What Is the Concept of a “Cash and Carry” Trade in This Context?

A cash and carry trade is a specific type of basis arbitrage. It involves buying the underlying asset (the "cash" position) and simultaneously selling (shorting) the perpetual futures contract (the "carry" position).

This strategy is profitable when the futures contract trades at a premium (contango), leading to a positive funding rate. The trader collects the funding payments while being hedged against the asset's price fluctuations.