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.
RELATED TERMS
  1. Cash Market

    The marketplace for immediate settlement of transactions involving ...
  2. Cash Price

    The actual amount of money that is exchanged when commodities ...
  3. Transaction Identifier

    A unique identifier assigned by a business to each transaction ...
  4. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
  5. Inverse Transaction

    A transaction that can cancel out a forward contract that has ...
  6. Cash Transaction

    A transaction that is settled with cash on the same day as the ...
Related Articles
  1. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  2. Investing Basics

    What Are Transaction Costs?

    Transaction costs are expenses incurred from buying or selling securities.
  3. Professionals

    Exempt Transactions

    FINRA/NASAA Seriex 66 - Exempt Transactions. This section lists transactions which are exempt according to the USA.
  4. Professionals

    Other Exempt Transactions

    FINRA/NASAA Series 63 - Other Exempt Transactions. In this section federal covered securities transactions, transactions between issuer and underwriter, existing owners and of employee stock ...
  5. Economics

    What's Recorded in a Cash Book?

    A cash book is an accounting book that records all cash receipts and cash payments before they’re recorded in a business’s general ledger.
  6. Professionals

    Market Structure

    Market Structure
  7. Professionals

    Private Securities Transactions

    A registered representative may not engage in any private securities transactions without first obtaining the broker dealer’s prior approval. The registered representative must provide ...
  8. Investing Basics

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  9. Professionals

    Introduction

    Investors, who do not purchase their stocks and bonds directly from the issuer, must purchase them from another investor. Investor-to-investor transactions are known as secondary market transactions. ...
  10. Professionals

    Inverted Markets

    Inverted Markets
RELATED FAQS
  1. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
  2. How are commodity spot prices different than futures prices?

    Find out more about commodity spot and futures prices, how to calculate a commodity's futures price, and the differences ... Read Answer >>
  3. Are arm's length transactions always better than transactions not at arm's length?

    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily ... Read Answer >>
  4. What are the biggest risks associated with covered interest arbitrage?

    Investing money can be confusing for novice investors. Find out more about covered interest arbitrage and the risks that ... Read Answer >>
  5. What are the goals of covered interest arbitrage?

    Learn the three major goals of covered interest arbitrage and increase your comprehension of the foreign exchange trading ... Read Answer >>
  6. How do commodity spot prices indicate future price movements?

    Find out more about commodity spot and futures prices, how to calculate commodity futures prices and how spot prices indicate ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center