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to calculate the futures price we use basis risk and apportion it depending on days/months and adjust the spot rate accordingly.
All I want to know is that do we always subtract the basis risk from the spot or we can also add it????. I am bit confused because I saw some questions in which basis risk was added in spot rate. Please explain this when to subtract and when to add.
Kind Regards.
The spot rate and the futures price move closer together.
So if the the spot rate is currently higher than the futures price it will always be higher, and vice versa.Hope that makes sense 🙂
Ok i got it so its spot rate which determines whether to add or subtract Thanks alot
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