Cash-and-Carry Trade
A trade that buys an asset on the spot market while simultaneously selling a futures contract on it, aiming to profit from the gap between the two prices.
A cash-and-carry trade buys an asset on the spot market while simultaneously selling a dated futures contract on that same asset, aiming to profit from the difference (the "basis") between the spot price and the futures price, which is expected to converge as the futures contract approaches expiry.
In crypto specifically, this strategy is commonly used to capture the basis between spot price and either dated futures or ongoing perpetual-futures funding payments, generally treated as a relatively market-neutral strategy, since the spot and futures legs are intended to offset each other's directional price risk. See Kaavon's perpetual-futures basis-trade breakeven calculator for the full mechanics.
Examples
- A cash-and-carry trade's profit comes from the spot-futures basis converging as expiry approaches, not from the underlying asset's price direction.
- Because the spot and futures legs are intended to offset each other's directional exposure, a cash-and-carry trade is commonly treated as a relatively market-neutral strategy.