Cash and Carry Transaction

AAA

DEFINITION of 'Cash and Carry Transaction'

A type of transaction in the futures market in which the cash or spot price of a commodity is below the futures contract price. Cash and carry transactions are considered arbitrage transactions.

INVESTOPEDIA EXPLAINS 'Cash and Carry Transaction'

The carrying costs in a cash and carry transaction are not deductible if the underlying commodity or security is part of a balanced position. These costs are instead capitalized and added to the basis.
RELATED TERMS
  1. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  2. Futures

    A financial contract obligating the buyer to purchase an asset ...
  3. Option

    A financial derivative that represents a contract sold by one ...
  4. Transaction

    1. An agreement between a buyer and a seller to exchange goods, ...
  5. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  6. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
Related Articles
  1. Spotting Breakouts As Easy As ACD
    Active Trading

    Spotting Breakouts As Easy As ACD

  2. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  3. Commodities: The Portfolio Hedge
    Active Trading

    Commodities: The Portfolio Hedge

  4. Is it possible to trade forex options?
    Options & Futures

    Is it possible to trade forex options?

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center