cash contract

(redirected from Carry trades)

Cash Contract

A trade of a security or a derivative where settlement occurs on the same trading day. This is fairly unusual; most contracts are settled between one and three days later. Generally speaking, cash contracts are most common in the last week of the calendar year when many trades must be settled sooner to guarantee tax advantages for one or both parties. It is also called a cash trade.

cash contract

A fairly unusual security transaction in which settlement with payment and security delivery are to occur on the same day as the trade date. This type of trade often occurs during the last week of a calendar year when sellers wish to settle early in order to realize a gain for tax purposes. Also called cash trade. Compare regular-way contract.
References in periodicals archive ?
Gagnon and Chaboud (2007) documented that risk reversals increase after episodes of presumed unwinding of carry trades, in which the Yen is sharply appreciated, meaning that investors are frightened by losses, but they also found that there is no evidence of purchase of protection through risk reversal when carry trade positions are building up.
the higher-yielding target currency) would appreciate rather than depreciate, while yen would depreciate rather than appreciate due to a large volume of carry trades that sell yen to buy dollar.
And it is this rally that is rattling the carry trades of old.
We can't say for sure whether this policy will lead to a yen carry trade and flooding in cheap foreign funds (on the local markets) because there are a lot of stages that such a policy has to go through before leading to actual carry trades," a senior official at the Bank of Korea said.
As central banks around the world lower interest rates, the gap that carry trade investors are counting on between low-yielding and high-yielding currencies has narrowed, cutting in the profitability of carry trades.
As in all of our work, here we consider a carry-trade strategy that combines individual-currency carry trades into an equally-weighted portfolio.
The bank said that it was considering action against activities such as carry trades that involve its short-term deposits that pay more than longer-dated government debt.
That would enhance the yen's appeal as a funding currency of choice amongst investors like hedge funds and model funds, which are increasingly looking to sell the yen and buy high-yielding currencies, called carry trades.
Since carry trades underperform when volatility is high (due to the threat of capital losses that may overwhelm carry income), a rise in volatility is unfavorable for the strategy.
Centre designed to carry trades education into 21st century
Signs of a rise in speculative interest against the yen were evident in both a rise in dollar/yen turnover and reports of a recent surge in hedge funds' yen carry trades.
long bond on fears that the new Federal Reserve Chairman would raise rates further for longer than was previously expected, and the change in monetary policy at the Bank of Japan with the implications that has for carry trades around the world.