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Carrying Charges
Posted By: TradersLog
(1) Cost of storing a physical commodity or holding a financial instrument over a period of time. These charges include insurance, storage, and interest on the deposited funds, as well as other incidental costs. It is a carrying charge market when there are higher futures prices for each successive contract maturity. If the carrying charge is adequate to reimburse the holder, it is called a “full charge.” See also: Negative Carry, Positive Carry, and Contango.
(2) In interest rate futures markets, the difference between the yield on a cash instrument and the cost of funds required to buy that instrument.
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