Cash and Carry Trade

Cash and Carry Trade

A transaction in which one takes a short position on a futures contract and a long position on the underlying asset where the spot price ? or current price ? of the underlying commodity is below the price in the futures contract. Making a profit from a cash and carry trade is considered a form of arbitrage. That is, one uses a cash and carry trade to make money from uncertainty or inefficiency in the market, in this case, with regard to the future price of the underlying asset.