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Carrying Charge Market


What does Carrying Charge Market mean?

 A future market situation where futures with maturities further into the future trades at a higher price than the spot price to cover carrying charge. In carrying charge market, features expiring further into the future are priced almost equal to near month futures plus carrying charge.

Futures Knowledge Explains Carrying Charge Market

For example, on May 20th, Gold is trading in spot market at $1209 and futures for December 2015 is trading at $1211 and June 2016 at $1214. The difference of $2 or $5 takes into account the interest, storage and other charges. Since carrying charge market factors in all the cost involved, it is also called full carry market.

This is also called “carrying cost”. As the duration of the contract increases so do the carrying charges market.



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