Define the sign first
Basis can be written under different sign conventions. In this article, basis equals spot price minus futures price. The CFTC glossary states this convention explicitly.[36](#source-cm-hedge) If spot is 100 and the futures price is 104, the basis is −4. If another author defines it as futures minus spot, the same prices produce +4. Conclusions cannot be compared without the definition. The sign is part of the descriptive language, not an independent measure of whether a contract is attractive.
In a simplified model, the spot asset is worth 100, six months remain, and financing at a simple annual rate of 8% creates a carrying cost of 4. The educational futures price is therefore 104. We exclude income from the asset, storage, insurance, trading restrictions and all other costs. This is not a universal formula for every future. If the asset pays income or has a special benefit of ownership, the relationship changes. For a cash-settled contract, the settlement index and its methodology also matter, not just a similar name for the underlying asset.
Contract and observation time
MOEX distinguishes physically delivered and cash-settled futures and explains that a participant does not simply pay the full value of the underlying asset when opening a position.[23](#source-cm-futures) Therefore, comparing the “futures price” with the cost of buying the physical asset requires the units and contract size to be specified. One hundred quote units may correspond to a very different monetary obligation. A percentage difference cannot be calculated until price, quantity and the conversion into money use the same basis.
With new hypothetical prices of spot 108 and futures 109, the basis under our convention is −1. It has changed by three units even though both prices rose. A change in basis and the direction of the underlying are separate quantities. That is why even economically opposite positions can leave residual risk. This example compares two stated snapshots and does not forecast further convergence. Explaining an actual difference requires the remaining term, payments, delivery conditions and the state of each market.
The futures curve is not a row of forecasts
Contracts with different maturities may have different prices. Contango and backwardation describe the shape of that term structure under the stated convention. The CFTC separately describes the maturity pattern and carrying costs, including storage, insurance and interest.[26](#source-cm-curve) This does not mean that every point is an unbiased prediction of a future spot price. Financing, risk premia and constraints lie between the observations. Do not read a higher distant price as a guaranteed rise in the underlying by that date.
To check a chart, write down the contract, month, size, quote, settlement method and a spot reference observed at the same time. Comparing different grades of a commodity, currencies or delivery locations adds further differences. [Introduction to futures and options](/guides/futures-and-options/) gives context for obligations, [identifiers](/guides/issuer-and-security-identifiers/) help verify the object, and [charts](/guides/chart-literacy/) address comparability. This material gives no basis trading signal, promise that the basis will reach a chosen level, or proposal to use the difference as risk-free income.
Boundary with spread analysis
This material examines one spot-and-forward-contract relationship and the general shape of maturities. It does not calculate the result of a calendar, intermarket or processing multi-leg position. That would require separate quantities for each leg, units, dates, costs and margin conditions. Merely mentioning contango does not cover those additional obligations.
Also check whether the same object and observation time are really being compared. If the spot price concerns another location or quality, the residual difference may have its own economics. If one market is already closed while another remains open, the price snapshot is not synchronized. The calculated sign therefore proves nothing by itself about immediate arbitrage. This check limits the conclusion to the stated inputs and does not turn historical convergence into a promise of repetition.