Typically, if implied repo rate is greater than actual repo, futures are rich. However, if implied repo is less than repo, futures are cheap ONLY IF you ignore the switch option. As a result, using implied repo rates to assess richness/cheapness can be misleading. Instead, you should build a delivery option model the implied repo rate of a futures contract to compare an Arbitrage Cash trade to other short term investments, to calculate the optimal delivery date, and to analyze the evolution of the cheapest-to-deliver bond. Opinions expressed in this article do not necessarily represent the views of the Bourse de Montréal Inc.