The sum of all expenses incurred on holding an asset, literally: storage, insurance and financing costs, subtracted from the income gained on that asset. The cost of carry betrays the relationship between futures prices and spot prices. The cost of carry for a commodity includes storage cost because it needs to be stored in a proper way and a fitting place. However, not all assets incur storage costs. A good example is a share of stock. If that share pays dividends, then its cost of carry is its financing cost minus any dividend income. If that share is non-dividend paying, so it generates no income, and its cost of carry is only the financing cost.
The cost of carry is also known as carrying charges.
