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Index arbitrage |
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Index 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.Index 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. Covered interest arbitrageCovered interest arbitrageA combination of transactions on two countries' securities and exchange markets designed to profit from failure of covered interest parity. A typical set of transactions would include selling bonds in one market, using the proceeds to buy spot foreign currency and foreign bonds, and selling forward the return at a future date. See also one-way arbitrage. Riskless arbitrageRiskless arbitrageThe simultaneous purchase and sale of the same asset to yield a profit. Structured arbitrage transactionStructured arbitrage transactionA self-funding, self-hedged series of transactions that usually use mortgage-backed securities (MBS) as the primary assets. International arbitrageInternational arbitrageSimultaneous buying and selling of foreign securities and ADRs to capture the profit potential created by time, currency, and settlement inconsistencies that vary across international borders. Further SuggestionsLocational arbitrageOne-way arbitrage arbitrage Triangular arbitrage Multiple Arbitrage arbitrageur Arbitrage Merger Arbitrage Arbitrage bonds Arbitrageur Reversal Arbitrage conversion arbitrage Risk controlled arbitrage Discount Arbitrage Covered interest arbitrage Arbitrage free option pricing models Special arbitrage account Triangular arbitrage Tax arbitrage Arbitrage Trading Program (ATP) Currency arbitrage |
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