how to do the future and NOW hedge/arbitrage method?
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Thread: how to do the future and NOW hedge/arbitrage method?

  1. #1
    Can anybody show me?

    I only do the dow index (NOW) cfd previously. I do NOW and NOW cross market hedge sometimes...

    I just noticed that Sep dow future is 8600 and dow index cfd today is 8520...

    (8600-8520)/8500=1 percent diff not large but should I hold until end of Sep that is a sure profit for 3 month??? (if 5x leverage it's 5% over 3month? Not bad)

    anyone could help point out if I'm wrong thinking of doing like this?

    Problem isn't a broker is supplying doing index cfd and future at same acc (can delta?) So need to perform at two broker and p/l cannot be hedged...

  2. #2
    If only it was that simple.

    The money index, or in this case CFD, transactions with the future within a spread that narrows the closer to expiry of the futures contract.

  3. #3
    How about simply distribute to month and nearest month?

  4. #4
    Quote Originally Posted by ;
    How about simply looking in a calander spread for front month and closest month for the YM contract?
    I discovered they charge something called storage fee.
    Such as WTI0809 0909 will be 1$ up.... like that.

  5. #5
    You forgot about interest.
    You would need to sell futures 8600 and buy place dow in 8520 to find this 1 percent. But you forgot that on dow place you have to pay interest and consequently this gap (80 points) is your interest you would have to pay.
    Remember that futures already include interest payment whereas spots do not, hence such a burst.

  6. #6
    Yea... arbitrage isn't that simple. If it had been you'de see people like warren buffet.

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