Cash & carry

Cash & carry

Applies to derivative products. Combination of a long position in a stock/index/commodity and short position in the underlying futures, which entails a cost of carry on the long position. Also known as cash and carry arbitrage.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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. This is also called buying the basis.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved