BackQuant Glossary
Basis
The difference between a futures or perpetual price and the underlying spot price. Positive basis means futures trade at a premium to spot; negative basis (sometimes called inverse basis) signals near-term selling pressure or fear. Cross-venue basis arbitrage is a core strategy in crypto market making.
Related terms
Futures
A standardized contract to buy or sell an asset at a set price on a future date. Crypto futures with fixed expiries exist alongside perpetual futures (perps) which never expire. Quarterly futures concentrate the most open interest.
Premium
The price of an option, paid by the buyer to the seller. Premium consists of intrinsic value plus time value. In a separate sense, basis premium refers to futures or perp prices trading above spot.
Spot
The current cash market price of an asset for immediate delivery. Spot is the underlying reference for derivatives pricing. Crypto spot trades 24/7 across hundreds of venues, with index prices aggregating across the deepest ones.
Backwardation
A market structure in which near-dated contracts trade at higher prices (or higher implied volatilities) than longer-dated contracts. In futures, backwardation often signals near-term scarcity. In options IV term structure, backwardation signals an imminent catalyst or active stress in the market.
Bid-Ask Spread
The gap between the highest current buy order (bid) and the lowest current sell order (ask) on an order book. Tight spreads indicate deep liquidity and competitive market making. Wide spreads indicate stress, low activity, or thin books.
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