Arbitration Strategy For Intra-Day

[rmani84]

To start with, Arbitration Opportunity will not be much on high volume traded stocks. It will be most prominent in stocks where trading is in low volumes.

For example, "PI Industries" is a low volume traded stock. Basically Arbitration is significant difference in price of a stock between BSE and NSE stock exchange.

Below is snapshot of Stock Quote "PI Industries" which presents a Arbitration Opportunity.



In this case as seen in snapshot above, You can buy 10 shares of "PI Industries" from BSE at 612.90 a share
At the same time, you can also sell 10 Shares of "PI Industries" from NSE at 613.50 a share.

This way you can make profits of 0.60 Rs a share instantly at almost ZERO Risk. Assuming you can do this on 1000 Shares a day, You can make 600 Rs profits a day at almost no risk. This way, you can make 12,000 Rs profits a month!

PS: This of-course does not involve brokerage charges. Use a broker which charges least brokerage to make most profits.

As a general piece of advise, invest your intra-day Arbitration Profits in long term stocks and take delivery.

[rmani84]

Combine this strategy with some basic analysis of the stock you choose for arbitration and the intra-day market behavior.
The key here is to make the buy and sell of arbitration instantly. If there's time gap, you may miss the opportunity and the stock may drift.

In case you cant buy in NSE and sell in BSE and vice versa, follow the below strategy.

Position 1: Buy intra-day 1000 shares @ 612.90 in BSE.
Position 2: Sell intra-day 1000 shares @ 613.50 in NSE.

Effectively you have profits of 0.60 Rs a share (600 Rs) combining the above 2 positions as a hedge arbitration.

Irrespective of whether the stock rises or falls, the profits of 600 Rs is locked.

[parm]

Dear Mani sir,
Today as i am watching HDFC bank FUT is 754.25 and in cash market it is 747.25.Difference is 6.40 rs.Can we take the benefit in intraday?

[rmani84]

Dear Mani sir,
Today as i am watching HDFC bank FUT is 754.25 and in cash market it is 747.25.Difference is 6.40 rs.Can we take the benefit in intraday?

No, you cannot benefit in intra-day .... You can benefit in positional where, Go long in current month Futures and Short next month Futures ....

[parm]

thank u very much sir for your early reply

[parm]

Dear Mani sir,
As per your artical on arbitrage strategy for intraday..I want to know is it possible to buy in NSE and same time sell at BSE.I think intraday arbitrage is not allowed?kindly advice

[rmani84]

Dear Mani sir,
As per your artical on arbitrage strategy for intraday..I want to know is it possible to buy in NSE and same time sell at BSE.I think intraday arbitrage is not allowed?kindly advice

No, you cannot sell across exchange in intra-day ... But u can take delivery and exit on T+2 ... This is only helpful for long term delivery investors who can choose to buy in an exchange trading at a lesser price

[AastroGuru]

sorry, but what is T+2?

I understand Intraday MIS is not allowed, If I take in CNC, today afternoon, when can I sell it off, do u mean I need to sell it off immediately by changing exchanges?

For example I buy in NSE, and when I sell instantly (next second), should I choose BSE and select same scrip and sell?

But BSE will have some other scrip id for same company, is it ok?

Edit:
Got the answers, by searching in net, thanks

[AastroGuru]

Hi mani, your explanation is good but unclear.
You have explained with example. Thanks
But you need to complete your explanation about closing the intraday trades again in BSE and NSE (which has to be done when there is no gap between NSE and BSE)

Situation 1: Uptrend curve
Position 1: Buy intra-day 1000 shares at 612.90 in BSE.
Position 2: Sell intra-day 1000 shares at 613.50 in NSE
SquareOff1: Sell intraday 1000 shares at 620.00 in BSE
SquareOff2: Buy intraday 1000 shares at 620.00 in NSE

Situation2: Downtrend curve
Position 1: Buy intra-day 1000 shares at 612.90 in BSE.
Position 2: Sell intra-day 1000 shares at 613.50 in NSE
SquareOff1: Sell intra-day 1000 shares at 600.00 in BSE
SquareOff2: Buy intra-day 1000 shares at 600.00 in NSE

So the trend doesnt matter, and profits are getting locked.

[Kirti]

Mani sir,
The above mentioned arbitration strategy is little unclear...Can we buy and sell the same share on nse and bse on intraday basis? Is it allowed ? How the hedging strategy applied to it ..please explain with one example..