How to pay 15%, earn 3%, and still make money: A guide for lending platforms

Futures markets

Cash and carry trades

  • Buy spot wheat at $770
  • Short-sell a June wheat futures contract at $900
  • Sell the spot wheat for $900, making $130
  • Buy back my short position for $900, losing $130;
  • = break even.
  • Sell the spot wheat for $640, losing $130;
  • Buy back my short position for $640, making $130;
  • = break even
  • I can sell the spot wheat for $770 (no change);
  • Buy back my short position which has now converged to $770, pocketing $130.

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