After Budget 2014, there has been talk of using arbitrage funds instead to get a reasonable post-tax return. How do these funds work? What kinds of arbitrage can you do, with different levels of risk, in the markets? In a series in Optionalysis, we will address this situation.
The Cash Future Arb
If you buy stock in the cash markets, and sell the future, you will be able to “lock in” the difference between the two. Your cost is the cost of the stock (cash . . .