Cash-and-carry is the oldest, cleanest futures-arbitrage trade: buy the coin on the spot market, short a dated future trading above it, and lock in the gap until expiry.
It is called 'cash-and-carry' because you pay cash for the asset today and carry (hold) it until the futures contract expires, when the two prices are guaranteed to meet. The profit is fixed the moment you open the trade — you know your return in advance, no matter what the coin does. This page walks through the exact mechanics, a fully worked example, the annualized-return math, and the real risks.
The Idea in One Picture
A dated future must equal the spot price on its expiry day — that is written into the contract. So if the future is trading above spot today, that premium is a gap that will close with certainty. Cash-and-carry captures it: you take the cheap side (spot) and the expensive side (short future), then simply wait.
Key term: the basis
The basis is futures price − spot price. A positive basis (future more expensive) is the normal 'contango' state and is what makes cash-and-carry profitable. Your locked return is essentially that basis, minus fees.
A Fully Worked Example
Let's use round numbers a beginner can follow:
| Step | Action | Price | Result |
|---|
| 1 | Buy 1 BTC on spot | $67,000 | You own 1 BTC |
| 2 | Short 1 BTC quarterly future | $67,800 | Locked sell price in 3 months |
| 3 | Wait until expiry (basis = $800) | — | Direction no longer matters |
| 4 | At expiry future settles to spot | converge | Collect the $800 gap |
Whatever BTC does, the two legs cancel on direction. If BTC falls to $50,000: your spot is down $17,000, but your short is up $17,800 (from $67,800 to $50,000), netting the original $800. If BTC rises to $90,000: spot up $23,000, short down $22,200 — still $800. The $800 is yours in every scenario.
Turning $800 Into an Annual Return
The dollar profit is fixed, but the rate depends on how long your capital is tied up. $800 on $67,000 is about 1.19% over three months. Annualized (×4) that is roughly 4.8% per year, market-neutral. In hot bull markets the quarterly basis can widen to 3–5%+, pushing annualized returns into the double digits.
Rule of thumb
Annualized return ≈ (basis ÷ spot price) × (365 ÷ days to expiry). Always subtract your total fees first — on a thin basis, fees can turn a winner into a loser.
Step by Step
1
Find a positive basis
Look for a coin whose dated future trades meaningfully above spot after fees. A scanner makes this instant across many coins.
2
Buy spot, short the future
Enter both legs quickly and in equal size so you are fully delta-neutral (no directional exposure).
3
Set low leverage + margin buffer
The short leg needs margin. Use 2–3× max and keep spare collateral so a pre-expiry spike can't liquidate you.
4
Hold to expiry
Let convergence do the work. At settlement the basis becomes your profit.
5
Roll or exit
At expiry, either take the profit or 'roll' into the next contract if the basis is still attractive.
The Perpetual Cousin
Most crypto traders run a version of this with perpetual futures — contracts with no expiry date. Instead of waiting for convergence, you collect a small funding payment every few hours while short. Same market-neutral idea, but income arrives continuously rather than at a fixed date. We cover it fully in funding-rate arbitrage explained.
Risks to Respect
1
Liquidation before expiry
A hedged trade can still be liquidated on the short leg if a price spike drains your margin. Low leverage + buffer is the fix.
2
Fees vs a thin basis
Two legs, two fee sets. If the basis is small, fees can erase it — always compute net first.
3
Exchange risk
Funds sit on an exchange for the whole carry period. Use reputable venues.
How ArbiScreen Helps You Trade the Basis
ArbiScreen scans spot-vs-futures gaps across 17 exchanges and shows the live basis and net-of-fee return, so you only carry trades that actually pay. Try the scanner or read the futures arbitrage overview.
Related Guides
Frequently Asked Questions
What does cash-and-carry mean in crypto?▼
You buy a coin on the spot market ('cash') and simultaneously short a dated futures contract on it that trades at a higher price, then hold ('carry') both until the future expires. The price gap between them is locked in as profit at expiry, regardless of price direction.
Is cash-and-carry arbitrage risk-free?▼
No trade is truly risk-free. The market-direction risk is neutralized, but you still face liquidation risk on the short leg, fees that can exceed a thin basis, and exchange/counterparty risk. Managed with low leverage and reputable venues, it is among the lower-risk crypto strategies.
How much can I earn with cash-and-carry?▼
Your profit equals the basis minus fees, fixed at entry. On majors this typically annualizes to a few percent up to low double digits, widening in strong bull markets when futures premiums are large.
Why is the futures price higher than spot?▼
In a healthy or bullish market, traders will pay a premium to get leveraged exposure to future upside, and holding costs are priced in. This 'contango' pushes the future above spot, creating the positive basis cash-and-carry harvests.
What happens at expiry?▼
The dated future settles into the spot price — the gap becomes zero. Your short gain (or loss) exactly offsets your spot, and the original basis is realized as profit. You then take the cash or roll into the next contract.
Do I need leverage for cash-and-carry?▼
You need a margin account to short the future, but keep leverage very low (2–3×). Leverage does not increase the strategy's edge — it only raises the chance of being liquidated before expiry.
