Forward arbitrage: short for forward arbitrage.

Forward arbitrage means that the price ratio between futures and spot is higher than the upper limit of no-arbitrage range, and arbitrageurs can sell futures and buy spot with the same value at the same time. After the current spot price ratio falls back to the no-arbitrage range, they will close their positions at the same time to obtain arbitrage income.

There is also reverse arbitrage.

Extended data:

The forward arbitrage of futures refers to the forward market, that is, the market where the futures price is higher than the spot price. Forward arbitrage means that the price ratio between futures and spot is higher than the upper limit of no arbitrage range. At this time, you can sell the futures and buy the spot, and then close the position when the price range is reasonable, and you can get the income.

The key here is to define the upper limit of the no-arbitrage interval, which is mainly determined by the transaction cost, and for commodity futures, it also includes storage fees and transportation fees. For arbitrage traders, beyond the no-arbitrage interval, it means that there are arbitrage opportunities, while within the no-arbitrage interval, it means that futures are priced reasonably and there are no arbitrage opportunities. When the spot spread is higher than the upper limit of the no-arbitrage interval, forward arbitrage can be carried out; Below the no-arbitrage range, reverse arbitrage can be carried out.

There are many technical terms in futures, which novice investors need to know in order to operate better. What do you mean by futures upside down? Let's have a look.

Positive arbitrage means that the price ratio of futures and spot is higher than the upper limit of no arbitrage range. Hedging, that is, reverse arbitrage, means that the price ratio of futures and spot is lower than the upper limit of no-arbitrage range. No-arbitrage interval refers to the fluctuation interval of futures theoretical price after considering transaction costs.

Generally speaking, forward arbitrage means buying near month and throwing far month, while reverse arbitrage means buying far month and throwing near month. In futures arbitrage trading, investors buy or sell futures market contracts at the same time or similar time, and sell or buy corresponding securities or other related assets with the same value in the spot market.

Take corn futures as an example. The trading code of corn futures is C. C 1-3, which refers to buying C 1 month contracts and selling March contract arbitrage; C3- 1 hedging refers to the arbitrage of buying contracts in March and selling contracts in June. When arbitrage is carried out, it is necessary to determine the no-arbitrage interval, which is often difficult to judge and has many influencing factors.

When investors carry out intertemporal arbitrage trading, they can trade the same futures product with the same value and opposite direction between contracts in different months at the same time or similar time.

When investors carry out cross-species arbitrage trading, they can conduct transactions with the same value and opposite directions between contracts of different varieties at the same time or similar time.