Arbitrage
Also called: cash-futures arbitrage, arbitrage trade
Profiting from a price difference between closely related things by buying the cheaper and selling the dearer at the same time.
True arbitrage opportunities are rare, small and quickly competed away by firms with low costs and fast systems. Trades described as risk-free still carry execution, funding, margin and rule-change risks. Promises of high risk-free returns are a warning sign.
Learn more in these lessons
- Arbitrage basicsWhat is arbitrage, and can it really be risk-free?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.