This lesson requires a premium membership to access.
Premium membership includes unlimited access to all courses, quizzes, downloadable resources, and future content updates.
The concepts of Contango and Backwardation are related with the term structure of the futures contracts. During the life of a contract, the difference between the futures price and the expected future price is called basis. At the end of the contract’s life, the futures price converges to the expected future spot price. Each month, the future price is updated with respect to the expectations and the basis is erased.
