Derivatives
Basis
Definition
What is Basis?
The difference between a spot priceThe current market price for immediate or near-immediate delivery of an asset. and a related futures price, or between two closely related prices.
Example in practice
How This Looks in Practice
The cash grain price differs from the futures contractA standardised exchange-traded agreement to buy or sell an underlying asset at a future date. by the local basis.
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Related Terms
Derivatives
Derivative
A contract whose value depends on an underlying asset, rate, index, or event.
DerivativesUnderlying Asset
The asset, rate, index, or reference on which a derivative's value is based.
DerivativesNotional Amount
The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.
Derivatives StrategiesCovered Call
A strategy that owns the underlying asset and sells call options against it.