An Introduction to Arbitrage Trading Strategies

6 Pages Posted: 28 Apr 2023

See all articles by Nicholas Burgess

Nicholas Burgess

University of Oxford - Said Business School

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

Suggested Citation

Burgess, Nicholas, An Introduction to Arbitrage Trading Strategies (April 16, 2023). Available at SSRN: https://ssrn.com/abstract=4420232 or http://dx.doi.org/10.2139/ssrn.4420232

Nicholas Burgess (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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