# What Is "Contango" and What Does It Imply about the Basis? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## What Is “Contango” and What Does It Imply about the Basis?

Contango is a market condition where the futures price of a commodity or financial asset is higher than the expected spot price at a future date, or where the longer-dated futures contracts are priced progressively higher than the nearer-dated ones. In the context of the basis (Spot – Futures), contango implies a negative basis, as the Futures Price is higher than the Spot Price.

- [What Does a ‘Negative Basis’ Imply about the Futures Price Relative to the Spot Price?](https://learn.greeks.live/path/what-does-a-negative-basis-imply-about-the-futures-price-relative-to-the-spot-price/)

- [Define ‘Contango’ and ‘Backwardation’ in the Context of Crypto Futures Pricing](https://learn.greeks.live/path/define-contango-and-backwardation-in-the-context-of-crypto-futures-pricing/)

- [What Is the opposite of Contango?](https://learn.greeks.live/path/what-is-the-opposite-of-contango/)

- [What Does a Negative Basis (Discount) Imply for the Funding Rate?](https://learn.greeks.live/path/what-does-a-negative-basis-discount-imply-for-the-funding-rate/)

- [What Does a State of ‘Contango’ Imply about the Futures Market?](https://learn.greeks.live/path/what-does-a-state-of-contango-imply-about-the-futures-market/)

- [What Is a ‘Contango’ Vs. a ‘Backwardation’ Market Structure in Futures Trading?](https://learn.greeks.live/path/what-is-a-contango-vs-a-backwardation-market-structure-in-futures-trading/)

- [What Does a Consistently Negative Funding Rate Imply about Market Sentiment?](https://learn.greeks.live/path/what-does-a-consistently-negative-funding-rate-imply-about-market-sentiment/)

- [How Does the Cost of Carry Influence Whether a Futures Market Is in Contango or Backwardation?](https://learn.greeks.live/path/how-does-the-cost-of-carry-influence-whether-a-futures-market-is-in-contango-or-backwardation/)

## Glossar

### [Market Condition](https://learn.greeks.live/area/market-condition/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Volatility ⎊ Market condition is defined by several key factors, with volatility being a primary determinant of risk and opportunity.

### [Spot Price](https://learn.greeks.live/area/spot-price/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Valuation ⎊ The spot price in cryptocurrency, options, and derivatives represents the current market-clearing price for immediate delivery of the underlying asset, functioning as a fundamental benchmark for pricing more complex instruments.

### [Futures Price](https://learn.greeks.live/area/futures-price/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Valuation ⎊ Futures price, within cryptocurrency and derivative markets, represents a binding agreement to transact an asset at a predetermined future date and price, functioning as a standardized forward contract facilitated by an exchange.

### [Futures Contracts](https://learn.greeks.live/area/futures-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Mechanism ⎊ Futures contracts, within cryptocurrency and broader financial derivatives, represent standardized agreements obligating parties to transact an asset at a predetermined price on a specified future date; these instruments facilitate price discovery and risk transfer, extending beyond traditional commodities to encompass digital assets and complex financial indices.

### [Basis](https://learn.greeks.live/area/basis/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Foundation ⎊ The basis, within cryptocurrency derivatives, represents the differential between the spot price of an underlying asset and the price of its corresponding futures contract.

### [Contango](https://learn.greeks.live/area/contango/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Condition ⎊ Contango describes a derivatives market state where the futures price for an asset is trading at a premium relative to the current spot price, suggesting that the market anticipates higher prices in the future or that the cost of funding and storage is positive.

## Discover More

### [What Is 'Local Basis' and How Does It Differ from 'Inter-Market Basis'?](https://learn.greeks.live/path/what-is-local-basis-and-how-does-it-differ-from-inter-market-basis/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is 'Local Basis' and How Does It Differ from 'Inter-Market Basis'?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Bifurcation-of-Collateralized-Debt-Position-Instruments-Against-Black-Background.webp)

Local basis is futures-spot on one exchange; inter-market basis is futures-futures on two different exchanges.

