An arbitrage strategy usually consisting of the purchase of a particular security and the sale of a similar security (often the purchase of a security and the sale of a corresponding futures contract). Basis trading is done when the investor feels that the two securities are mispriced with respect to each other, and that the mispricing will correct itself such that the gain on one side of the trade will more than cancel out the loss on the other side of the trade. In the case of such a trade taking place on a security and the futures contract, the trade will be profitable if the purchase price plus the cost of carry is less than the futures price. also called cash and carry trade.
Related information about basis trading:
- Basis trading - Wikipedia, the free encyclopedia
Basis trading is a financial trading strategy which consists of the purchase of a particular financial instrument or commodity and the sale of its related derivative ...
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Definition of basis trading: An arbitrage strategy usually consisting of the purchase of a particular security and the sale of a similar security (often the purchase of ...
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Basis trading relates to a trading strategy in which a trader believes that two similar securities are mispriced relative to each other, and the trader will take ...
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A form of arbitrage in which one buys an investment vehicle while selling or selling short a similar investment vehicle. For example, one may buy a stock while ...
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Jun 5, 2011 ... A bond basis trade is the simultaneous purchase and sale of a bond and a bond futures contract to capture a non-zero basis as profit. It is also ...
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Basis Trading. Exhibit 3.1. Basis Trading n Things that affect the basis n Trade construction n P/L profiles for long and short basis positions n Types of basis ...
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The University of Arkansas Global Campus, The University of Arkansas Department of Agricultural Economics and Agribusiness, and White Commercial ...
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