Cost of Carry

This is the cost of holding (or carrying) the position.
If you have bought a security (Long) then the cost of carry is the interest paid on a margin account.
If you have sold a security (Short) then the cost of carry is the cost of paying dividends or the opportunity cost elsewhere.


For most investments, the cost of carry refers to the risk-free interest rate that could be earned by investing the currency in a safe investment (such as the money market)


Storage costs - often expressed as a percentage of the spot price applicable to commodities.





The same model use in currency markets is - Interest rate parity


Spot future parity ??




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