Futures options trader magazine pdf

A futures contract in contango will normally decrease in value until it equals the spot price of the underlying at maturity. This may be due to people’s desire to pay a premium to have the commodity in the future rather than paying the costs of storage and carry costs of buying the commodity today. A market is ‘in backwardation’ when the futures price is below the spot price for a futures options trader magazine pdf commodity. This is favorable for investors who have long positions since they want the futures price to rise to the level of the current spot price.

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