Cost of carry
TradingDefinition
The total cost of holding a position over time: financing costs, storage costs, dividends paid (for short positions), opportunity cost. Shapes the futures curve and forward exchange rates.
For storable commodities: cost of carry = interest rate + storage + insurance − convenience yield. For currencies: interest-rate differential.
For storable commodities: cost of carry = interest rate + storage + insurance − convenience yield. For currencies: interest-rate differential.