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Define the Term “Basis” in the Context of Futures Trading

The difference between the futures contract price and the spot price of the underlying asset.
Greeks.Live22.11.25

Define the Term “Basis” in the Context of Futures Trading.

Basis is the difference between the price of a futures contract and the spot price of the underlying asset. It is calculated as: Basis = Futures Price – Spot Price.

The basis can be positive (contango) or negative (backwardation) and reflects factors like the cost of carry, supply and demand dynamics, and market expectations.

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