What is Arbitrage?
Arbitrage is also known as "interest arbitrage." There are two main forms: (1) no arbitrage. That is, by using the interest rate difference between the capital markets of the two countries, short-term funds are transferred from a market with a low interest rate to a market with a high interest rate in order to obtain interest margin benefits. (2) Put up arbitrage. That is, while the arbitrageur transferred the short-term funds from A to B to arbitrage, he used forward foreign exchange transactions to avoid the risk of exchange rate changes. Arbitrage activities will change the relationship between supply and demand in different capital markets, make the interest rates of short-term funds in various places more consistent, reduce the difference between the short-term exchange rate and the forward rate of the currency, and keep the difference between the interest rate difference between the capital market and the exchange rate difference in the foreign exchange market. Equilibrium, thereby objectively strengthening the integration of international financial markets. However, a large number of arbitrage activities will lead to large-scale international movement of short-term capital and aggravate the turbulence of international financial markets. [1]
- Arbitrage is also called spread trading. Arbitrage refers to buying or selling some kind of
- Arbitrage opportunities arise when one or more of the following three conditions are met.
- First of all, explain that trend analysis is suitable for medium and long-term investors, regardless of how much the day s rise and fall, focusing on long-term benefits [4]
- Futures arbitrage [6]
- Commodity spread arbitrage
- The simplest example of arbitrage comes from the use of the same commodity in large spreads in different markets. For example, the price of the same wheat in the producing area (such as Kansas) is usually lower than that of the city (New York). Once the price of urban wheat minus transportation, storage and
- Arbitrage in the silver market
- Fundamental
- Among all types of arbitrage, silver is a very good asset. Compared to other agricultural and industrial products, silver arbitrage has the following characteristics: (1) Global recognition, since the record of civilization, whether it is jewelry consumption or trade With all currencies, silver plays an important role.
(2) Uniform global pricing. Silver's pricing is the same whether it is in developed or developing countries or in authoritarian countries of democracies. Because of the uniqueness of pricing [7] , silver spread arbitrage must be returned. Compared with agricultural products and industrial products, due to various reasons such as trade protection, the prices of different exchanges are often very different.
(3) Stable attributes. Compared with other underlying assets, silver has relatively stable chemical properties. Silver will never deteriorate regardless of its storage for hundreds of years. As long as the purity is specified, the underlying assets of different exchanges can be regarded as the same.
(4) Differences in investor structure. Why are there obvious price differences for the same product? It is precisely because of the existence of different investor groups that they have different expectations for the future of commodity prices. Investors in the Shanghai Gold Exchange are mainly individual retail investors, while Comex silver investors are mainly mature investors. The different structure of investors determines that the same commodity has obvious differences in different markets.
(5) It has the characteristics of a class of financial futures. In futures arbitrage, if commodity futures are involved, the spread will not necessarily return. Investors who want to realize arbitrage will necessarily involve spot delivery, and the commodity delivery process is relatively complicated. As a professional investor, I do not want to involve the issue of spot delivery. For financial futures, for example, stock index futures are settled in cash, there is no problem of spot delivery. Even if future government bond futures are settled on the spot market, the current liquidity preservation of the government bond market is very good, which can only be approximated by Cash delivery. For silver, although it is also delivered on the spot, because silver is the second hardest currency in the world, its liquidity is very good, similar to financial futures, making silver arbitrage opportunities very large.
(6) Silver is the perfect arbitrage product [7] . Silver has both a complete mean return similar to financial futures and a higher yield on commodity futures, but the risk is the same as a stock index futures arbitrage, which is a low-risk investment strategy. .
- Practical operation case
- Tianjin Precious Metals Exchange, the price of silver is **** yuan / kg, 1 kg per lot, 15 kg;
Shanghai Gold Exchange, the price of silver T + D **** yuan / kg, 1 kg per lot;
Under normal circumstances, silver T + D is about 180-200 higher than Tianjin Silver (referred to as Tiantong Silver);
They are all operated with one kilogram per hand.
When silver T + D is 100 higher than Tianjin silver, go long silver T + D and short Tiantong silver;
When the silver T + D is 200 times higher than Tianjin silver, make blank silver T + D and do silver for multiple days;
This is a general operation idea. If the cost is relatively low, the operation space is large. [8]
The silver arbitrage index chart is as follows: