The purchase of futures contracts as a hedge against a short position in futures or options whereby a trader is under obligation to sell, or take a short position in, a commodity or a financial instrument (e.g., bonds) underlying the futures in the spot markets. It is the position of the long hedger who stands, in a contango market, to benefit from a falling basis.

In other words, short the basis could also be defined as selling in the cash market and buying futures.

On expiration date, the basis will be zero, and the futures price would converge to the spot price.

It is also referred to as “selling the basis”.