What Is the Difference between a Cash-and-Carry Arbitrage and a Reverse Cash-and-Carry Arbitrage?

A cash-and-carry arbitrage is executed when the futures price is significantly higher than the spot price plus the cost of carry (contango). The trader buys the spot asset and simultaneously sells the futures contract.

A reverse cash-and-carry arbitrage is executed when the futures price is too low relative to the spot price (backwardation). The trader sells the spot asset (or shorts it) and simultaneously buys the futures contract.

Both seek a risk-free profit.