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.