When a futures market is in contago, the calendar spread will be negative.
If the calendar spread is long term futures price - short term futures price of the same underlying asset, wouldn’t contango indicate that the calendar spread will be positive?
In a calendar spread you sell near term and buy further term , in a market of contango the further term prices will be higher than near so you will sell cheap and buy high, (Negative spread)
is this because you are rolling your futures into further and further maturities?
I havent seen calender spreads for futures. Usually, this is discussed among options. Also, you can do a long calender spread or a short calender spread. I suppose the same applies for a futures calender spread.
For a long spread, you take the credit premium on the short and pay a debit on the long, for a net debit. You home time decay in your favor and the short expires worthless.
Its in the alternative investments section.
Calendar spread = long term futures price - short term futures price
Are you discussing this from the viewpoint of the long or from the viewpoint of the short?