Arbitrage

This Issue in United States

Concept of Arbitrage in Futures Trading

In this context of financial law, the following is a definition of Arbitrage: A strategy involving the simultaneous purchase and sale of identical or equivalent commodity futures contracts or other instruments across two or more markets in order to benefit from a discrepancy in their price relationship. In a theoretical efficient market, there is a lack of opportunity for profitable arbitrage. See Spread.

Arbitrage

Concept of Arbitrage in the context of derivatives contract, by the International Swaps and Derivatives Association (ISDA): A strategy to take advantage of profitable opportunities in different markets arising from differential price anomalies.

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See Also

• Derivatives Contract