Futures positive arbitrage is correct arbitrage, which is correct market, that is, the market where futures prices are higher than spot prices. Forward arbitrage means that the futures and spot prices are higher than the upper limit of the no-arbitrage range. At this time, you can sell futures, buy spot, and close your position after the price range recovers. The key here is to know the upper limit of the no-arbitrage interval, which is mainly determined by the transaction cost, including the storage fee and transportation fee of commodity futures.

What does futures hedging mean?

Reverse arbitrage, that is, reverse arbitrage, when the ratio of futures to spot price is lower than the upper limit of no arbitrage interval. No-arbitrage interval refers to the theoretical price interval of futures after considering transaction costs. Generally speaking, forward arbitrage buys in recent months and sells in distant months, while reverse arbitrage buys in distant months and sells in recent months. In futures arbitrage trading, investors buy or sell futures contracts, while selling or buying securities or other related assets with the same value in the spot market.