cash-and-carry arbitrage


cash-and-carry arbitrage
A basis trade involving a long cash position exactly offset by a short futures position. The holder of the position believes that the futures contract is expensive. He shorts the future, borrows at money market rates to finance a long position in the underlying, and either delivers the asset into the futures contract or waits for a narrowing of the basis and closes out the positions in which case he effectively collects the yield on a synthetic money market instrument. Also called buying the basis. This arbitrage and its opposite, reverse cash-and-carry, ensures an efficient relationship between cash and derivatives markets. LIFFE

Financial and business terms. 2012.

Look at other dictionaries:

  • Cash-and-Carry-Arbitrage — Als Cash and Carry Arbitrage bezeichnet man eine Strategie an den Finanzmärkten, bei denen ein Preisungleichgewicht zwischen Kassamarkt und Terminmarkt ausgenutzt wird, um einen risikolosen Gewinn zu erzielen (Arbitrage im engeren Sinn). Cash and …   Deutsch Wikipedia

  • Cash-And-Carry-Arbitrage — A combination of a long position in an asset such as a stock or commodity, and a short position in the underlying futures. This arbitrage strategy seeks to exploit pricing inefficiencies for the same asset in the cash (or spot) and futures… …   Investment dictionary

  • cash and carry arbitrage — An arbitrage trade entered into where a futures contract is sold and the underlying asset is purchased in the cash market. Such a trade will be effected where the trader believes that the futures is trading relatively expensive to its fair value …   Financial and business terms

  • Reverse Cash-and-Carry-Arbitrage — A combination of a short position in an asset such as a stock or commodity, and a long position in the futures for that asset. Reverse cash and carry arbitrage seeks to exploit pricing inefficiencies for the same asset in the cash (or spot) and… …   Investment dictionary

  • reverse cash and carry arbitrage — An arbitrage trade entered into where a futures contract is purchased and the underlying asset is sold in the cash market. Such a trade will be effected where the trader believes that the futures is trading relatively cheaply to its fair value.… …   Financial and business terms

  • Cash-and-carry — (engl. ‚bar bezahlen und selbst transportieren‘) steht für: Abholgroßmarkt, ein Supermarkt zum Abholen für Großkunden Cash and carry Klausel Cash and Carry Arbitrage Diese Seite ist eine Begriffs …   Deutsch Wikipedia

  • Cash and carry — Der aus dem englischen Sprachraum stammende Begriff Cash and carry (= bar bezahlen und selbst transportieren) kommt in folgenden Zusammenhängen vor  : ein Supermarkt zum Abholen für Großkunden, siehe Abholgroßmarkt Cash and carry Klausel Cash and …   Deutsch Wikipedia

  • Cash and carry — may refer to:*Cash and Carry (TV series), the first network televised game show. *Cash and carry (World War II), a revision of the Neutrality Acts, designed to aid the British. *Cash and carry (wholesale), a type of operation within the wholesale …   Wikipedia

  • cash-and-carry — An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract. Exchange Handbook Glossary * * * Ⅰ. cash and carry UK US (plural cash and carrys) (also cash… …   Financial and business terms

  • cash and carry trade — See basis trading LIFFE * * *    An arbitrage position that typically comprises a long cash position together with a short position in its respective futures contract. The trader buys the cash (or physical) commodity, such as coffee, and at the… …   Financial and business terms


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