A Guide to Carry

Imagine every investment is a fruit tree. Some trees drop fruit while you hold them. Some cost money to keep watered. Carry is the fruit minus the watering cost. If the tree also grows taller, great. That is a price gain. If it shrinks, that is a price loss. Carry is just what you collect, or pay, while waiting. Positive carry means you get paid to wait (the fruit is more than the watering costs), before the tree grows or shrinks. Negative carry means you pay to wait (the fruit is less than the watering cost), so you need the tree to grow to make up for it.

Carry is the return you expect to earn if prices do not move.

Hold on to your seats.