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Index Arbitrage
Index arbitrage is a trading strategy reserved only for skilled and investors with large capital.
Index arbitrage is done by buying the stock index future and simultaneously selling the stocks in that index. In order to successfully invest in index arbitrage, investor must use sophisticated computer software that can monitor a stock index and futures contracts on that index and announce the gap in the current prices.
As other arbitrages, index arbitrage opportunities can be very profitably only for the first investors embarking it.
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