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Basis Trade
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(1) A portfolio or basket trade in which the price for the position is determined by a spread against the price of an exchange-traded derivative, usually a futures contract. See Exchange of Futures for Physicals (EFP). (2) An arbitrage-type transaction which attempts to profit from changes in the relative prices of derivative and underlying instruments. Also called Relationship Trade. (3) A cash and carry trade or its reverse. See Cash-and-Carry Trade.
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