I am planning to do arbitrage trading for 50 lakhs.
If you check this,
http://www.moneycontrol.com/stocks/marketstats/arbitrage/futures-spot-near-2.html
spot price of stock expiring in 15 days is 218 where as futures price is 221.
On expiry both will have same price, so if i do arbitrage trading I can get 1.31% profit. That is quite good considering the time.
So, is it possible to earn 2% monthly profit using arbitrage trading? Do I need to purchase some automated software to place orders for arbitrage trading?
Further i had checked BSE has cash future spread.
http://www.bseindia.com/markets/Derivatives/DeriReports/cfs_trading.aspx?expandable=3
How can i trade in this spread?What are the margin requirements for this spread?
The difference between Futures and Spot isn't that much. Moneycontrol shows the spot price to be 215 and futures 221. If the difference was indeed that much you could have done an arbitrage trade.
If you'd like to do an arbitrage, you'd have to buy 1000 quantities of Spot and sell 1 lot of Futures. This will give you a riskless gain of Rs.6150.
The capital implemented to do this trade:
Margin required to short 1 lot of VEDL: 34000
Margin required to buy 1000 shares of VEDL: 214950
Total margin: 249000
Percentage return: 6150/249000*100 = 2.5%
These are brilliant returns for a month. However the possibility of finding such opportunities are very very minimal because you're competing with super computers and algo trades in finding such opportunities, the chances of human winning are very slim.
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