# Index arbitrage

**Definition:** [crh] An investment trading strategy that exploits divergences between actual and theoretical futures prices. An example **Definition:** is the simultaneous buying (selling) of stock index futures (i.e., S&P 500) while selling (buying) the Definition: ="/?rd=underlying">underlying stocks of that index, capturing as profit the temporarily inflated basis between these two **Definition:** baskets. Often, the point at which profitability exists is expressed at the block call as the number of points the future must be over or **Definition:** under the underlying basket for an arbitrage opportunity to exist. See: Program tr**Definition:** ading.

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