Futures curve
Definition · Level 7 · Futures & commodities
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A commodity’s futures prices lined up by expiry, from the nearest to the furthest. Its slope shows whether later contracts cost more (contango) or less (backwardation).
Example
CL1 70.00, CL2 70.60, CL3 71.15: the row slopes upward.
Where Tradecraft teaches it
Level 7 · Futures & commodities, in the lesson “The futures curve: contango & backwardation”: The front month and the roll, contango against backwardation, spot, basis and convergence, and what a roll costs.
Related terms
- BackwardationCurve shape where later-dated futures trade below nearer ones.
- BasisThe gap between the spot (cash) price and a futures price, usually spot − futures.
- ContangoCurve shape where later-dated futures trade above nearer ones (and above spot), typically reflecting carrying costs such as financing and storage.
- Front monthThe nearest-expiring futures contract that is actively traded: usually the most liquid, and the one a screen means by “crude” or “ES”.
- Futures rollClosing an expiring futures position and opening the same position in a later expiry, usually as one calendar-spread trade, to keep exposure past…
- Roll yieldThe gain or loss from rolling a futures position when the curve is not flat: negative in contango (you buy the dearer later contract), positive in…