An Introduction to Arbitrage Trading Strategies
6 Pages Posted: 28 Apr 2023
Date Written: April 16, 2023
Abstract
Arbitrage trading strategies are a class of trading strategies that involve buying and selling financial instruments to take advantage of price discrepancies. The goal of arbitrage trading is to make a profit from the differences in prices between securities or markets, without taking on significant directional risk. Arbitrage trading strategies typically rely on quantitative analysis and mathematical models to identify mispricing and execute trades quickly before the market adjusts. In this article, we will introduce five popular arbitrage trading strategies and provide a simple example and reference materials for each strategy.
Keywords: Arbitrage, Trading Strategies, Mispricing, Volatility, Structured Products, Capital Structure, Stocks, Equity, Credit Derivatives, Bonds, Options
JEL Classification: F3, F37, F38, G1, G21, G24, G30, G32, G34
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