Cash-and-Carry (Basis Trade)

Glossary · Derivatives

Cash-and-carry buys the asset in spot and sells the same amount in futures, locking in the basis — the gap between the futures price and spot — as a return regardless of direction. On perpetuals the same idea collects funding: long spot, short perp, and the funding payments are the yield.

"You do not care where price goes; you are being paid the gap between two prices of the same thing. The catch is the size of the gap and how long it holds."

Worked example: spot at $80,000, the quarterly future at $81,600 with 90 days to go. Buy spot, sell the future, and the $1,600 converges to zero at expiry — a 2% return over the quarter, about 8% annualised, regardless of price. The perpetual version replaces the fixed basis with funding: if longs pay 0.03% every 8 hours, the spot-long, perp-short pair collects about 33% a year while it lasts. Our price tape shows each venue's perp against spot so you can see where the basis is widest.

The risks are the ones the return hides: funding can flip negative and the carry becomes a cost; the exchange holding your short can go down; the perp can squeeze far above spot before converging, and a short with insufficient margin gets liquidated on a trade that was mathematically fine. Size the short to survive the widest basis you have seen, not the average.

Basis per venue on the price tape

Related jargon

Questions

What is Cash-and-Carry in crypto trading?

Cash-and-carry buys the asset in spot and sells the same amount in futures, locking in the basis — the gap between the futures price and spot — as a return regardless of direction. On perpetuals the same idea collects funding: long spot, short perp, and the funding payments are the yield.

How would a trader say it?

You do not care where price goes; you are being paid the gap between two prices of the same thing. The catch is the size of the gap and how long it holds.

Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.

Crypto Jargon

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