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Basis trading

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Basis trading
To Basis trade is to deal simultaneously in a Derivative contract, normally a Future, and the Underlying asset. The purpose of such a trade  is either to cover derivatives sold, or to attempt an Arbitrage strategy. This Arbitrage can either take advantage of an existing mispricing (in Cash-and-carry arbitrage) or be based on speculation that the Basis Will change.

See also Cash-and-carry arbitrage
Posted by  Privatebanking.com
 
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