Basis Grade

DEFINITION of 'Basis Grade'

The minimum accepted standard that a deliverable commodity must meet to be used as the actual of a futures contract. Also known as "par grade" or "contract grade."

BREAKING DOWN 'Basis Grade'

Basis grade is important for futures investors for maintaining uniformity, since a given commodity (e.g. oil) may vary drastically in quality. For example, the basis grade of crude futures contracts is set according to certain levels of hydrogen and sulfur in crude oil.

RELATED TERMS
  1. Deliverable Grades

    The deliverable grade specifies the minimum quality of the commodity ...
  2. Differential

    The amount of adjustment of the delivery location and grade of ...
  3. Grading Certificate

    A document issued by inspectors or an approved grading panel ...
  4. A-Credit

    The highest credit grade available as assigned to a borrower ...
  5. In Sight

    A term describing deliverable grades of commodities underlying ...
  6. Allowances

    A deviation from the basis grade or location allowable when delivering ...
Related Articles
  1. Investing

    What does Investment Grade Mean?

    Investment grade is a term used to describe a favorable rating for corporate and municipal bonds.
  2. Markets

    What are Commodities?

    A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commonly traded commodities include gold, beef, oil, lumber and natural gas. Additional ...
  3. Investing Basics

    Explaining Bond Ratings

    A bond rating is a grade given to a bond to indicate its creditworthiness.
  4. Investing Basics

    Investing in Crude Oil Futures: The Risks and Rewards

    Learn about the risks and rewards of trading oil futures contracts. Read about a few strategies to limit the risk in trading oil futures contracts.
  5. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  6. Forex Education

    Scoring Fund Analytical Commentary

    By Richard Loth (Contact | Biography)This is the entry we need to complete in the Fund Investment-Quality Scorecard for an analysis of a mutual fund's analytical commentary: ...
  7. Markets

    Crude Oil Prices: Comparing Future Price Vs. Current Market Price

    Discover the differences between oil futures market prices and oil spot market prices and what leads to the differences between the two.
  8. Bonds & Fixed Income

    Four Ways to Increase Your Corporate Bond Exposure

    Looking at the corporate bond market over the past few years, we see that there has been a growing demand for both investment grade and high yield corporate bonds.
  9. Investing Basics

    How To Invest In Commodities

    Find out which futures, options or funds will be your perfect commodity portfolio fit.
  10. Options & Futures

    All About Liquid Commodities

    You might hear 'liquid commodities' and think of an auction, but they're actually a high-volume, fast paced financial product suitable for day traders.
RELATED FAQS
  1. Which securities are considered investment grade?

    Learn which securities are considered investment grade by credit rating agencies such as Standard & Poors and Moody's and ... Read Answer >>
  2. How can I tell if a security is considered investment grade?

    Understand how Standard & Poor's and Moody's rates securities. Learn what types of ratings types go into evaluating the investment ... Read Answer >>
  3. What does the grade of a gold mine refer to?

    Discover how gold mines are graded, how the World Gold Council defines a high-grade gold mine and where the highest graded ... Read Answer >>
  4. What does investment grade mean?

    Credit ratings provide a useful measure for comparing fixed-income securities, such as bonds, bills and notes. Most companies ... Read Answer >>
  5. What are the highest-yielding investment grade bonds?

    Learn how Standard & Poor's and Moody's rate bonds. Understand what investment grade bonds offer the best yield. Read Answer >>
  6. How are junk bonds rated differently by Standard & Poor's and Moody's?

    Learn how credit rating agencies rate bonds with junk bond status, and understand how downgrade risk can impact the price ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center