Positive Carry

AAA

DEFINITION of 'Positive Carry'

A strategy of holding two offsetting positions, one of which creates an incoming cashflow that is greater than the obligations of the other.

INVESTOPEDIA EXPLAINS 'Positive Carry'

Similar to arbitrage, positive carries generally occur in the currency market where interest paid to investors in one currency is more than they have to pay to borrow in another currency.

Another example of a positive carry would be borrowing $1000 from the bank at 5% and investing it into a bond paying 6%. Thus, the coupon on the bond would pay more than the interest owing on the loan to the bank, and you pocket the 1% difference.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Diversified Carry Basket

    A forex trading strategy in which multiple carry trades are conducted ...
  3. Arbitrage

    The simultaneous purchase and sale of an asset in order to profit ...
  4. Basis Risk

    The risk that offsetting investments in a hedging strategy will ...
  5. Currency Carry Trade

    A strategy in which an investor sells a certain currency with ...
  6. Currency Swap

    A swap that involves the exchange of principal and interest in ...
Related Articles
  1. The 0 and 00 on the roulette wheel were introduced to break the martingale's mechanics by giving the game more than two possible outcomes.
    Forex Education

    Forex Trading The Martingale Way

  2. Options & Futures

    Trading The Odds With Arbitrage

  3. Trading Strategies

    What is the difference between the dividend ...

  4. Trading Strategies

    What's the safest way to invest in high-yielding ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center