when the market is in backwardation the future price of an asset is below the expected cash or spot price in this case an investor profits when the position is rolled to the contract with a later expiration date because the investor is effectively paying less money than expected by the spot market for the underlying asset that the futures investment represents 
for example imagine that an investor holds 100 crude oil contracts and wants to buy 100 again for expiration at a later date if the contract s future price is below the spot price the investor is actually rolling into the same quantity of an asset for a lower price negative roll yield occurs when a market is in contango which is the opposite of backwardation when a market is in contango the future price of the asset is above the expected future spot price and so the investor will lose money when rolling contracts returning to the example of an investor with 100 oil contracts if the investor wants to roll into 100 oil contracts with a later expiration date as the contract nears expiration the investor will pay more money for the oil contracts compared to the spot market they would therefore have to pay more money to maintain the same number of contracts negative roll yields have sometimes led to significant losses by hedge funds and exchange traded funds that hold futures 