TransWikia.com

What happens to cost of carry when a commodity is short-sold?

Personal Finance & Money Asked by Trevor Wierzbowski on September 26, 2021

Say investor B has a gold bar, and must pay 1 dollar per day to store it. Investor A shorts gold, borrowing the gold bar from B, and selling it to investor C.

What I want to know is, what happens to the cost of carry here? Who pays it? Since investor C bought a bar of gold and doesn’t care whether it was from a short sell or not, they should certainly be paying a cost of carry to store their gold. Should B then pay the cost of carry to A then, since it’s kind of like the opposite of a dividend?

Add your own answers!

Ask a Question

Get help from others!

© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP