Comment on Reverse Arbitrage? SLB?
commented on
21 May 2013, 07:22 AM
Anand,
You are getting confused, what you are talking about is a calendar spread. Calendar spread is when you take a trade to make profits between difference in prices of 2 different series. Like the way you have mentioned between may and june futures.
The arbitrage I am talking about is the difference between spot and futures. Reverse arbitrage is when futures is trading at a discount to the spot. So if stock is trading at 2500 and futures at 2470, this is a reverse arb opportunity, unless the stock is going ex dividend, in which case the stock price will come down on the ex dividend date..
Hope this helps…