Selected normal,.... -> normal market and contango have the same meaning. So does inverted market and backwardation.
Append - Please ignore my earlier note w.r.t,...normal / contango & inverted / backwardation meaning the same.
Normal / Inverted are terms use to describe a futures price curve which is an increasing / decreasing function of time to maturity.
Contango / backwardation are terms used to describe the futures price drift towards the spot price as you approach maturity.
Hi David, can you explain with reference to this?I've not sat for the exam but Ive always thought normal=contango
In the BT hull notes it writes (pg 23)
If the forward price is higher than the spot price (or the distant forward price is higher than the near forward price) the Futures curve is said to be normal, or in Contango.
If the forward price is less than the spot price (or the distant forward price is less than the near forward price), the Futures curve is said to be inverted, or in Backwardation