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Index Arbitrage


What does Index Arbitrage mean?

An arbitrage opportunity between an index and its components. Index Arbitrage aims to profit from intermarket spreads between the futures contract and the index itself.

Futures Knowledge Explains Index Arbitrage

Index Arbitrage involves the simultaneous purchase of stock index futures and the sale of some or all of the component stocks that make up the particular stock index. Or it may be reverse, the simultaneous sale of stock index futures and the purchase of some or all of the component stocks. This strategy is equally applicable for commodities index also. This is mainly used through algorithms or program trading.



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