Carry forward strategy


What is a cash and carry forward strategy?

A cash-and-carry trade is a trading strategy that an investor can utilize in order to take advantage of market pricing discrepancies. It usually entails taking a long position in a security or commodity while simultaneously selling the associated derivative, specifically by shorting a futures or options contract.


The security or commodity being purchased is held until the contract delivery date and is used to cover the short position’s obligation. By selling a futures contract, the investor has taken a short position. The investor knows how much will be made on the delivery date and the cost of the security because of the cash-and-carry trade’s long position component

For example, in the case of a bond the investor receives the coupon payments from the bond they've bought, plus any investment income earned by investing the coupons, as well as the predetermined future price at the future delivery date.

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