Tonight trivia comes from the carry market portion of commodity futures (reading 39). In traditional carry markets, convenience yeild will not accrue to the average investor. As a result it creates a no- arbitrage region rather than a no- arbitrage price. The convenience yeild only surfaces in which arbitrage strategy (reverse cash and carry, or standard C&C) and why?
The reverse cash and carry but I haven’t got a clue why.
Reverse C&C because an average investor will need to take the short position while a party who can derive a convenience yield (e.g. corn producer) takes the long?
Swan must have passed out!