Arbitrage Trading Strategies India -Arbitrage Option Trading Strategies for Stock Trading 

arbitrage option trading strategies in India
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Arbitrage trading is called buying stock or commodity from one platform and simultaneously selling it on the other platform to gain the margin profit. Know more about various Arbitrage trading strategies in India for options trading

What do you Mean by Arbitrage Trading Strategies, and What are Their Types ?

Arbitrage is a process in which the buying and selling of commodities occur simultaneously but on different platforms. The main objective of doing so is to earn a good amount of profit in the short term. If the quantity you are buying and selling is huge, then there are chances to make huge profits. It is an entirely risk-free operation.

 

Some conditions should be proved true for Arbitrage to take place.

 

  • The price of an asset must be different in  different markets

  • Two assets having the same cash flows are traded at different prices.

  • There is a considerable difference between the current and expected future prices.

 

If any of the above conditions are fulfilled, only then we can say that Arbitrage is possible. A trader must keep some points in mind while entering into the Arbitrage state of any stock:

 

  • The fees or cost of a transaction should be low to gain profit.

  • The commodity volume should be sufficient to bear the risk attached to it.

  • A trader should make the Transaction fast.

Below are the Widely Used Arbitrage Trading Strategies in the Financial Market in India

  1. Cryptocurrency

  2. Triangular

  3. Covered Interest

  4. Uncovered Interest

  5. Merger or Risk

  6. Statistical

  7. Index

  8. Betting Or Sports

  9. Currency

  10. Convertible

  11.  Futures

  12. Capital Structure

  13. Cash Carry

  14. Fixed Income

  15. Relative Value

  16. Swap

  17. Options

  18. Gold

  19. Tax

  20. Negative

  21. Latency

  22. Rental

  23. Credit Card

  24. Regulatory

  25. Volatility

  26. Location Or Spatial

  27. Time

  28. Yield Curve Or Interest Rate

  29. On The Run And Off The Run

  30. Retail

  31. Crude Oil

  32. Multiple

  33. Information

  34. Riskless

  35. Political

  36. Institutional

  37. Beta

  38. Knowledge

  39. Static And Dynamic

  40. Quasi

arbitrage strategy in options

Arbitrage Trading Strategies India

There are many Arbitrage trading strategies India used by the traders; they are either checked manually or using the software.

 

There are basically 3 main types of strategies used in India they are Pure Arbitrage, Merger Arbitrage, and Convertible Arbitrage.

 

Pure Arbitrage refers to the investment strategy described above. An investor buys and sells a security in different markets at the same time to leverage a price gap. As an outcome, the terms "arbitrage" and "pure arbitrage" are frequently interchanged.

 

Merger arbitrage is a type of Arbitrage that involves merging entities, such as two publicly traded companies.

 

Convertible Arbitrage is a type of Arbitrage involving convertible bonds, also known as convertible notes or convertible debt. So these are the Arbitrage trading strategies India.

What are Arbitrage Trading Strategies in Options or Arbitrage Option Trading Strategies in India ?

Arbitrage strategy in options - Option arbitrage trades are used to generate small profits with little or no risk. It is the process of buyng and selling the same commodity in two different markets. In Arbitrage option trading strategies, Put-call parties can be used to perform options arbitrage. A call grants you the right to buy, while a put grants you the right to sell. So, this is how the Arbitrage trading strategies in options works.

 

You can only make an arbitrage trade if you already have stocks in your Demat. If the stock is trading at different prices on multiple markets, a simple Arbitrage trading strategies requires buying the stock at a lower cost on one exchange while selling it at a higher price. But as said before, Arbitrage stock trading strategies in India works when you have a particular stock in your Demat account.

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Arbitrage Stock Trading Strategies in India