Webbthe theory of normal backwardation (cantango). This is in the same logic as measuring normal backwardation as the sum of the return on the total long open interest when … http://depot.som.yale.edu/icf/papers/fileuploads/2704/original/Yale_ICF_Working_Paper_No06-12_Geert_final.pdf
Backwardation: Definition, Causes, and Example - Investopedia
WebbThis explains normal backwardation and normal contango. Speculators will require a return for the risk that the hedgers pass onto them and the hedgers will be willing to pay a cost to transfer the risk. Therefore the futures price will be lower than the expected spot price at expiration, to compensate speculators for the risk of buying. WebbNormal Backwardation Theory. In Keynesian economics, a theory stating that the future spot price for a commodity will be higher than the forward price. This is because the producers of commodities expect to sell no matter what, and are willing to sell at a loss, if necessary. In normal backwardation, no rational investor will buy on the future ... mehmed hasanbegovic
The Keynes-Hicks theory of normal backwardation - 1library
WebbKeywords: normal backwardation; Cantango; forecasting; hedging; futures markets INTRODUCTION There are two seemingly opposing theories proposed to explain the returns of traders in futures markets. The ‘theory of normal backwardation’ (or its counterpart, ‘contango’) views speculative returns as directly linked to the bearing of risk. WebbThis theory is known as forecasting theory and its advocates argue that there would be no clear price movement trend in futures markets and that the proportion of profits relative to contango or normal backwardation would be zero (Lee & … Webb21 apr. 2024 · Normal Backwardation & Financialization November 9, 2024 20 hedge funds and other capital managers investing in commodity futures, using quantitative 21 computer models, began after Gordon Rausser's pioneering work with Cargill, see Cargill 22 and Rausser (1972, 1975). Cargill and Rausser studied the stochastic behavior of futures 23 … mehmed cosic