Contango, Backwardation & Roll Yield
Why a futures price differs from today's spot, what the shape of the futures curve tells you, and how rolling contracts quietly adds or subtracts return.
Every futures contract has an expiry, so for any commodity there is not one price but a whole curve of prices — the September contract, the October contract, the December contract, and so on. The shape of that curve has a name, it carries information, and it quietly feeds money into or out of any position you hold for more than one contract month. Understanding it is what separates a trader who knows why their oil position is bleeding from one who is merely surprised.
The two shapes of the curve
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