Question

Both VIX and SPY futures are contango. Do you agree? Please use at least two different reasonings to prove your answers.

Answer 1

Bahut VIX futures and SPY futures are not always contango because sometimes the futures are also trading at a discount to the spot price ,sometimes spotis also trading at the discount to future price.

Contango is a situation in which the spot prices treading lower than that of future price. That means that the spot price at trading at a discount to the future price. But it is not always the case in SPY future and VIX Futures.

So the given statement is false.

This is because of extreme emotional reaction to either of the side because if we are in a bear market, the spot will always be trading at a premium to future because of extreme pessimism. This can also lead because of readjustment of different contracts.