cash contract

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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.

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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 information content of risk reversals in emerging market currencies/O conteudo informacional dos "risk reversals" em moedas de paises emergentes

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.

Time differential effects of credit yield spread and interest rate differential on the currency carry trade return: the case of Japanese yen

And it is this rally that is rattling the carry trades of old.

A tipping point for the carry trade

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.

Asia upbeat on Japan's $1.4trn push

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.

FX Carry Trades Lose Appeal (WSJ)

As in all of our work, here we consider a carry-trade strategy that combines individual-currency carry trades into an equally-weighted portfolio.

Understanding the profitability of currency-trading strategies

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.

-Philippine central bank prepared to take action against speculation

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.

Dollar rallies as jobs data fuels Fed policy talk

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.

Risk Appetite Stalls But the Dollar and Dow Maintain Trend Through Week's End

Centre designed to carry trades education into 21st century

College expansion underway

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.