backwardation). 5 years; to easily visualize Backwardation Vs Contango (carrying charge) markets. 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. Conversely, when a market is in backwardation, the forward price of the futures contract is lower than the spot price. 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。 Nov 6, 2024 · Backwardation and contango are essential concepts in the crude oil market, each reflecting unique market expectations and economic conditions. Understanding these market conditions is crucial for making informed trading decisions and managing risk in futures markets. This means that there is a forward premium and the forward curve is upward sloping. Sep 5, 2024 · We want to look more closely at contango and backwardation. 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. Study with Quizlet and memorize flashcards containing terms like TRUE, DES GO, BOIL GO and more. e. Backwardation generally indicates immediate demand or tight supply, while contango reflects oversupply and weaker demand expectations. 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). Sep 11, 2020 · The forward curve is a plot of forward rates against time to maturity. The slope of a futures curve is influenced by various factors, such as seasonal demand, carrying costs, and market expectations. These curves are not static and can shift based on changing market conditions and sentiment. It also helps identify commodity's demand supply pattern. The 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. However, contango and backwardation were originally constructed to compare futures price vs expected spot price at expiry. Sep 18, 2019 · Contango occurs when the current futures price of an asset (as quoted in the futures market) is higher than the current spot price of the underlying asset. Backwardation is more frequent with lower crude inventories. In this case, the demand for the asset is so high that the further its delivery goes in time Sep 25, 2023 · This article discusses about Contango vs Backwardation and how they differ from each other. Which one shows the curve going from backwardation to super contango? With the spread of coronavirus, the crude oil curve went from backwardation to a super contango Click on the Bloomberg CCRV charts on the right. What is a super-contango? Super-contango is when the spot price for a commodity is trading dramatically below the futures price. 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 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. Learn more about contango vs backwardation. Why is that? 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). The Wikipedia graph has maturity on the right side of the graph so it shows a downward sloping line. Dies ist normal, da Vermögenswerte tendenziell im Wert steigen und bei physischen Gütern Lagerkosten anfallen. Sep 21, 2024 · However, backwardation can also signal potential supply issues or market instability. 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. In the futures markets, the forward curve can be in either contango or backwardation. Jul 26, 2022 · A state of contango represents the expectation that the VIX index will increase from its current level moving forward. Apr 17, 2020 · The forward curve in the NYMEX WTI crude oil futures market highlights the contango in the energy commodity. Mar 19, 2024 · Contango and backwardation both describe the slope of a forward-facing futures curve in the futures market. It can provide insights into demand predictions and influence derivative strategies. These terms describe the shape of the futures curve, which is crucial for traders to understand before diving into futures trading. It helped me gain more understanding about futures and the stock market. What Are Contango and Backwardation? Contango and backwardation get used to describe the forward curve in commodity markets. Jun 19, 2025 · In contango, the futures curve slopes upward, reflecting higher prices for contracts with longer maturities. 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. Dec 20, 2017 · It is important to understand the curve is not static over time. The VIX futures curve is in contango more than 80% of the time since 2010. 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. Mar 10, 2022 · The graph below shows the VIX futures curve from a random day in early November 2021. Distinguishing between backwardation and contango in a market is valuable for investors and traders to make informed decisions. 3 mb/d in 2021 which will further deepen the contango as inventories continue to 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. A normal futures curve will show a rising slope as the prices of futures contracts rises in time. 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. After presenting the definitions for reference, we look at how they can affect trading strategies. 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. 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 Contango is a market condition where the prices of long-dated futures contracts are higher than the spot or nearest-term futures contract price. 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 Contango (deutsch: Terminzuschlag) bezeichnet eine Situation am Terminmarkt, in der der Terminpreis eines Rohstoffs (oder auch eines Index oder einer Währung) höher ist als sein aktueller Spotpreis. 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. 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. 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. A backwardation forward curve will show lower future prices and higher spot prices. Apr 30, 2025 · Conclusion Understanding backwardation and contango helps oil futures traders anticipate pricing pressure, structure trades more efficiently, and manage rollover strategies. Sep 14, 2022 · Contango is a theoretical term that describes the relationship between future prices and spot prices of underlying assets. Find out more about what this means, how it happens, and how it impacts the market. Step-by-step solutions Search our library of 100M+ curated solutions that break down your toughest questions. In this case, the price of futures contracts is lower than the spot asset price or its spot price. Which is Better: Contango or Backwardation? Individual trading strategies and market conditions determine whether contango or backwardation is better. This often happens in markets where the asset’s supply is expected to increase or its demand is anticipated to drop. Contango, on the other hand, reflects a market where futures prices increase with maturity—like an upward sloping curve from front to back. May 24, 2019 · Theories of backwardation: buyer risk premium, undersupply, and disruption risk premium. ). The more time to 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. Since there is no cost associated with delivery for the VIX and contango is considered to exist in healthy markets, is the upward slope simply accounting for the greater potential for the market to become unhealthy over longer periods of time? Yes. When a market is in backwardation, the spot and nearest-term futures prices are higher than deferred contract months. Commonly referred to as a negative roll yield, contango results in a significant drag on index performance. All in one place. Super backwardation can also be caused by a lack of supply of the commodity, which drives The opposite is true for a holder of a short futures position, where contango offers positive results, a backwardation yields negative results. This chart contrasts contango and backwardation—two key futures curve shapes—highlighting how market expectations shift over time. Jan 10, 2024 · Contango vs backwardation The opposite effect to contango is called backwardation. Carrying charge (contract prices increasing into the future) = normal, representing the costs of carrying/storage of a commodity. A market that has steep backwardation — i. Which one shows the curve going from backwardation to super contango? Chart 1 Chart 2 Chart 3 Chart 4 · · · Copy link Report Instead, they fell prey to the super contango in the WTI crude oil market. Click on the Bloomberg CCRV charts on the right. Investors must assess the reasons behind backwardation to make informed decisions. A commodity shortage in the spot market serves as the primary factor that creates backwardation. We will make three arguments: 1) That contango trades helped to create fake demand in 2009 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. What is Contango? Contango market pricing structure where prompt crude oil prices are below those in the future. 