Going short the basis is just the opposite of going long the basis, or buying the basis. It involves selling or shorting cash bonds and purchasing a number of futures contracts equal to the bond’s conversion factor for every $100,000 par value of the instrument. In other words, selling the basis refers to the difference between the gain of a short cash position and the cost of the futures contracts bought to hedge that position.
An investor selling the basis attempts to make profit from a widening of the basis. For example, an investor selling $50 million of the basis (with a conversion factor of 1.0733) is said to be selling a $50 million par amount of a bond and buying bond futures in the tune of $50 million x (1.0733 / 100,000), or 5366.65.
