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Is the meaning of backwardation and contango used in finance textbooks the same as the colloquial meaning used by Wall Street?
In short, whether we have Backwardation or Contango depends on how the expected forward spot prices are quantified and how the related commodity strips behave. Contango and Backwardation in Common Usage Investment professionals on financial TV channels and in newspapers colloquially refer to upward trends in futures prices as contango and downwards trends in futures prices as backwardation. Contango and Backwardation in Economic TheoryIn economic theory regarding Backwardation and Contango, associated with John Maynard Keyns and John Hicks, for Contango to exist, expected spot prices (someday in the future) have to be lower than current futures prices for the same future moments, and reverse has to apply for Backwardation. Thus whether we have a contango or bacwardation depends on an arbitrary forward estimate of spot prices. For example, if we estimate that today's spot price, price at which a physical commodity is trading today, is an expected spot price someday in the future, and we see an upward trend in a commodity strip (series of future contracts prices), we see a contango. On the other hand, if the futures prices in a commodity strip trending upwards are considered unbiased estimates of the expected future spot prices, meaning they are equal, there is no Contango or Backwardation to speak of. By the way, upward trend of estimates may be a result of storage expenses.
What is contango in commodity markets?
In short, whether we have Backwardation or Contango depends on how the expected future spot prices are quantified and how the related commodity strips behave. Contango and Backwardation in Common Usage Investment professionals on financial TV channels and in newspapers colloquially refer to upward trends in futures prices as contango and downward trends in futures prices as backwardation. Contango and Backwardation in Economic TheoryIn economic theory regarding Backwardation and Contango, associated with John Maynard Keyns and John Hicks, for Contango to exist, expected spot prices (someday in the future) have to be lower than current futures prices for the same future moments, and reverse has to apply for Backwardation. Thus whether we have a contango or bacwardation depends on an arbitrary forward estimate of spot prices. For example, if we estimate that today's spot price, price at which a physical commodity is trading today, is an expected spot price someday in the future, and we see an upward trend in a commodity strip (series of future contracts prices), we see a contango. On the other hand, if the futures prices in a commodity strip trending upwards are considered unbiased estimates of the expected future spot prices, meaning they are equal, there is no Contango or Backwardation to speak of. By the way, upward trend of estimates may be a result of storage expenses.
What is backwardation in commodity markets?
In short, whether we have Backwardation or Contango depends on how the expected future spot prices are quantified and how the related commodity strips behave. Contango and Backwardation in Common Usage Investment professionals on financial TV channels and in newspapers colloquially refer to upward trends in futures prices as contango and downward trends in futures prices as backwardation. Contango and Backwardation in Economic TheoryIn economic theory regarding Backwardation and Contango, associated with John Maynard Keyns and John Hicks, for Contango to exist, expected spot prices (someday in the future) have to be lower than current futures prices for the same future moments, and reverse has to apply for Backwardation. Thus whether we have a contango or bacwardation depends on an arbitrary forward estimate of spot prices. For example, if we estimate that today's spot price, price at which a physical commodity is trading today, is an expected spot price someday in the future, and we see an upward trend in a commodity strip (series of future contracts prices), we see a contango. On the other hand, if the futures prices in a commodity strip trending upwards are considered unbiased estimates of the expected future spot prices, meaning they are equal, there is no Contango or Backwardation to speak of. By the way, upward trend of estimates may be a result of storage expenses.
Futures and spot prices are parallel?
A futures contract is a exchange traded device where someone can speculate on or hedge price risk regarding a specific commodity, bond market or stock index asset. The contract is a binding agreement of delivery of an asset at a predetermined time in the future. At first futures prices vs. the current price of the underlying asset they represent are not the same due to the time value of future money, market forecast opinion, news, etc. But as the futures contract comes to it's time conclusion it's price starts to closely track the spot or actual cash market price of the asset. In the end they are both at parity as the futures contract ends at the delivery date and thus is then equal to the then current cash market price of the underlying asset.
What happens if the forward and reverse reactions are equal?
Equilibrium.
How many E-Minis equal one Futures contract?
Here is a free platform for trading E-Mini. http://ampfutures.com/justin.php
Why are opposite angles equal?
They are only equal in certain specific conditions.
Did cultivating an equal opportunity society has helped countries such as South Africa and Americato move forward?
Cultivating an equal opportunity society has helped countries like South Africa and Americato move forward.
Why are online game shop prices equal to normal shop prices?
The prices of online games will be equal or less than the price of purchasing a game in a store or shop. The reason that they would be the same or less is because they do not have the overhead costs associated with owning a store.
When a reaction system is at equilibrium the rates of the reaction in the forward and reverse directions are?
Equal. At equilibrium, the rates of the forward and reverse reactions are balanced, meaning that the rate of the forward reaction is equal to the rate of the reverse reaction. This results in no net change in the concentrations of reactants and products over time.
What equal volumes of gases under the same conditions of temperature and pressure have equal?
Equal volumes of gases under the same conditions of temperature and pressure have an equal number of molecules, according to Avogadro's Law. This relationship allows for direct comparisons of the amounts of different gases.
Which factors must be equal in a reversible chemical reaction at equilibrium?
At equilibrium in a reversible chemical reaction, the rates of the forward and reverse reactions must be equal. This means that the concentrations of the reactants and products remain constant over time.
