Cash and Carry Trade

A trading strategy that involves the simultaneous trading of two similar securities in order to recognize an arbitrage profit. Also known as "basis trading" or "buying the basis."


In a cash & carry trade, the first trade involves the purchase of a particular type of security, (usually a stock, index, or commodity), and the second involves a short trade in the asset underlying the security, (usually a futures contract).





Finding Profit in Pairs - Read about a market neutral trading strategy that can achieve profits through relatively low-risk positions.

Trading the Odds with Arbitrage - Profiting from arbitrage is not only for market makers--retail traders can find opportunity in risk arbitrage.
Related Terms

Arbitrage

Cost of Carry

Futures

Pairing Off

Pairs Trade

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