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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 MatchesCovered 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. Riskless arbitrageRiskless arbitrageThe simultaneous purchase and sale of the same asset to yield a profit. Reversal ArbitrageReversal ArbitrageA riskless arbitrage that involves selling the stock short, writing a put, and buying a call. The options have the same terms. Arbitrage free option pricing modelsArbitrage free option pricing modelsYield curve option-pricing models. Arbitrage Trading Program (ATP)Arbitrage Trading Program (ATP)See: Program trading. Further SuggestionsConvertible Arbitragearbitrageur Structured arbitrage transaction Risk controlled arbitrage Locational arbitrage Arbitrageur Special arbitrage account conversion arbitrage Merger Arbitrage Discount Arbitrage Triangular arbitrage Triangular arbitrage International arbitrage arbitrage Multiple Arbitrage Arbitrage Arbitrage bonds One-way arbitrage Covered interest arbitrage Tax arbitrage Currency arbitrage |
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