The Structure of Futures Markets: Rapid Fire

What this video covers

• The normal market structure: why deferred months trade higher than nearby months due to carrying charges (storage, insurance, and financing), and why the cash price sits below futures
• Full carry: what it measures, why it acts as an arbitrage ceiling rather than a floor, and what happens when the distant month premium exceeds it
• The inverted market structure: why nearby months trade higher than deferred months, the sole drivers (near-term supply shortage or urgent demand), and why carrying charges cannot cause inversion
• Cash price positioning relative to futures in both structures, and how to derive it from the shape of the curve
• The interchangeable terminology groups: normal, carrying-charge, premium, and contango versus inverted, discount, and backwardation, and why treating any term from one group as different from the others is wrong
• The memory aid for normal versus inverted: nearby cheap means deferred sits on top in normal; immediate month on top means the ladder falls in inverted