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What are the operation methods of futures arbitrage?
There are three main arbitrage methods in the futures market, namely, cross-delivery month arbitrage, cross-market arbitrage and cross-commodity arbitrage. First, cross-delivery month arbitrage. That is, speculators use the price difference of the same commodity in different delivery periods in the same market to buy futures contracts in one delivery month and sell similar futures contracts in another delivery month, thus making profits. Its essence is to profit from the price difference between different delivery months of the same commodity futures contract, which is the most commonly used form of arbitrage. Generally speaking, cross-month arbitrage has nothing to do with the absolute price of goods, but only with the trend of price difference in different delivery periods. Second, cross-market arbitrage. That is, speculators use the futures prices of the same commodity in different exchanges to buy and sell futures contracts in two exchanges at the same time, so as to make profits. When the price difference of the same commodity in two exchanges exceeds the transportation cost of the commodity from the delivery warehouse of one exchange to the delivery warehouse of another exchange, it can be predicted that their prices will shrink, reflecting the real cross-market delivery cost in a certain period in the future. Third, cross-commodity arbitrage. That is, arbitrage is carried out by using the futures price difference between two different and interrelated commodities, that is, buying (selling) a futures contract of one commodity in a certain delivery month and selling (buying) another futures contract and another related commodity in the same delivery month at the same time. Generally speaking, cross-commodity arbitrage must meet the following conditions: first, there is correlation and mutual substitution between the two commodities; Second, the transaction price is restricted by the same factors; Third, futures contracts bought or sold should usually be in the same delivery month.