Updated 2026-07-25
Basis is the difference between a derivative's price and the spot price of the same asset, usually quoted as a percentage and often annualised for dated futures. A positive basis means the future trades above spot; a negative basis means below. On perpetuals the same premium or discount shows up continuously through the funding rate.
Basis is one of the cleanest positioning reads available, because it prices the demand for leveraged long exposure directly. Wide positive basis means traders are paying up for leverage. Basis compressing or flipping negative means that demand has drained or reversed. It is also the foundation of the cash-and-carry trade, where a trader is long spot and short the future to collect the spread as the two converge. Full guide: basis trade explained.