Arbitrage..........

NOMINDTR

Well-Known Member
#2
Arbitrage is basically an activity through which one can make profits using disparity of two markets.

For an example, you can consider Equity and Derivatives. Arbitrager takes buys in one market and sells in other market. It is not possible to buy equity and sell it in derivatives. I try to just give general picture.

It is about having positions in two markets, and to make profits using the difference in prices in two markets.
 
#3
Arbitrage is basically an activity through which one can make profits using disparity of two markets.

For an example, you can consider Equity and Derivatives. Arbitrager takes buys in one market and sells in other market. It is not possible to buy equity and sell it in derivatives. I try to just give general picture.

It is about having positions in two markets, and to make profits using the difference in prices in two markets.
tnx..... can u giv any example how it works........?

assaraf
 

bandlab2

Well-Known Member
#4
take tata steel. spot rate in cash is 222. dec future is 216.35. lot size is 318. now assume you have 318 shares in dmat. sell these at 222 and buy 1 lot in future at 216.35. expiry is on dec 25, on dec 25 aroundd 3:20 PM, sell your future lot and immeiately buy 318 shares in cash. both rates will be same by then. so you got your 318 shares back. profit is 222-216.35 multipled by 318 = 1800 rs. reduce brokerage for transactions. appx 300 rs. net pofit 1500 rs. on 318 shares.

just an example. like this there are several. but you need to calclate on paper before oing actual trde
 
#5
take tata steel. spot rate in cash is 222. dec future is 216.35. lot size is 318. now assume you have 318 shares in dmat. sell these at 222 and buy 1 lot in future at 216.35. expiry is on dec 25, on dec 25 aroundd 3:20 PM, sell your future lot and immeiately buy 318 shares in cash. both rates will be same by then. so you got your 318 shares back. profit is 222-216.35 multipled by 318 = 1800 rs. reduce brokerage for transactions. appx 300 rs. net pofit 1500 rs. on 318 shares.

just an example. like this there are several. but you need to calclate on paper before oing actual trde
tnx......... is any website to help understnd d idea fully........
 
#7
take tata steel. spot rate in cash is 222. dec future is 216.35. lot size is 318. now assume you have 318 shares in dmat. sell these at 222 and buy 1 lot in future at 216.35. expiry is on dec 25, on dec 25 aroundd 3:20 PM, sell your future lot and immeiately buy 318 shares in cash. both rates will be same by then. so you got your 318 shares back. profit is 222-216.35 multipled by 318 = 1800 rs. reduce brokerage for transactions. appx 300 rs. net pofit 1500 rs. on 318 shares.

just an example. like this there are several. but you need to calclate on paper before oing actual trde
although the thread is 3 months old but I wanna ask anyway. What if on expiry the price of future as well as spot price fall below 210 (say).
 
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#10
hello friends.....

I am working as an arbitrager in one of the top brokerage house in ahmedabad.....

Types of arbitrage........

(1) BETWEEN BSE CASH MARKET AND NSE CASH MARKET........(AT PRESENT I M WORKING IN THIS SEGMENT......)

EXAMPLE :- IN A MOVING MARKET (VOLATILE) RATES OF SAME STOCKS ARE DIFF IN BSE AND NSE.....DIFF MAY BE IN "PAISA" FOR SMALL SCRIPTS AND BETWEEN RUPEES IN HIGH VALUE SCRIPTS.........SUPPOSE RELINFRA RATE IN NSE IS 1250.60 RS AND IN BSE 1252.10 RS......SO U BUY SUPPOSE 100 SHARES IN NSE AND SELL IT IN BSE................SO PROFIT OF 1.5 RS PER SHARE.......AND DURING MARKET MOVEMENTS MANY TIMES IT HAPPENS THAT RATES OF RELINFRA ARE HIGHER IN NSE ...IT MIGHT HAPPEN FOR SECONDS ONLY....AT THAT TIME BUY IN BSE AND SELL IN NSE.......SO YOUR EARLIER POSITIONS GETS SQUARE OFF.........SUPPOSE U BUY AT 1253.30 IN BSE AND SELL AT 1253.50 IN NSE...........SO PROFIT OF 20 PAISA.....SO TOTAL PROFIT OF 1.7 RS MINUS BROKERAGE......


NSE BUY 100 BSE SELL -100

NSE SELL -100 BSE BUY 100

----------------------------------------
NET QUA. 0 0

REMEMBER IN CASH MARKET U HAVE TO SQUARE UP POSITIONS AT THE END OF DAY.....IN OUR CASE (CASH ARBITRAGERS) BROKER DONT CHARGE US ANY BROKERAGE.....ONLY STT AND OTHER TAXES APPLIED.......THAT IS 1900 RS PER 1 CRORE TURNOVER........................FOR NORMAL INTRADAY TRADER IT IS 2900 RS TO 4900 RS PER CRORE.......SO MAIN ADVANTAGE IS THIS......

(2) BETWEEN CASH (NSE OR BSE ) AND NSE FUTURE................

WHICH IS ALLREADY EXPLAINED.........

(3) BETWEEN CURRENT MONTHS FUTURE AND NEXT MONTHS FUTURE....

ACTUALLY THIS IS ALSO KNOWN AS SPREAD.............

IF ANYONE HAVE ANY QUESTIONS REGARDING THIS, FEEL FREE TO ASK......
MOST WELCOME......................
 

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