Going long the basis, or more specifically the purchase of a cash-market investment instrument such as cash bonds or index futures and the sale of a number of futures equal to the bond’s conversion factor for every $100,000 par value of the instrument. In other words, the cash-and-carry trade refers to the difference between the cost of a cash position and the futures contracts sold to hedge that position. An investor following such a strategy attempts to make profit from a narrowing of the basis.

For example, an investor buying $50 million of the basis (with a conversion factor of 1.0733) is said to be buying a $50 million par amount of a bond and selling bond futures in the tune of $50 million x (1.0733 / 100,000), or 5366.65.

This type of trade is also called buying the basis.