{"id":6615,"date":"2025-01-31T05:43:29","date_gmt":"2025-01-31T05:43:29","guid":{"rendered":"https:\/\/www.alcircle.com\/blog\/?p=6615"},"modified":"2025-01-31T05:43:31","modified_gmt":"2025-01-31T05:43:31","slug":"hedging-with-jorge-episode28-exploring-the-lending-side-of-carry-trades","status":"publish","type":"post","link":"https:\/\/www.alcircle.com\/blog\/hedging-with-jorge-episode28-exploring-the-lending-side-of-carry-trades","title":{"rendered":"Hedging with Jorge #Episode28: Exploring the Lending Side of Carry Trades"},"content":{"rendered":"\n<p>As we dive into another week, let\u2019s continue <a href=\"https:\/\/www.alcircle.com\/blog\/author\/jorge\/\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#350ca9\" class=\"has-inline-color\">our discussion<\/mark><\/strong><\/a> on carry trades. So far, we&#8217;ve explored the borrowing side in detail, but now it\u2019s time to shine the spotlight on lending, the second integral part of this family.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Hedging with Jorge #Episode28: Exploring the Lending Side of Carry Trades\" width=\"696\" height=\"392\" src=\"https:\/\/www.youtube.com\/embed\/Pc1NJiu7TSA?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<p>To recap, borrowing in carry trades involves buying a futures contract for the nearest date while simultaneously selling a contract for the further date. On the flip side, lending is the opposite \u2014 you sell the nearest contract and buy the further one. Simply put, in borrowing, you \u201cbuy near, sell far,\u201d whereas in lending, you \u201csell near, buy far.\u201d<\/p>\n\n\n\n<p>Now, let\u2019s paint a scenario. Imagine you\u2019re holding a long position in the March futures market, but you actually need to hold that position in April instead. In this case, you would unwind your March position by selling it and simultaneously buy the April contract. This process of selling near and buying far is what we call lending. It\u2019s that simple.<\/p>\n\n\n\n<p>But what happens in a contango market, where the price for the further date (April) is higher than for the nearer date (March)? This introduces a new dynamic that we\u2019ll unpack next time.<\/p>\n\n\n\n<p>Stay tuned as we dive deeper into the intricacies of lending in carry trades and explore how contango influences these strategies. See you in the next post!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As we dive into another week, let\u2019s continue our discussion on carry trades. So far, we&#8217;ve explored the borrowing side in detail, but now it\u2019s time to shine the spotlight on lending, the second integral part of this family. To recap, borrowing in carry trades involves buying a futures contract for the nearest date while [&hellip;]<\/p>\n","protected":false},"author":89,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-6615","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-open-forum-for-aluminum-community-blog"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Exploring the Lending Side of Carry Trades<\/title>\n<meta name=\"description\" content=\"This process of selling near and buying far is what we call lending\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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