Can someone explain to me in plain English what a contango is (as well as backwardation)? I have been surfing around the internet/wikipedia/whatever else and the explanations all leave me needing a bit more. Does anyone know it well enough to describe it to me so I understand? Thanks in advance!
Contango = near term prices are lower than long(er) term prices. Upward progression: Jan @ 100, Feb @ 105, Mar @ 110. Backwardation = near term prices are higher than long(er) term prices. Downward progression: Jan @ 110, Feb @ 105, Mar @ 100.