Basis Risk Explained Simply | Hedging Strategies

Dive into the complex world of commodities trading with "Basis Risk Explained Simply," where Ryan O'Connell, CFA, FRM, breaks down the essential differences between spot prices and forward prices. Discover the intricacies of hedging strategies and how they can lead to basis risk, even in seemingly perfect hedges. This video will provide a clear understanding of the fundamental concepts that govern the relationship between spot and forward prices in the commodities market.

🎓 Tutor With Me: 1-On-1 Video Call Sessions Available

Chapters:
0:00 - What is "The Basis"?
1:16 - What is a Perfect Hedge?
3:25 - Basis Risk with a Perfect Hedge
5:13 - Basis Risk with an Imperfect Hedge

Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

[tsunningwah]

You really save my life. My professor walked through these topic too quickly and the knowledge didnt have enough time to sink in my brain.

[tw]

Thank you! You explained it better than my textbook. Now I can wrap my head around it

[mphys]

Ryan, could you do a video of CFA vs FRM

[alexwire]

If you had to buy gold in 2 months so you went long on a future would the basis risk then be ft- st instead of st-ft as seen in your example?

[tsunningwah]

there is one point i dont get. Future price= spot price x e^rt by no arbitrage principle. so usually, future price should be greater than spot isnt it??