Contango vs Backwardation: What They Mean, Why Traders Care 📱

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Backwardation and Contango: What They Mean, Why Traders Care PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What Are Backwardation and Contango? http://www.financial-spread-betting.c... Contango versus Backwardation in the futures market. Where do those terms come from? In the futures market we have a scenario where in general the futures price is going to be more expensive in the future (and the further away the more expensive it is). This is because there is a cost to carry. For instance looking at crude oil there is a cost of storage and insurance as well as an opportunity cost. Sometimes we can have extreme contango and this could be for several reasons...there could be a massive oversupply of oil at the moment and the suppliers are trying to get rid of it but there's not much demand... For extreme contango there could be an arbitrage opportunity... Backwardation is when we have a supply/demand imbalance.

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