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What Is the “Basis Risk” Associated with Commodity Futures?

Basis risk is the risk that the price of the futures contract and the price of the underlying physical commodity (the spot price) do not converge at expiration, or that their price relationship changes unexpectedly over time. This is a major concern for hedgers who use futures to lock in a price, as an adverse change in the basis can undermine the effectiveness of their hedge.

Define ‘Basis Risk’ in the Context of Futures Arbitrage
How Does the ‘Basis’ Relate to the Potential Impact of Settlement?
What Is Basis Risk in the Context of Hedging with Futures?
What Is the Term for the Failure of Spot and Futures Prices to Converge at Expiration?