24/7 support. Contango situations are rare. Contango and backwardation are the terms used to define the structure of the forward curve. Usually, a curve in contango encourages inventories to Feb 18, 2022 · The phenomenon of backwardation illustrates one of the reasons why oil is in short supply right now. These distinctions are necessary because they tells traders which direction the futures price must move towards in the long-run. Which one shows the curve going from backwardation to super contango? Jul 4, 2025 · Contango and backwardation might sound technical, but they show us the market’s outlook. Innovative learning tools. EquityEssentials NGO 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. 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. Nov 23, 2024 · Reviewed by Gordon ScottFact checked by Vikki VelasquezContango vs. The curve has two dimensions, and plots time across the horizontal axis and delivery price of the commodity across the vertical axis. later delivery contracts hit an 11-year high Mar 28, 2024 · Traders use backwardation to profit by selling short at the current price and buying at lower futures prices. 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. Jul 9, 2024 · Contango vs. It clearly shows an upward sloping VIX curve in contango, with the front month VIX at a low 18. Contango and backwardation show how futures prices relate to expected spot prices at different points in time. In this comprehensive article, we’ll explore the definition, causes, and examples of backwardation, along with its pros, cons, and differences from contango. 2 days ago · Contango and backwardation are terms used to define the structure of the forward curve. Contango and normal backwardation refer to the Since contracts on physical goods have associated costs, it makes sense that the term structure curve would be upward sloping. According to this graph, are the futures in contango or backwardation? Backwardation Contango Aug 4, 2021 · What is contango? Contango is a situation where a commodity’s futures contract price has decreased to converge with the actual price on the day of delivery. 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 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. 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 As such, a market in contango will see gradual decreases in the price to meet the spot price at expiration. Sep 3, 2024 · Contango is when the futures price of an asset is higher than its current spot price. Jan 1, 2025 · Contango and backwardation are fundamental concepts in futures markets that influence trading strategies. Dec 1, 2020 · 4. , 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. When a futures curve is in contango, investors pay to roll futures contracts. 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. However, over weeks or months, the changes can be significant. This is how a normal market prices future risk. Discover strategies for contango and backwardation here. Contango is different from a "Normal Contango," which occurs when the futures price exceeds the anticipated spot price. Backwardation signals panic, as short-term fear dominates. These factors have tended to mean that historically commodity curve strategies tend to go through periods of strong performance in the aftermath of extreme backwardation as curves normalise back into contango, and in fact some of the highest returns have been realised after periods of highly stretched backwardation such as those currently being Contango describes the structure of prices in the market across the time horizon, and is most often associated with commodities and futures markets. The markets are dynamic, and therefore their structure may look different every day. Backwardation and Contango Markets A contango market simply means that the futures contracts are trading at a premium to the spot price. Feb 2, 2023 · Crude Oil, CL Plots Futures Curve: Futures contract prices over the next 3. According to our structural VAR model, the supply-demand imbalance is projected to reach 5. Find out how it impacts investors. Feb 25, 2022 · Backwardation refers to when the spot price, or current price of an asset, is higher than the futures market trading price. Backwardation is sometimes confused with an inverted futures curve. Which one shows the curve going from backwardation to super contango? See full list on investopedia. ” The forward curve is a form of forecasting. In backwardation, near-term contracts are priced higher than those expiring later. Dec 12, 2024 · A confusing case of nomenclatureThis is a specific and informative article. Unlike in contango, the graph in this case is downward, that is, it is falling from one maturity to the next and so on. When a market is in contango, the forward price of a futures contract is higher than the spot price. By understanding these conditions, traders can identify arbitrage opportunities, optimize roll yields, and make informed investment decisions. 7 mb/d in 2020 and 3. Another critical consideration involves exchange-traded funds based on futures. 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. Mar 20, 2019 · Contango vs. Feb 22, 2022 · contango in the stock market occurs when spot prices or current prices are lower than the futures price. Contango, sometimes referred to as forwardation, is the opposite of backwardation. . Where the forward rates increase along with time creating an upward sloping forward curve, the market is said to be in contango. The leftmost dot Oct 20, 2011 · A heads up — This is a three-part series attempting to explain the current backwardation in the market. 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. However, these two curves are often confused for one another. The market situation is described as backwardation if the forward rates decrease with time creating a 【前言】关注老白，带你更懂期货，交所+0. Access 9 Free Option Books The horizontal axis shows months going forward. A few fundamental factors such as the cost to carry a physical asset or finance a financial asset will inform the supply/demand for the commodity. 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… Contango and backwardation can have significant implications for commodity traders, hedgers, and investors in commodity ETFs (Exchange Traded Funds). Here we discuss top differences between Contango and Backwardation with their comparative table. Normal backwardation generally indicates the market's expectation that the asset price will decrease over time. The ideas are very clear and evidently well thought out. 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. 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. By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity. Click on the Bloomberg CCRV chats on the right. evzuenymshjvbtawgarecufyhpcyxkbzsdnajkqxrdutys