Reading #46 Calendar Spread


I am referencing Schweser here (page 114 book 5)…

How is calendar spread supposed to be negative under a contango futures market? A calendar spread is the difference between the futures price of a more distant maturity and the futures prices of a nearer maturity {futures price(t+1) - futures price(t)}, and in a contango maket {futures price(t+1) > futures price(t)}.

I appreciate any thoughts. Thanks

Is Schweser talking about it from the short position or the long position?

There are no details about that. I assume they are referring to a long position.

I checked BB #11 on page 208 of the curriculum, and it states that the spread is the difference between spot price and futures price; so in a contango state it makes sense to have a negative spread.

Schweser didn’t clarify that very well.

Thanks s2000 magician…