Colin Cooper is in possession of a large quantity of wheat and expects prices to decline. Which of the following positions is most
appropriate for Cooper?
Short the basis.
Long the basis.
Answer given is long the basis
but i feel this is wrong as basis = spot - future and price to decline means spot is falling hence basis is reduced hence this will lead to loss for long basis i.e. short hedge.
i guess correct answer the short the basis or long hedge..buy futures and sell cash as price will decline and this will lead to profit for short the basis hedger.
Pls give you view.