Cash and Carry Transaction

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.

BREAKING DOWN '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.
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    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
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    Find out more about commodity spot and futures prices, how to calculate a commodity's futures price, and the differences ... Read Answer >>
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    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily ... Read Answer >>
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    Investing money can be confusing for novice investors. Find out more about covered interest arbitrage and the risks that ... Read Answer >>
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