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Discount Arbitrage

Definition: [crh] A riskless arbitrage in which a discount option is purchased and an opposite position is taken in the underlying security. The arbitrageur may either Definition: REF="/?rd=buy">buy a call at a discount and simultaneously sell the underlying security (basic call arbitrage) or may buy a put at a discount and simultaneously buy the underlying security (basicDefinition: put arbitrage). See also Discount.

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