How Does Contango Affect the Cost of a Long-Only Rolling Hedge? ⎊ Path

How Does Contango Affect the Cost of a Long-Only Rolling Hedge?

In a contango market, a long-only rolling hedge is generally more expensive to maintain. When the expiring long contract is rolled into a new, higher-priced contract, the hedger must pay the difference (the roll yield).

This repeated cost erodes the profitability or increases the overall cost of the hedge over time.

What Is the Impact of Market Volatility on Roll Risk?

What Is ‘Roll Yield’ and How Is It Calculated?

What Is the Difference in Objective between a Hedger and a Speculator?

How Do Contango and Backwardation Impact the Profitability of a Commodity ETF?

In a Backwardated Market, What Is the Risk for a Long-Term Investor Rolling Futures Contracts?

How Can an Individual Investor Identify the Roll Yield of a Specific Commodity ETF?

How Is the Holding Period Affected by Rolling over a Futures Contract?

Why Is a Contango Term Structure Beneficial for a Hedger with a Long-Term Position?

Glossar

Rolling Hedge

Mechanism ⎊ A rolling hedge, within cryptocurrency options and derivatives, represents a dynamic strategy of systematically closing and reopening option positions prior to their expiration to maintain a desired level of exposure.