Backwardation

Market situation in which futures prices are progressively lower in the distant delivery months. For instance, if the gold quotation for January is $360.00 per ounce and that for June is $355.00 per ounce, the backwardation for five months against January is $5.00 per ounce. (Backwardation is the opposite of contango). See Inverted Market.

Trading Performance in Forward Markets: Information Vs. Normal Backwardation

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Contango

Delivery Month

Futures price

Inverted Market

Options & Futures

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