Cost of carry explorer
A future is just the spot price carried forward to maturity. Interest and storage push it up; a convenience or dividend yield pulls it down. Compounding the net carry more often nudges the price up toward the continuous limit.
Compounding frequency — F at 0.5y
Contango. F sits 2.53 above spot — positive net carry means it costs more to hold the asset than the yield it throws off.
Spot S100.00
Fair futures price F (continuous)102.53
Carry components (price impact over 0.5y)
Interest carry (raises F)+2.53
Storage cost (raises F)+0.00
Convenience / dividend (lowers F)+0.00
Net carry+2.53
Spot S100.00
Risk-free rate r5%
Time to maturity T0.5y
Storage cost u0%
Convenience / dividend y0%
F = S · e^((r + u − y)·T)As the compounding frequency rises, the discrete price climbs toward the continuous limit. Raise r or T to see the four curves fan apart. Storage (u) and convenience/dividend (y) are modelled as yields added to r for teaching simplicity, not as separate cash flows.