The difference between the spot price of a commodity to be hedged and its futures price in the futures contract used for that purpose. For example, a basis spread may exist between the oil spot price (under certain contract specifications: grade, location, etc.) and the corresponding futures price for an oil futures contract.

Basis spread may also refer to the difference in the market value of a commodity (e.g., natural gas) at two different physical locations at the same point in time. It may also mean the difference in the value of an underlying commodity between different physical locations and/ or different points in time. Basis spread (or simply, basis) is most often traded by means of swaps (commodity swaps). The basis spread between two different points in time (or physical locations) can be captured by swapping the price of a commodity at one location for the price at a different location.

Basis spread is also known as a basis differential.