Hi All,
I am trying to execute a futures arbitrage, for say Abbott, as the future price is at a premium compared to spot.
For this:
- Can I buy the spot and immediately sell the futures, or do I have to wait for the stock delivery
- I am assuming cash is needed for buying the spot component. Is that correct or is there a way to reduce buying costs
- What would be the best method for realizing the benefit - hold till expiry or any other way
- How does this method compare to the Synthetic Long and Arbitrage method on Varsity, and buying a Near month future and selling a mid / far month future.
Thanks
Yes you can sell futures immediately
you can take the futures sell first, cash buy next, or in any order. It doesnt matter
Futures are settled (shares settlement) only on the monthly expiry day
Yes spot needs 100% cash.
Yes on the day of expiry just square off both positions (Dont leave it for physical settlement, it leads to unnecessary settlement charges)
Yield is too less, better to do FD
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Jst do ur research proprly . Thrs lot of money needed to buy same qty of stocks against one lot futures . N return is little more than fd tht too if diffrnce is more . Yes gud if u invest so mch money n thn pledge those shares n take more arbitratge positions . If u do b/w near n next expiry thn less capital bt stt n other taxes wud be more
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