### [How Does Contango Affect the Cost of a Long-Only Rolling Hedge?](https://learn.greeks.live/path/how-does-contango-affect-the-cost-of-a-long-only-rolling-hedge/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Contango Affect the Cost of a Long-Only Rolling Hedge?](https://learn.greeks.live/wp-content/uploads/2025/10/Algorithmic-Hedging-Dynamics-Visualized-Through-Concentric-Spreads-and-Collateral-Tranches.webp)

Contango increases the cost of a long-only roll because the hedger must pay the positive roll yield to enter the higher-priced new contract.

### [What Is "Contango" and How Does It Affect the Performance of a Futures-Based ETF?](https://learn.greeks.live/path/what-is-contango-and-how-does-it-affect-the-performance-of-a-futures-based-etf/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "Contango" and How Does It Affect the Performance of a Futures-Based ETF?](https://learn.greeks.live/wp-content/uploads/2025/10/Crossed-Metallic-Struts-Reflecting-Cyanic-Light-Illustrating-Synthetic-Asset-Hedging-Mechanisms.webp)

Contango is when futures prices are higher than the spot price. It causes a drag on ETF performance when rolling contracts.

### [How Does a Positive Basis Indicate Contango?](https://learn.greeks.live/path/how-does-a-positive-basis-indicate-contango/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Positive Basis Indicate Contango?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-Modeling-of-Intertwined-Hedging-Strategies-in-Decentralized-Finance-Primitives.webp)

Futures Price > Spot Price defines contango, which is a positive basis in the Futures - Spot calculation.

### [Can a Negative Funding Rate Persist for a Long Period, and What Does It Imply?](https://learn.greeks.live/path/can-a-negative-funding-rate-persist-for-a-long-period-and-what-does-it-imply/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Negative Funding Rate Persist for a Long Period, and What Does It Imply?](https://learn.greeks.live/wp-content/uploads/2025/10/Advanced-Mechanistic-Depiction-of-Cross-Chain-Atomic-Swap-Execution-Primitives-Underneath-Curve-Protocol-Structures.webp)

A long-lasting negative funding rate implies a sustained bearish sentiment, with shorts paying longs to keep the swap price low.

### [What Does a Strongly Negative Funding Rate Imply for a Futures Trader?](https://learn.greeks.live/path/what-does-a-strongly-negative-funding-rate-imply-for-a-futures-trader/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Does a Strongly Negative Funding Rate Imply for a Futures Trader?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Intersecting-Metallic-Blades-Representing-Decentralized-Finance-Protocol-Mechanism-Structure.webp)

Strong bearish sentiment; short sellers are dominant and pay a high fee to long holders.

### [Define 'Contango' and 'Backwardation' in Futures Pricing](https://learn.greeks.live/path/define-contango-and-backwardation-in-futures-pricing/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define 'Contango' and 'Backwardation' in Futures Pricing](https://learn.greeks.live/wp-content/uploads/2025/10/Microcosm-of-Layered-Hardware-Interfacing-for-High-Frequency-Digital-Asset-Option-Pricing-Mechanics.webp)

Contango: Futures price > Spot price. Backwardation: Futures price < Spot price.

### [Can a Positive Funding Rate Persist for a Long Period, and What Does That Imply?](https://learn.greeks.live/path/can-a-positive-funding-rate-persist-for-a-long-period-and-what-does-that-imply/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Positive Funding Rate Persist for a Long Period, and What Does That Imply?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Protocol-Mechanism-Assembly-Illustrating-Staking-Yield-Convergence-and-Volatility-Skew-Adjustment.webp)

Yes, it implies a sustained, strong imbalance favoring long positions, meaning continuous premium for futures and cost for longs.

### [Does Contango Imply an Expectation of Future Higher Volatility?](https://learn.greeks.live/path/does-contango-imply-an-expectation-of-future-higher-volatility/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does Contango Imply an Expectation of Future Higher Volatility?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-of-Volatility-Skew-and-Decentralized-Autonomous-Organization-Governance-Mechanisms.webp)

Not necessarily; it primarily reflects the Volatility Risk Premium (VRP) that options sellers demand for taking on long-term risk.

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**Original URL:** https://learn.greeks.live/learn/what-is-contango-and-what-does-it-imply-about-the-basis/
