F&O Market

R

rudranil

New Member
#1
#1
Hi,

Can anybody explain me what is Carrying Cost(CC) and implied volatility in Future and Option Market and how it is calculated.

Thanks
Rudranil C
 
R

rkkarnani

Well-Known Member
#2
#2
jeffsmith said:
Carrying cost is that if you carry forward some trade you will have to pay the cost of it. And implied volatility is (A theoretical value designed to represent the volatility of the security underlying an option as determined by the price of the option.)
Click to expand...
Hi Jeff, Seems to me there is some error in this explanation about Cost of Carry. If one has to pay the cost to carry forward, then what is negative cost of carry?
Please explain with some example to clear it a bit more.
It is possible that you are saying it correctly but I am unable to understand it.
 
N

NOMINDTR

Well-Known Member
#3
#3
rkkarnani said:
Hi Jeff, Seems to me there is some error in this explanation about Cost of Carry. If one has to pay the cost to carry forward, then what is negative cost of carry?
Please explain with some example to clear it a bit more.
It is possible that you are saying it correctly but I am unable to understand it.
Click to expand...
Cost of Carry is the difference between equity price and futures price. It is defined as follows.
Cost of Carry = interest to be paid to finance the underlying(equity) - income earned (eg. dividends from equity) + storage cost (only in case of commodities)
 
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