Cash and Carry Strategy

The cash and carry strategy is a classic arbitrage trade involving the purchase of a spot asset and the simultaneous sale of a futures contract. This locks in a guaranteed profit equal to the difference between the futures price and the spot price at the time of purchase.

In crypto, this is a popular way to earn risk-free yield, provided the trader can borrow the spot asset at a lower rate than the basis. The trade is held until the futures contract expires, at which point the spot asset is delivered to satisfy the contract.

This strategy is highly scalable and is a primary driver of liquidity in the crypto derivatives market. It requires careful calculation of the cost of carry, including storage and financing costs.