Cost of carry
Definition · Level 2 · Long options & hedges
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Net cost of holding a position over time: financing on the money tied up, plus storage or borrow fees where they apply, minus income such as dividends, lending fees or convenience yield. For forwards and futures it is the gap between forward and spot.
Example
Positive → forward above spot; negative (high dividends) → forward below spot.
Where Tradecraft teaches it
Level 2 · Long options & hedges, in the lesson “Put-call parity and the conversion”: Calls, puts and stock are tied by one equation — and a conversion locks it in.
Related terms
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