If a market-quoted futures price does not equal a calculated fair futures price, it may be possible to earn a risk-free gain by entering into an arbitrage trade. An arbitrage trade involves entering into two opposite positions through two differing marketplaces. And here, the two different marketplaces that will be involved will be the futures market and the corresponding cash market. If a quoted futures price is higher than a calculated fair futures price, it may be possible to enter into what is referred to as cash and carry arbitrage. For any arbitrage trade, it is necessary to buy low and sell high. And if the quoted futures price is too high, then we need to enter into a trade today to sell the futures contract or in other words to enter into the short side of a futures trade where we are delivering the underlying asset and receiving that fixed futures price. To be able to fulfill our obligations under the futures contract on the future delivery date, we also need to enter into another trade today in the cash market so that we can fulfill those obligations. If we have a short futures position, then we're going to need to deliver the underlying asset in the future. And the way that we can ensure that we are able to do that through trading today is to buy the underlying asset today. If we do buy the underlying stock today or underlying index today, we will then own it through the future period up until that futures delivery date, when we can deliver it under the obligations of short futures position that we had initially set up. To enable us to buy the underlying stock or index at the inception of this arbitrage trade today, we will need to borrow some money and we will be able to repay those borrowed funds with the cash that we receive from delivering the underlying asset and receiving the futures price through the futures trade. A similar arbitrage trade can be set up if the quoted futures price is lower than a calculated fair futures price. If that quoted price is below the fair futures price, to make an arbitrage risk-free gain, we will need to buy a future or in other words enter into a long futures position where we are agreeing today to pay that quoted market price to take delivery of the underlying asset on the future delivery date. To be able to fulfill those obligations in the future, we will need to have cash available in the future to pay the future's price to take delivery of the underlying stock or index and to be left with no remaining exposure. Therefore, the trade required in the cash market today would be to sell the underlying asset or to short sell the underlying asset. And this can be effected through borrowing the underlying stock or index and short selling it today. As a result of that trade, when we come through to the future delivery date, we will have cash available, which we will then use to pay the futures price and take delivery of the underlying asset. This underlying asset that is then received through the settlement of the futures contract can be returned to the counterparty who the underlying stock was initially borrowed from.