Short The Basis

Short The Basis
A futures strategy involving the purchase of a futures position to hedge against a future commitment to deliver the underlying commodity.

Opposite to a short hedge, shorting the basis implies that the investor will be taking a short position in the commodity and a long position in the futures contract. This strategy is used to hedge a position by locking in a future spot or cash price and thereby removing the uncertainty of rising prices.


Investment dictionary. . 2012.

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