Trading Basics
Contango
This is when the futures price of a security is above the cash price at maturity. The opposite is backwardation.
Other Trading Basics
Backwardation
Backwardation occurs when a bid price exceeds the ask price.
This usually occurs when stock is suspended or under a share repurchase scheme.
It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.
The opposite of backwardation is known as contango.
Close A Position
When a trader places a trade to reduce their position to zero.
They are closing their position.
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