# Basis Spread ### What is a basis trade? A basis trade is a trade in which the trader simultaneously purchases (sells) an asset and sells (buys) the futures contract for that asset. Since spot and futures are traded separately, their prices are not guaranteed to be the same at all times. In fact, their prices often diverge and this differential is known as the "basis". As the future approaches expiration, its price often trends towards the underlying spot price. At expiration, futures contracts require the trader long the contract to purchase the underlying asset at the contract’s predetermined price, guaranteeing that at the futures contract expiry. Therefore, as the futures expiration draws nearer, the basis should approach 0. If for example, the futures contract is trading at a premium to the underlying spot price, a trader can short this future against the underlying and as the future converges to the spot price at expiration they will collect this difference in basis. Fixed expiry futures will provide a fixed interest rate on this basis trade. **Example** For instance, as of January 2025, the price for the **BTC/USD** spot was $103,337 whereas the price for the BTC March 28th expiry futures, has a price of $103,401. We define the basis as being the difference between the spot price and the futures price. The basis has a value of $103,401 - $103,337 = $64. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.ethena.fi/solution-overview/underlying-derivatives/basis-spread.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.