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What is Arbitrage


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What is Arbitrage: a hedge fund investment strategy for risk free income generation. Mostly utilize in mergers and acquisitions “Risk Arbitrage Trading”. WTI Brent Crude Oil.

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What is Arbitrage

  1. 1. What is ArbitrageArbitrage is an investment strategy that is focused on buyingsecurity while at the same time selling another one; in thesame asset class. Page 1
  2. 2. Imagine you can buy crude in Cushing,Oklahoma at WTI Prices; but sell it inHaynesville, Louisiana at Brent Oil Prices. Brent Oil Price $100 WTI Price $90 Transactions Cost $3 Your Profit $7In effect you created a risk free trade. if both contracts happen simultaneously,you will be pocketing the spread, after transactions cost are paid. Page 2
  3. 3. But the most popular way of arbitrage iswith equities also known as risk arbitrage.Because of this I created the following spreadsheet to help you developyour own strategy. Page 3