basis risk

Hi there, I have a question regarding basis change concept at BT P1.T3. reading (page 9): * When the spot price increases by more than the future price, the basis increases, ... for a short(long) hedge position, it is favorable (unfavorable) to the hedger, as the price received (paid) for the...

Hi David I have a few questions: Q1. Basis risk of a commodity = b= S0- F0 A farmer who, by taking short position in futures on his corn to hedge (his naturally long position) is benefited by which one from the 2 options below? 1. strengthening of the basis or weakening of the basis? 2. Flat...

Hi David, I am trying to relate the 2 concepts here and getting a little confused - So-Fo = Basis where; So<Fo = Weak Basis, Contango and model is Cash and Carry at time = 0 if So<Fo ex. 4 and 4.2 i.e basis = -0.2 weak basis here at time = t if St<Ft ex. 4.2 and 4.3 then basis = -0.1 weak...

Hi, I am little confused in below table on page 36 of Hull Notes. specially around red color part. if spot is 2.00 in sept -13, why would future price difference from spot assuming future expiry is also in sept. isn't it like corn is selling in market at spot at 2.00 and future is at 1.95 then...