Basis
Definition · Level 7 · Futures, rates & macro
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Gap between the spot (cash) price and a futures price, usually spot − futures. It converges toward zero as expiry approaches.
Example
Spot gold 3,000, Dec future 3,025 → −25.
Where Tradecraft teaches it
Level 7 · Futures, rates & macro, in the lesson “The futures curve & commodities”: Front month and rolling, contango vs backwardation, basis and convergence, cash-and-carry, WTI vs Brent, gold.
Related terms
- BackwardationCurve shape where later-dated futures trade below nearer ones.
- Cash-and-carryArbitrage when a future trades above fair value: buy the asset, finance (and store) it, sell the future, and hold to expiry.
- ContangoCurve shape where later-dated futures trade above nearer ones (and above spot), typically reflecting carry costs like financing and storage.
- Front monthThe nearest-expiring futures contract that is actively traded — usually the most liquid, and the one a screen means by “crude” or “ES”.
- Futures rollClosing an expiring futures position and reopening it in a later expiry, usually as one calendar-spread trade, to keep exposure past the front month…
- GoldPrecious metal quoted in dollars per troy ounce (XAU/USD).