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Which of the following statements is an example of Contango? More than one answer is possible....

Which of the following statements is an example of Contango? More than one answer is possible.

A) The current futures price of oil for delivery in six months is $60/barrel. The current spot price of oil is $50/barrel.

B) The current futures price of oil for delivery in six months is $60/barrel. The current spot price of oil is $70/barrel.

C) As the expiration date of a future contract on gold approaches, the future price decreases, but the spot price remains the same.

D) As the expiration date of a future contract on gold approaches, the future price increases, but the spot price remains the same.

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Answer #1

Contango: Futures price > Spot Price

Option A and Option D are examples of Contango.

A) The current futures price of oil for delivery in six months is $60/barrel. The current spot price of oil is $50/barrel.

D) As the expiration date of a futures contract on gold approaches, the future price increases, but the spot price remains the same.

In each of the above cases, Futures price > Spot Price. So, they are in Contango.

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