Trading glossary · practical definition
What is futures basis?
The difference between a futures price and its underlying spot price.
Futures basis in plain English
The difference between a futures price and its underlying spot price.
Basis can reflect financing, positioning, time to expiry and market stress.
Practical example
A quarterly future above spot trades at contango; below spot trades at backwardation.
Common mistake
Confusing basis with perpetual funding.
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