#SpotVSFuturesStrategy

A Spot vs. Futures strategy leverages the differences between an asset's current market price (spot) and its price for future delivery (futures). Traders employ this for hedging or speculation.

For hedging, a producer might sell futures contracts to lock in a price for their future output, protecting against price drops. Conversely, a consumer might buy futures to secure a future purchase price.

For speculation, traders exploit price discrepancies. If futures are significantly higher than spot (contango) and expected to converge, one might short futures and long spot. If spot is higher (backwardation), they might long futures and short spot. This strategy utilizes market expectations and convergence for profit.