Arbitrage trading: buying one futures contract and selling another futures contract at the same time. The futures contracts here can be different delivery months of the same futures product.

it can also be two different commodities that are interrelated. It can also be the same commodity in different futures markets. Arbitrage traders are long on one futures contract and short on another futures contract at the same time, and gain profits through the price difference between the two contracts, which has little to do with the absolute price level.

Arbitrage trading has the following characteristics compared with ordinary speculative trading:

1. Lower risk. The price difference of different futures contracts is far less drastic than the absolute price level, which reduces the risk accordingly, especially avoiding the risk of unexpected events impacting the disk.

2. facilitate the entry and exit of large funds. Arbitrage trading can attract large funds. Due to bilateral positions, it is difficult for the main institutions to force arbitrage traders to cut their positions.

Extended information:

Main arbitrage modes:

Arbitrage trading modes are mainly divided into four types, namely: stock index futures arbitrage, commodity futures arbitrage, statistics and option arbitrage.

1. Arbitrage of stock index futures

Arbitrage of stock index futures refers to the behavior of taking advantage of unreasonable prices in the stock index futures market, participating in the trading of stock index futures and stock spot market at the same time, or trading stock index contracts with different maturities and different (but similar) categories at the same time to earn the price difference. Stock index futures arbitrage is divided into futures arbitrage, intertemporal arbitrage, cross-market arbitrage and cross-variety arbitrage.

2. Commodity futures arbitrage

Similar to stock index futures hedging, there is also an arbitrage strategy in commodity futures. When buying or selling a futures contract, you sell or buy another related contract, and close both contracts at the same time at a certain time.

It is somewhat similar to hedging in transaction form, but hedging is to buy (or sell) physical goods in the spot market and sell (or buy) futures contracts in the futures market at the same time; Arbitrage only buys and sells contracts in the futures market, and does not involve spot trading. ?

Baidu encyclopedia-arbitrage