Carry (investment)

The carry of an asset is the return obtained from holding it (if positive), or the cost of holding it (if negative) (see also Cost of carry).^[1] For instance, commodities are usually negative carry assets, as they incur storage costs or may suffer from depreciation. (Imagine corn or wheat sitting in a silo somewhere, not being sold or eaten.) But in some circumstances, appropriately hedged commodities can be positive carry assets if the forward/futures market is willing to pay sufficient premium for future delivery. This can also refer to a trade with more than one leg, where you earn the spread between borrowing a low carry asset and lending a high carry one; such as gold during financial crisis, due to its safe haven quality.

Carry trades are not usually arbitrages: pure arbitrages make money no matter what; carry trades make money only if nothing changes against the carry's favor.