At What Point in Time Should the Basis Theoretically Be Zero for a Physically Settled Contract? ⎊ Path

At What Point in Time Should the Basis Theoretically Be Zero for a Physically Settled Contract?

The basis should theoretically be zero at the moment of expiration, specifically at the close of the last trading day. At this point, the futures price must converge with the spot price of the underlying asset at the designated delivery point, eliminating the basis difference before the delivery process begins.

What Is the Difference between a Physically Settled and a Cash-Settled Futures Contract?

Explain the Concept of ‘Basis’ in Futures Trading

What Are the Key Differences in Settlement Price Calculation between Physically-Settled and Cash-Settled Futures?

How Does the Basis Change as the Futures Contract Approaches Expiration?

What Is the Ideal “Basis” for a Futures Contract at Expiry?

How Does the Basis Typically Behave as a Futures Contract Approaches Expiration?

How Does the ‘Basis’ Relate to the Price Difference between a Futures Contract and the Spot Price?

What Is the Difference between Cash-Settled and Physically-Settled Futures Contracts?

Glossar

Physically Settled

Settlement ⎊ Physically settled derivatives contracts require the actual transfer of the underlying asset from the short position holder to the long position holder at maturity.