Define the ‘Cost of Carry’ in the Context of Financial Derivatives

The cost of carry is the net cost or benefit of holding an underlying asset. It is calculated as the cost of financing the asset (e.g. interest on borrowed money) plus any non-financial costs (e.g. storage) minus any income generated by the asset (e.g. dividends or staking rewards).

It is a key factor in determining the theoretical price of futures and options.