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Currency arbitrage |
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Currency arbitrageTaking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market.Currency arbitrage Similar MatchesConvertible ArbitrageConvertible ArbitrageIn the context of hedge funds, a style of management that involves the simultaneous purchase of a convertible bond and the short sale of shares of the underlying stock. Interest rate risk may or may not be hedged. Index arbitrageIndex arbitrageAn investment/trading strategy that exploits divergences between actual and theoretical futures prices. An example is the simultaneous buying (selling) of stock index futures (i.e., S&P 500) while selling (buying) the underlying stocks of that index, capturing as profit the temporarily inflated basis between these two baskets. Often, the point at which profitability exists is expressed at the block call as the number of points the future must be over or under the underlying basket for an arbitrage opportunity to exist. See: Program trading. Covered interest arbitrageCovered interest arbitrageOccurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the investment forward for dollars. Discount ArbitrageDiscount ArbitrageA riskless arbitrage in which a discount option is purchased and an opposite position is taken in the underlying security. The arbitrageur may either buy a call at a discount and simultaneously sell the underlying security (basic call arbitrage) or maybuy a put at a discount and simultaneously buy the underlying security (basic put arbitrage). See also Discount. Risk controlled arbitrageRisk controlled arbitrageA self-funding, self-hedged series of transactions that generally use mortgage securities (MBS) as the primary assets. Further SuggestionsRiskless arbitrageOne-way arbitrage Triangular arbitrage arbitrageur Triangular arbitrage arbitrage Arbitrageur Locational arbitrage Arbitrage Tax arbitrage Arbitrage Trading Program (ATP) Merger Arbitrage Arbitrage bonds International arbitrage Special arbitrage account Multiple Arbitrage Covered interest arbitrage conversion arbitrage Reversal Arbitrage Arbitrage free option pricing models Structured arbitrage transaction |
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