Understanding Basis Trading on Cboe Digital

June 4, 2023

Trading the basis is a well-known trading strategy requiring a spot and U.S. regulated futures market. Conveniently, Cboe Digital offers a unique solution by combining both markets into a single, innovative platform. 

At its core, basis trading employs an arbitrage approach to capitalize on pricing discrepancies between the spot and futures markets of the same commodity. This difference in pricing is known as the basis. 

To illustrate this concept without providing specific investment advice, let's consider an example. Suppose a trader was able to buy Ether at a spot price of $395 and subsequently sells an equivalent amount of futures contracts at $398. By doing so, they could lock in a price differential with a profitable $3 basis per contract. It is important to note that, like any trading strategy, there is also a risk of incurring losses if a positive price differential cannot be achieved. 

Cboe Digital’s spot market currently offers trading in Bitcoin, Bitcoin Cash, Ether, Litecoin and USDC. Additionally, the platform's futures exchange is preparing to launch physically delivered and cash settled contracts for both Bitcoin and Ether. While cash-settled contracts offer a secure entry point into the digital asset space, Cboe Digital recognizes how physically delivered contracts help mitigate the potential risk of slippage. In cash-settled products, the spot price may fluctuate between the settlement and delivery phases, potentially resulting in slippage. 

In summary, Cboe Digital is a unified platform for spot and regulated futures trading of digital assets. The platform provides traders with essential features such as price transparency, collateral efficiencies and a multitude of opportunities to express a view on the market, including the option to engage in basis trading. Cboe Digital is deeply committed to building on our trusted capital markets expertise, working closely with institutional investors who prioritize market centers that are well-regulated, fair and professionally operated.  

Learn more about Cboe Digital at www.cboedigital.com.  



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  • These products involve the risk of loss, which can be substantial and, depending on the type of product, can exceed the amount of money deposited in establishing the position. 
  • Market participants should put at risk only funds that they can afford to lose without affecting their lifestyle. 
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