Frequently Asked Question

August 25 2009 | Filed Under ยป ,

What does it mean when futures prices are in contango?


a. The basis is positive.

b. Future prices are higher than cash prices.

c. The market is in backwardation.

d. Supply disruptions are abating.


Answer: B

The other answers are associated with backwardation, the opposite of contango.

by

Joseph Nguyen

Joseph Nguyen
Joseph Nguyen is an Research Analyst and contributing author at Investopedia. He graduated from the University of Alberta with a Bachelor of Commerce degree and specializes in financial analysis and research. Prior to joining Investopedia, he worked at a securities brokerage firm.
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