Cost of Carry (COC) or Carry Forward Charges in Angel Broking

The costs of carry, also known as carry forward charges. The Cost of Carry (CoC) refers to an investor's expenses for holding a particular position in the underlying market until the futures contract expires. The CoC includes the risk-free interest rate but excludes any dividend payouts from the underlying asset. The CoC is calculated as the difference between the futures and spot prices of a stock or index and is expressed as an annual percentage rate.

Traders often use the CoC as an indicator of market sentiment. A low CoC indicates a potential fall in the underlying asset's value, while a high CoC suggests that traders are willing to pay more to hold futures and expect the underlying asset's value to rise. Analysts may interpret a significant drop in CoC as a signal of an impending fall in the underlying asset, while a rise in CoC could indicate an expected increase in the asset's value.

The Carry forward charges are calculated using the formula: Future price fair value = Spot Price + Cost of Carry - Dividend Payout. The real-time values of CoC can be found on stock exchange websites. Generally, the Cost of carry same as intraday charges which is Rs. 20 per transaction or 0.25% per transaction.

It is possible for the CoC to be negative. A negative CoC occurs when futures trade at a discount to the underlying asset, usually, because the stock is expected to pay a dividend or traders are executing a "reverse arbitrage" strategy of buying spot and selling futures. A negative CoC typically indicates bearish sentiment in the market.

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