So we believe the forward price should be $2.72, but it is actually $2.80. We enter a cash and carry arbitrage, okay. Now what I don’t understand is this whole paying and borrowing of storage costs. The payment of storage costs is a FV while the borrowed storage cost remains flat at .05. Can anyone make sense of this?作者: MiniMe7 时间: 2013-4-1 14:03
bpdulog
It is a bit misleading the table is presented.
What it means is:
You received 0.05 storage cost from someone in Dec, you lent it immediately (e.g., to the bank, -0.05 means outflow of money). A few months later (feb), the bank pays you back this amount plus interest (so you’ll receive 0.051005 from this lending act you did back in Dec).
Hope it is clearer.作者: ap0258 时间: 2013-4-1 14:03
Thanks, so instead of trying to interpret this weird chart, can I assume that the FV of all storage costs need to be calculated?
