A cash and carry transaction that is reversed. It involves the simultaneous sale of a cash market commodity/ instrument for physical delivery on a spot basis and the purchase of the same commodity/ instrument for a future delivery. The spot transaction takes place at a price higher than the future-date transaction. In other words, the commodity/ instrument on the spot leg is sold at a high spot price, and the forward futures is purchased at a low price, while physical delivery occurs against the futures contract for which delivery takes place at a future date. The simultaneous selling and purchasing transactions followed by taking delivery serve as a risk mitigation tactic, which also comes at a lower carry cost.

A reverse cash and carry can be decomposed into a short sale (short position in a commodity/ instrument) and a long position in a futures contract in which the same commodity/ instrument is an underlying. The riskless profit arises when the proceeds from the short sale exceed the price of the futures contract and the costs associated with carrying the short position in the commodity/ instrument. In that sense, this transaction is meant to exploit pricing inefficiencies between the sport price and the corresponding futures price in order to make riskless profits (by means of arbitrage).