Cash and carry arbitrage - Financial definition
Concise definition of the term cash and carry arbitrage
A cash and carry arbitrage is a strategy in the financial markets where a price difference between an instrument's cash price and its term price is being used to realize a risk-free profit.
Comprehensive definition of the term cash and carry arbitrage
Cash and carry arbitrage is possible whenever the term price of a financial instrument is too high compared to its cash price. The arbitrager will make a forward sale of the instrument, buy it on the cash market (“cash”) and hold it until the delivery date (“carry”) of the forward sale.