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What if the futures immediately start trading in contango

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Part a - We have an interesting series of forward contracts that are equal to the spot price of 100 for all forward maturities from 1 month through 1 year. If the spot price is positively correlated with interest rates, are 3-month futures prices above or below or equal to 100? Are 3 month futures prices greater than, less than or equal to 6 month futures prices?

Part b - RBOB Gasoline futures are currently trading at the following: August 2021= 1.96, October 2021= 1.80. To take advantage of backwardation which contract do we buy and which contract do we sell? What if the futures immediately start trading in contango, do we win or lose immediately?

Reference no: EM133070570

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