Answer: positive and the investor will need to buy fewer contracts to maintain the same exposure.

## Explanation **Backwardation** occurs when futures prices are lower than spot prices, creating a downward-sloping forward curve. **Roll return in backwardation:** - For a long position, you sell the expiring contract at a higher price - You buy the new contract at a lower price - This creates a **positive roll return** because you're "selling high and buying low" **Contract adjustment in backwardation:** - Since you're rolling from more expensive contracts to cheaper contracts - You need **fewer contracts** to maintain the same dollar exposure - Cheaper contracts mean each contract represents less value, so you need more of them Therefore, the correct answer is **C: positive and the investor will need to buy fewer contracts to maintain the same exposure**.

Author: LeetQuiz Editorial Team