Arbitrage opportunity

Discussion in 'Options' started by Aquarians, Aug 20, 2018.

  1. JSOP

    JSOP

    Ok what are we supposed to do here? Just to tell you what we think are arbitrage opportunities in various securities? You are the one with the R&D grant, aren't you supposed to be the one who finds arbitrage opportunities to invest? LOL If you want us to find you the arbitrage opportunities, then we should be the ones who should get those R&D grants from EU. LOL
     
    #11     Aug 20, 2018
  2. guru

    guru

    Many people seem to post only pointless criticism and arguing semantics, so let me provide quick constructive feedback. I specialize in options arbitrage and some of my trades are fully riskless and show profit the instant they’re made. Others carry no practical risk but in theory have a negligible chance of losing big. This may be different from your situation and you may be trading different instruments and different types of arbitrage, but here are a few issues that I am facing:
    1. Riskless arbitrage opportunities become more rare the more often you trade them. The other side that loses money is not stupid, and in some cases they may be market makers who fix their system or even steal your trade ideas after analyzing how they’ve lost money. So some opportunities that you may see today may not be there next month, or when you start trading them.
    2. “Almost riskless” arbitrage opportunities may be more frequent but still facing the same problems as above. At the same time if there is even a slight risk then it’s possible to go broke. See the story of Long-Term Capital Management founded by top mathematicians that lost billions.
    3. Liquidity may not be sufficient in terms of getting quantities of stock or options and maybe sometimes futures that would allow making serious money with arbitrage.
    4. As someone else pointed earlier, you may not be able to get funding for trading, or a trading type business.
    5. In my case many of my arbitrage trades require vey large initial margin. I’m always in search for leverage but the more leverage I can get the more margin/capital I need to use to secure the trade, even when there is no chance of loss. So you may not be able to load up on too much stock(s) or other instruments that you’d like to arbitrage.
    6. You may be wrong with your tests, especially if you don’t have super clean data customized for your needs. Almost all historical data available anywhere on the market shows spikes where they wouldn’t be in real life, especially as many trades are reported by dark pools hours after they happened.
    And especially since you’ve mentioned that you may have bugs, then you really can’t know if you really found something.
    Etc.

    So it’s possible that you discovered something interesting and it can be exciting, but I wouldn’t advise quitting your day job just yet :)
     
    Last edited: Aug 21, 2018
    #12     Aug 21, 2018
    JSOP, ironchef, DaveV and 1 other person like this.
  3. ironchef

    ironchef

    Sounds like good risk free money for you, better than arbitrage.

    I don't think any of us can provide you with such a deal.
     
    #13     Aug 21, 2018
  4. pipeguy

    pipeguy


    Alright man, sound convincingly. What return do you "promise"? Okay, expect to promise?
     
    #14     Aug 21, 2018
  5. guru

    guru

    [edited] If this question was for me, I don't sell education or anything else, so I don't promise anything.
     
    #15     Aug 21, 2018
  6. kmdguy

    kmdguy

    My armchair opinion based on general principles of economics is that true arbitrage situations are fleeting. If you can spot one, then so can a host of others and soon the disparity in price will equalize and the opportunity will vanish. If you are lucky to find a true arbitrage opportunity once, then it is just that... luck. It won't last though.
     
    #16     Aug 25, 2018
  7. An EU grant is an arbitrage.

    a) There's zero possibility to lose my money (since the investment is theirs, not mine).
    b) There's positive or at least zero probability I'll make money as result of this investment.

    The only problem I have with them is timing. I got $50k of my own, just like the grant I may get. But if instead of waiting months or years till I get it, I use my own money NOW, I can't deduce them from the grant. Like I spent $25k so far, you're giving me $50, lemme get my $25 back and proceed with the remaining $25k.

    It's effectively incentivizing the slackers who can't or won't put their own capital in the game.
     
    #17     Aug 26, 2018
  8. I am not sure as to the legality of this. You cannot borrow money to trade...I know what a grant is...but then is that a sponsor?..and then is that legal?

    ES

     
    #18     Aug 26, 2018
  9. Take a sidestep and look at the greater picture. I'm not talking ONLY trading, EU grants sponsor ANYTHING. Albeit mostly car washes and nail polishing saloons where I live and it's these retarded imbeciles I have to compete with if I'm to get a grant for my trading R&D business.

    It goes like this: EU has 10 billion dollars for sponsoring new businesses per year. You apply with an idea limited at $50k. You enter a contest with other ideas and win. From this point on it's an arbitrage. Whatever the idea you stick to it. It's like getting $50k to bet on the roulette. You stick to the idea and bet them all. If you lose, you owe nothing back, not even regrets since they weren't your money anyways. If you win it's all yours (after taxes but again, it was free money anyways).

    It's unfair towards hard working honest citizens like me who busted their ass for 20 years to save $50k for a similar investment, and if they lose (independently or worse, towards arbitrage-sponsored competition), they've essentially flushed their life down the toilet?

    Sure is but that's how EU works.
     
    #19     Aug 26, 2018
  10. It's the rules in the exchanges themselves that I am talking about...

     
    #20     Aug 26, 2018