cost of carry


Cost of carry

Out-of-pocket costs incurred while an investor has an investment position. Examples include interest on long positions in margin account, dividend lost on short margin positions, and incidental expenses. Related: Net financing cost.

Cost of Carry

The cost of storing a commodity over a period of time. It includes incidental costs, insurance coverage, and the physical cost of storage. It does not include depreciation, if any. The carrying charge is incorporated in the price of a commodity on the futures market. See also: Carrying costs.

cost of carry

Direct costs paid by an investor to maintain a security position. For example, an individual purchasing securities on margin must pay interest expenses on borrowed funds. Likewise, an investor selling stock short is responsible for making dividend payments to the buyer. Also called carrying charges.