Alternatives: could someone clarify Backwardation and normal backwardation?

Yushin · February 7, 2015, 11:24am

I am kind of confused abt backwardation and normal backwardation…

What’s the difference?

Could someone clarify the difference? ’

Thanks!

hei.so · February 7, 2015, 1:44pm

Contango: CURRENT spot price < future price

backwardation: CURRENT spot price > future price

normal contango: EXPECTED spot price < future price

normal backwardation: EXPECTED spot price > future price

Harrogath · February 9, 2015, 3:39am

Interesting… thanks.

Harrogath · February 10, 2015, 6:06pm

The thing I didn’t understand clearly is if normal contango or normal backwardation expected spot prices are the spot prices on the execution date of the future contract. It should be, right?