Answer: B they have a positive calendar spread.

## Explanation When futures contracts are in contango: - **They have a positive calendar spread** - This is correct because contango means longer-term futures prices are higher than near-term futures prices, creating a positive calendar spread - **Their value tends to erode over time** - While this can happen as futures prices converge to spot prices, it's not the definition of contango - **They must be settled by physical delivery** - Settlement method is unrelated to whether markets are in contango or backwardation Contango specifically refers to a market condition where futures prices are higher than spot prices, and longer-term contracts trade at higher prices than near-term contracts.

Author: LeetQuiz Editorial Team