CNBC Explains: Commodities
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Yield curves help investors understand the relationship between bonds of differing time horizons to maturity. CNBC explains.
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Unlike forward contracts, commodity futures can be bought and sold on the open market. Salman Khan of the Khan Academy explains the mechanics of futures contracts.
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Futures curves are important for companies to understand trading commodities on the open market. Salman Khan of the Khan Academy explains.
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Margin accounts are a big part of buying and selling futures contracts, which allow buyers and sellers to protect themselves against price volatility. Salman Khan of the Khan Academy demonstrates the reasons for the existence of margin accounts for futures contracts.
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Do margin contracts really defend market participants from commodity price volatility? Salman Khan of the Khan Academy verifies the math. Then he explains how these contracts work in practice.
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Arbitrage is a way to make risk-free profits by taking advantage of a market’s price differences. Salman Khan of the Khan Academy shows two examples of using arbitrage in futures contracts, and he identifies important information you should know if you try this type of transaction.
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Contango may seem daunting to those new to investing or unfamiliar with futures contracts, but it doesn’t have to be. Salman Khan of the Khan Academy illustrates.
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When you see a futures curve trending downward, it’s possible you’re observing a market in backwardation. The inverse of contango, backwardation occurs when the futures price for a given date falls below the expected value