Historically, the mode of trade has been developing continuously. At first, it was a spot transaction of primary money and primary goods. Later, under the premise of the establishment of the credit system, forward spot trading appeared, and 1870 began cotton futures trading. At present, there is no futures market and spot market in the United States, which we often say in academic circles. The actual situation is that the price formed by the futures exchange is the benchmark price of spot circulation, which is just a logistics system. Due to the differences in origin and quality, both parties need to talk about a premium of futures price when trading spot, namely:

Transaction price = futures price+premium.

In other words, futures market and spot market are just a distinguishing concept in academic research. In practice, they are a whole market. Only when futures pricing and spot logistics play an organic role can the market mechanism operate normally.

In addition, futures prices are also divided into near and far month contracts. If the price of the far-month futures contract is higher than that of the near-month contract, the far-month premium of the near-month contract will increase. On the other hand, the distant moon is close to the recent month. From another angle, that is, from recent months to distant months, the same is true.

Therefore, after understanding this relationship, we can generally look at premium and discount in this way: A is the standard, and B is relative. If its value (usually expressed as price) is higher, it is a premium, and vice versa.

For example, the delivery standard of fuel oil specified by Shanghai Futures Exchange is 180CST high-sulfur fuel oil. If the seller's enterprise does not have this standard fuel oil for the time being, it will be replaced with a higher standard imported low-sulfur fuel oil 180, which is a premium compared with the former; If the previous system allows other lower-grade fuels to be transported, it is a discount compared with the standard.