Contango

The price of an asset for forward delivery is usually above the price you would pay today...

A futures contract is an agreement to buy or sell an asset – such as oil, gold, currency, cryptocurrency or shares – at a prearranged price on a prearranged date (the “delivery date”). Futures may be physically delivered (which means the seller must deliver the asset to the buyer), or cash settled (which means they exchange a payment based on the difference between the initial price and the price when the contract expires).

Futures contracts for any asset are usually available with a range of delivery dates – this may be monthly, quarterly, or less regular (for example, some delivery dates for crops may be aligned with harvest months).

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