Arbitrage strategies are risk-free strategies to capitalize on price discrepancies. Here we look at different types of arbitrage trading strategies and the types of arbitrage strategies.
Cash futures is quite simple. Reliance is trading at Rs.2100 in the cash market and at Rs.2118 in the 1-month futures. You buy Reliance in cash equivalent to the lot size and sell one lot of Reliance futures.
Macro arbitrage is quite popular among arbitrage traders, especially higher risk players like hedge funds. Arbitrage trading is not just about cash-futures or exchange to exchange trading.
At a conceptual level, arbitrage is the anomalies in pricing. In the good old days of the NSE and BSE, there used be huge price differences between the two exchanges and even with the regional exchanges.
Arbitrage is about capitalizing on price differentials between markets while hedging is about reducing risk through offsetting positions.
Reverse cash and carry arbitrage happens when the futures is at a discount to the spot price and is attractive even after you consider the cost of carry.
Various assets are traded in high volume across different exchanges in India. However, due to market inefficiencies and differential demand-supply
Terms like arbitrage and speculation are common place words in the market trading lexicon. As a trader in markets, it is essential to understand the arbitrage and speculation difference.
Arbitrage strategies are risk-free strategies to capitalize on price discrepancies. Here we look at different types of arbitrage trading strategies and the types of arbitrage strategies.
Cash and carry arbitrage is a financial arbitrage strategy that involves making the best of the anomalies in pricing, or mispricing as it is called.
One of the most common activity in the stock market is arbitrage. Let us first understand what is arbitrage and the actual arbitrage definition.
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