Definition

Cash and Carry Arbitrage

Meaning ⎊ A market-neutral strategy of buying spot assets and selling futures to profit from the price spread.
Greeks.liveApril 13, 2026

Cash and Carry Arbitrage

Cash and carry arbitrage is a market-neutral strategy that involves simultaneously buying a spot asset and selling a corresponding futures contract to lock in a risk-free profit from the price difference. This strategy is possible when the futures price is trading at a premium to the spot price, a condition known as contango.

The arbitrageur earns the difference between the two prices, which is effectively the cost of carry for holding the asset until the contract expires. In the cryptocurrency market, this strategy has been a primary driver of demand for futures contracts, as it allows institutional investors to earn yield on their holdings without taking on price risk.

The success of this strategy depends on the stability of the basis and the ability to execute trades across spot and derivatives markets with minimal slippage. As more participants enter the market, the basis tends to compress, reducing the profitability of the trade.

This strategy is a key indicator of market maturity, as it requires efficient markets and reliable infrastructure. It also helps to align spot and futures prices, contributing to overall market stability.

Cash Balance
Net Liquidation Value
Cost of Carry
Carry Trade
Cash Secured Put
Trade Settlement
Cash Settlement
Cash Management

Glossary

Regulatory Arbitrage Prevention

Regulation ⎊ Regulatory arbitrage prevention, within cryptocurrency, options, and derivatives, centers on mitigating the exploitation of differing regulatory treatments across jurisdictions or asset classes.

Quantitative Trading

Algorithm ⎊ Quantitative trading, within cryptocurrency, options, and derivatives, fundamentally relies on the systematic implementation of algorithms to identify and execute trading opportunities.

Market Microstructure Arbitrage

Arbitrage ⎊ Market microstructure arbitrage, within cryptocurrency, options, and derivatives, exploits fleeting price discrepancies across exchanges or order books.

Regulatory Arbitrage Vectors

Arbitrage ⎊ Regulatory arbitrage vectors represent the exploitation of discrepancies in regulatory treatment across jurisdictions or asset classes, specifically within cryptocurrency, options, and derivative markets.

Arbitrage Internalization

Application ⎊ Arbitrage internalization represents a trading strategy where a firm executes trades across multiple venues to profit from discrepancies in pricing, while keeping the order flow within its own infrastructure.

V2 Flash Loan Arbitrage

Arbitrage ⎊ V2 Flash Loan Arbitrage represents a sophisticated, decentralized finance (DeFi) strategy exploiting transient price discrepancies across different decentralized exchanges (DEXs) utilizing uncollateralized loans.

Arbitrage Cost

Cost ⎊ Arbitrage cost represents the total expenses incurred when executing a strategy designed to exploit price discrepancies across different markets or instruments.

Lending Rate Arbitrage

Arbitrage ⎊ Lending rate arbitrage involves capitalizing on the temporary inefficiencies where the cost of borrowing an asset differs from the yield generated by lending that same asset across separate platforms.

Time-Delay Arbitrage

Arbitrage ⎊ Time-Delay Arbitrage, within the context of cryptocurrency derivatives, exploits temporary price discrepancies across different exchanges or markets for the same underlying asset or derivative contract.

Arbitrage-Free Surface Fitting

Algorithm ⎊ Arbitrage-Free Surface Fitting represents a computational methodology employed to derive a consistent set of implied volatilities across all strikes and maturities for a given underlying asset, crucial for accurate derivative pricing.