What Are the Risks Associated with Cash-and-Carry Arbitrage vs Speculative Trades

Tue, 30 Dec 2025 10:04:47 +0000

Market participants often hear terms like cash and carry arbitrage and speculative trading. Although both involve taking positions in the market, their purpose, structure, and risk profiles differ. Arbitrage aims to benefit from temporary price differences across markets, while speculation involves taking directional positions based on expectations. Understanding the difference between speculation and arbitrage is essential for anyone studying market structures and risk dynamics.