List of Arbitrage Articles

Arbitrage is about capitalizing on price differentials between markets while hedging is about reducing risk through offsetting positions.

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.

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.

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.

In the media or news, there are always reports about one company being merged or bought by another rival company. Mergers and acquisitions are a fundamental part of a company’s business cycle.

Arbitrage is about capitalizing on price differentials between markets while hedging is about reducing risk through offsetting positions.

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.

Before getting down to understanding the advantages of arbitrage, let us spend a moment understanding arbitrage at a conceptual level.

To understand the importance of arbitrage, it is essential to understand the law of one price which governs the price discovery in efficient markets.

The arbitrageur in stock market is a very critical link between asset prices and helps to equalize them across markets or at least synchronize the prices.

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.

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.