Glossary

Long the Basis

See Also:

Basis: Basis is the difference between the current cash price of a commodity and the futures price of the same commodity. In more details, the Basis is the difference between the spot or cash price of a commodity and the price of the nearest futures contract for the same or a related commodity. Basis is usually computed in relation to the futures contract next to expire and may reflect different time periods, product forms, grades, or locations.

Long: Long Futures trader is a trader who has bought futures contracts or options on futures contracts or owns a cash commodity. Long position (long trading) is opposite to Short position (Short trading).

Commodity: A commodity, as defined in the Commodity Exchange Act, includes the agricultural commodities enumerated in Section 1a(4) of the Commodity Exchange Act, 7 USC 1a(4), and all other goods and articles, except onions as provided in Public Law 85-839 (7 USC 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.

Futures: Futures (also called Futures Contract) is a legally binding agreement to buy or sell a commodity or financial instrument at a later date. Futures contracts are normally standardized according to the quality, quantity, delivery time and location for each commodity, with price as the only variable.

Spot: Spot usually refers to a cash market for a physical commodity where the parties generally expect immediate delivery of the actual commodity.

Spot Commodity: Spot Commodity is the actual commodity as distinguished from a futures contract. In some cases, the "Spot Commodity" term is used to refer to cash commodities available for immediate delivery.

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