Query about arbitrage?

ivanboesky · #21 15th July 2005, 11:37 AM

Altraderji,
Yes, it is possible to arbitrage between the MCX and NYMEX. However, you would have to have a broker (or two) who can execute the trade on both exchanges. You would also have to look at hedging away the forex exposure, since the oil futures are quoted in Rupees on the MCX, and in Dollars on the NYMEX.

gopii · #22 15th July 2005, 02:42 PM

Dear Ivan

thks a lot for the guidance, yes u are right about the 90 days thing.

anything you could add for me, pl do, i am learning this arbit stuff and dont want to burn my fingers with the half knowledge i have.

thks
b rgds
gopii

nillohit · #23 9th October 2005, 08:50 AM

RE- Query about Arbitrage/HEDGING
I am an avid reader of contents of Traderji.com. This is an excellent site for understanding stock trading and of immense value rendering interaction with seasoned Senior Members. I am interested in HEDGING between spot and future section, and seriously thinking of some investment.
I earnestly request all senior members to share their experience,and part with their valuable advices and to guide me in the process.
Waiting to hear from you soon.
Regards.

ravi_s_ghosh · #24 25th February 2006, 08:36 PM

Traderji, as you have mentioned, one needs to own large amount of shares of the script concerned to take advantage of prize difference. Now, first of all, it is not possible to own even 100 out of 800 odd shares listed in NSE and that too in large quantities. I know some guys do this by borrowing shares or stuff like that but its not quite clear. As far as I know, most brokers do not allow intraday interexchange transactions and even if they do, then also we would be required to give delivery of shares first before getting them in our account which won't be possible. Hence, the option left with us is to square off separately in NSE and BSE.

Secondly, how do we get to know the scripts with best arbitaging opportunities out of the 800 NSE scripts. Is there any software available for this? Probably techies in this forum can help a bit with some excel to do this job using asp or that kind of stuff which retrieve data from websites, but this needs to be done with nse and bse websites directly as ***** data is delayed and certainly speed needs to be kept in mind.

An Observation: I have seen that when the market opens, some script show a huge upward movement in nse whereas the prizes remain low on bse. This, however, is corrected wthin a few minutes. To me, this seems to be because of huge orders placed before market hours by institutional bodies who trade mostly in NSE. This happens almost everyday. Just look at "top gainers and losers" at nseindia.com and then compare them with bseindia.com. I have tried to capitalize on this and tried placing market prize orders as they are executed first, but orders were either executed at unfavorable prize (other than market prize) or prizes have converged significantly.

Any feasible solution??????

supaTrade · #25 3rd January 2007, 12:52 AM

As far as I understand, I will have to sqare off the positions before the end of the day. I mean I will have to again buy 600 from BSE at say 504.00 and sell 600 of them at NSE for say 501.00. The net outcome will be 1+1 = 2.00 per share. Then how can I get a profit? Traderji please explain.

Quote:

Originally Posted by Traderji

Here is a simple explanation:

Suppose you own 600 shares of Satyam. One trading day you notice that Satyam is trading at 505.00 on the BSE and 500.00 on the NSE. You sell your 600 shares on the BSE at 505.00 and simultaneously buy back the 600 shares on the NSE at 500.00.

You profit in this case is 600*5.00 = 3000.00 less brokerages if any.

Generally in the west, large institutions have automated trading programs that scan different markets across the globe to take advantage of arbritrage opportunities as small as a fraction of a point. Because of their volumes and almost no brokerage these institutions make profits out of these.

Traderji · #26 3rd January 2007, 08:07 AM

If you own the shares you do not have to cover up your positions. However f you do not own the shares then you have to close both positions on the BSE & NSE.

Arbitrage is generally not feasable for individuals. However brokers are more likely to take advantage of arbitrage because they do not have to pay any brokerage.

tintin8801 · #27 3rd January 2007, 11:55 AM

Quote:

Originally Posted by Traderji

Here is a simple explanation:

Suppose you own 600 shares of Satyam. One trading day you notice that Satyam is trading at 505.00 on the BSE and 500.00 on the NSE. You sell your 600 shares on the BSE at 505.00 and simultaneously buy back the 600 shares on the NSE at 500.00.

You profit in this case is 600*5.00 = 3000.00 less brokerages if any.

Generally in the west, large institutions have automated trading programs that scan different markets across the globe to take advantage of arbritrage opportunities as small as a fraction of a point. Because of their volumes and almost no brokerage these institutions make profits out of these.

in this case will the brokerage be charges based on delivery trades as i am actually again in possesion of the shares?

how can i do arbitrage if i dont own any share ? what is the procedure?

can a share bought in NSE be sold at BSE? as sometimes the price diff exits as u said and even i want to sell the delivery stocks i may gain some selling in the higher market!

swagat86 · #28 3rd January 2007, 01:23 PM

Quote:

Originally Posted by tintin8801

in this case will the brokerage be charges based on delivery trades as i am actually again in possesion of the shares?

how can i do arbitrage if i dont own any share ? what is the procedure?

can a share bought in NSE be sold at BSE? as sometimes the price diff exits as u said and even i want to sell the delivery stocks i may gain some selling in the higher market!

hi tintin,

If u hav the deliery u call sell in BSe or NSE, Provided it is traded on the other exchnge.

supaTrade · #29 3rd January 2007, 04:48 PM

Thank you Traderji for replying to my post. It is all very clear now.

prashant909 · #30 23rd May 2007, 09:31 PM

Trader ji,
I hav few queries bout arbitrage.....
1. Do we hav to make a short sell first @ the higher rate and then purchase at lower rate?
2. Which broking cos. in India are providing Arbitrage facility?
3. Or do we have to make the arbitrage deal during the closing session?
4. What does "square up their positions during the course of the day whenever they have a favourable price" means??

Kindly explain the above................

Thanking YOu..........................

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