Index Arbitrage

Index arbitrage is a trading strategy that aims to generate returns by exploiting short-term price differences between the same or related indices. This strategy relies on the fact that indices with a standard value may temporarily diverge, creating opportunities for profit. Index arbitrage can be executed using various financial instruments, such as: - Exchange-Traded Funds (ETFs). - Options. - Futures. Traders take advantage of the price discrepancies by simultaneously buying and selling these instruments to lock in profits, capitalizing on the momentary mispricing between the index and its related assets.