# Short Hedge Example with Changing Basis Relationships

Now we extend the previous hedging example by allowing you to establish hedging strategies under alternative basis scenarios. In this first set of examples we provide you with the opportunity to see the impacts on a short hedge of basis changes.

Under the * Constant Basis* scenario, we assume you know
your basis with certainty (e.g., there is no basis risk).

The * Basis Weakens* scenario implies that the basis
decreases from what you expected when you initiated your hedging
strategy.

The * Basis Strengthens* scenario pertains to
the situation where the basis increases from what you expected when
you initiated your hedging strategy.

Under these last two scenarios we assume the basis experiences an unanticipated change of $0.25.