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.
BREAKING DOWN '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.