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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 MatchesArbitrageurArbitrageurOne who profits from the differences in price when the same, or extremely similar, security, currency, or commodity is traded on two or more markets. The Arbitrageur profits by simultaneously purchasing and selling these securities to take advantage of pricing differentials (spreads) created by market conditions. See: Risk arbitrage, convertible arbitrage, index arbitrage, and international arbitrage. Convertible 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. ArbitrageurArbitrageurA person or firm carrying out arbitrage. Tax arbitrageTax arbitrageTrading that takes advantage of a difference in tax rates or tax systems as the basis for profit. Currency arbitrageCurrency arbitrageTaking advantage of divergences in exchange rates in different money markets by buying a currency in one market and selling it in another market. Further SuggestionsLocational arbitrageTriangular arbitrage Triangular arbitrage Riskless arbitrage Covered interest arbitrage conversion arbitrage arbitrage Special arbitrage account Reversal Arbitrage Structured arbitrage transaction Arbitrage Trading Program (ATP) Arbitrage free option pricing models Discount Arbitrage Arbitrage One-way arbitrage Arbitrage bonds Covered interest arbitrage Merger Arbitrage Risk controlled arbitrage International arbitrage Multiple Arbitrage |
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