Basis

From Reuters Financial Glossary

The difference between futures prices and the corresponding underlying cash price. Basis is normally quoted as cash price deducted from futures price of the nearest delivery month. There is a high degree of correlation between cash and futures prices but the basis is not constant. A basis trade exploits the expected movements in basis. Basis is likely to reduce and eventually to shrink to nothing as the futures contract approaches its expiry date.

See also: Backwardation, Contango