ETF Arbitrage
This video explains how arbitrageurs gain profits through mismatches between constituent share prices versus ETF prices and the problems with using ETFs to gain arbitrage profits.
Overview
The fact that you can create and redeem ETFs easily and at virtually no cost, means you can create ETF inventory very easily.
Arbitrageurs therefore will monitor the ETF price, and recalculate the real-time value of the constituent shares, and they will jump in whenever the prices deviate.
Key learning objectives:
Understand how arbitrageurs gain profits through mismatches between constituent share prices versus ETF prices
Understand the influence of arbitrageurs
Understand the problems with using ETFs to gain arbitrage profits
Summary
Expert
Gontran de Quillacq
Gontran de Quillacq has 25 years of experience in derivatives trading, portfolio management, proprietary trading, structured products and investment research. He has worked with top-tier banks and hedge funds in both London and New York.
