What does arbitrage mean?
Arbitrage refers to the trading behavior that futures market participants use the price difference between different months, different markets and different commodities to buy and sell two different futures contracts at the same time to obtain risk profits from them.
And make futures speculation not only limited to the level change of the absolute price of futures contracts, but also turn to the level change of the relative price of futures contracts. This is often called arbitrage.
What are the arbitrage classifications?
(1) Period arbitrage: Period arbitrage, also known as month-to-month arbitrage, is to use the price difference between different delivery month contracts of the same commodity to trade and hedge when favorable changes occur.
(2) Cross-market arbitrage: Because cross-market arbitrage is to buy and sell futures contracts in two futures exchanges within the same delivery month, and make use of possible geographical price differences to make profits.
(3) Cross-commodity arbitrage: refers to trading by using the price difference between two futures commodity contracts that are highly replaceable or affected by the same supply and demand factors.
(4) Arbitrage between raw materials and commodities.
(5) Arbitrage by using the price difference between spot and futures.
The above means "arbitrage". What are the arbitrage classifications? "All the explanations, I hope everyone can gain something after reading them.