Backwardation / contango

CFA Level I Glossary

These describe the shape of a futures curve relative to expected future spot. Contango means futures prices sit above the expected future spot, so the curve often slopes upward. Backwardation means futures sit below expected future spot, so the curve often slopes downward. Drivers include storage costs, convenience yield, and risk premia, not simply “the market expects prices to rise.” Candidates often treat contango as a pure bullish forecast, which is incomplete.

Sign up free — get all 175 CFA Level I terms, flashcards & rank tracking →

More CFA Level I terms

KomFi: Test Prep Made Easy

KomFi: Test Prep Made Easy — free adaptive practice for GMAT, GRE, SAT, ACT, National Real Estate Exam, Investment Banking, and finance with full explanations.

KomFi Academy is free GMAT prep and personalized GMAT help built as a training platform: 77,980+ practice questions, 26,500+ flashcards, on-demand video lectures, podcasts, and 4K slide decks. Flagship tracks: Free GMAT Prep, Free GMAT Resources, National Real Estate Exam Prep, Investment Banking Prep, Finance Prep, GRE, SAT, ACT, LSAT, MCAT, Financial Accounting, Private Equity, Private Credit, and Quantitative Finance.

Free GMAT Prep & Personalized GMAT Help

What's inside

Topics

View pricing · Read testimonials