Short The Basis

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Dictionary Says

Definition of 'Short The Basis'


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

Investopedia Says

Investopedia explains 'Short The Basis'


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.

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