Difference between futures and spot: Basis = F_t - S_t. Under cost-of-carry: F_t = S_t · e^(r - q)(T-t), so basis reflects financing minus dividend/convenience yield. Positive basis (contango) is the normal commodity regime when storage costs dominate; negative basis (backwardation) signals scarcity or a high convenience yield. As t to T basis converges to zero by no-arbitrage; the convergence trade is the canonical basis arbitrage. In fixed-income, 'basis' more often means the asset-swap spread or the cash-CDS basis.