First of all, the basis change in hedging is expressed by strength, not expansion and contraction. The names of expansion and contraction seem to appear in arbitrage, where they are called spreads.

Second, the basis difference is positive and the value is getting bigger and bigger, or it changes from negative value to positive value, or negative value and the absolute value is getting smaller and smaller. These three situations are that the foundation is getting stronger and stronger; The cardinality is positive and the value is getting smaller and smaller, or from positive value to negative value, or negative value and the absolute value is getting bigger and bigger. These three situations are weak foundations.

Third, the basis change can be summarized as follows: the basis in the forward market and the reverse market is strong, and the basis in the forward market and the reverse market is weak, from the forward market to the reverse market, from the reverse market to the forward market. Looking at the above three points again, we will understand that the expansion (strengthening) of the foundation is not an absolute increase.

Extended data:

The basis is calculated by subtracting the futures price from the spot price. Spot price is lower than futures price, basis is negative, spot price is higher than futures price, basis is positive. The smaller the negative value of basis, the stronger the basis and the weaker the basis; Similarly, the smaller the positive basis, the weaker the explanation and the stronger the explanation.

The futures difference consists of two parts, namely, the "time and space" that separates the markets, and the basis difference includes the delivery cost and holding cost between the two markets.

For example, if you are in a corn producing area in Kansas City, the spot price of corn will be lower than that of Chicago because transportation cost is not considered, and the difference lies in transportation cost.

Baidu Encyclopedia-Stock Index Futures Basis