Contango is a situation where the futures price of a commodity is higher than the spot price.
In all futures market scenarios, futures prices tend to move closer to spot prices as contracts get closer to expiration.
Experienced traders can use arbitrage and other strategies to profit from contango.
Contango tends to cause losses for investors in commodity ETFs that use futures contracts, but these losses can be avoided by buying ETFs that hold real commodities.
Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined price and date in the future.
A horizontal spread is a simultaneous long and short position in derivatives for the same underlying asset and strike price, but with different expiration dates.
centner (abbreviated as CWT) is a standard unit of weight or mass used in some commodity markets. It can also be used to determine the price of small batches of goods.
Tick size - the minimum change in the price increment of a trading instrument.
– Tick sizes used to be in fractions (e.g. 1/16th of $1), but today they are mostly decimal based and expressed in cents.