Derivatives & Risk

What is basis trading and how does it work?

Basis trading is a strategy that profits from the price gap, or basis, between an asset's spot price and its futures price. A trader typically buys the asset in the spot market and sells an equivalent futures contract, capturing the spread as the two prices converge at expiry. For example, if Bitcoin trades at 60,000 spot and 62,000 in futures, the 2,000 basis is the target. It is often called cash-and-carry. The trade looks market-neutral but carries funding, execution, and counterparty risk, and is not without downside.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.