What is cost of carry?Cost of Carry
The storage, insurance and financing costs of holding a physical commodity.
Learn “cost of carry” in an animated lesson
- Arbitrage StrategiesCash-and-Carry Arbitrage
Futures have a "fair value" worked out from interest and storage. When the quote strays from it, borrow to buy spot and sell futures, and the profit is locked in the moment you open.
- Physical CommoditiesStorage, Transport and Cost of Carry
Physical goods need warehouse space and insurance, and they tie up money. The cost of carry sets the price gap between buying now and buying later.
- Futures BasicsBasis and Convergence at Expiry
The futures price isn't the same as the spot price, and the gap between them is the basis. As expiry approaches, the futures price moves toward spot.
Related terms
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Go to “Cash-and-Carry Arbitrage”