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How Does the Cost of Carry Influence the Basis?

The basis should theoretically equal the cost of carry; a difference signals market inefficiency or arbitrage.
Greeks.Live24.11.25

How Does the Cost of Carry Influence the Basis?

The cost of carry (storage, insurance, financing) is the theoretical driver of the basis in a contango market. The basis should theoretically equal the cost of carry.

If the actual basis is significantly different from the cost of carry, it indicates an arbitrage opportunity or a breakdown in the market's efficiency.

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