What does Basis mean?
A financial term used in trading to indicate cost associated with the physical transportation of a commodity from a trading hub to another point.
Futures Knowledge Explains Basis
Basis, in the natural gas market, is the difference in value between gas at one delivery point and gas at another location. In the U.S., Henry Hub is considered as the main trading hub for natural gas and basis is the contractual cost of delivering natural gas from Henry Hub to the other location.
In financial market, this term is also used for the differential between a spot price and the nearest equivalent futures price.