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Financial terms in "Futures"

1. BUGS Index (HUI)

2. convergence

3. light crude oil

4. local

5. commodity paper

6. NFA

7. convenience yield

8. upside

9. commodity-product spread

10. bond futures

11. managed futures account

12. futures

13. Face value

14. worthless

15. selling hedge

16. limit up

17. international clearing system

18. futures pack

19. cash and carry trade

20. Malaysia Commodity Exchange (MCE)

21. futures spread

22. outcry

23. commodity prices

24. futures equivalent

25. forex futures

26. position trader

27. Hong Kong Exchanges and Clearing Limited (HKEx)

28. underlier

29. expectations theory

30. intraday limit

31. Long Position

32. furthest month

33. derivative market

34. Chicago Mercantile Exchange

35. contract month

36. exempt security

37. Dusseldorf Stock Exchange (DUS)

38. crush spread

39. stable

40. invisible supply

41. bookout

42. West Texas intermediate

43. Merc

44. Actuals

45. Committee on Uniform Securities Identification Procedures

46. tar sands

47. futures strip

48. Restricted security

49. Montreal Exchange (MX)

50. Dalian Commodities Exchange (DCE)

51. first notice day

52. Euroequity issues

53. gold

54. stamped security

55. Inspection

56. goldbug

57. Index and Option Market

58. fully disclosed account

59. Eurex US

60. not rated

61. London spot fix

62. current delivery

63. forward cover taking

64. Minneapolis Grain Exchange (MGEX)

65. upgrade

66. rating

67. Contango

68. commodity contract

69. witching hour

70. swap spread

71. Derivative

72. cost of tender

73. Dojima Rice Exchange

74. physicals

75. intermediate goods

76. intermarket spread

77. cash price

78. variable price limit

79. CBOT

80. COMEX

81. pit broker

82. managed futures

83. Cash settlement

84. narrow-based index (NBI)

85. par

86. street book

87. customer type indicator codes (CTIC)

88. backpricing

89. serial option

90. life of contract

91. warehouse report

92. listed

93. delivery price

94. New York Stock Exchange

95. back month contract

96. chasing the market

97. offering circular

98. short-seller

99. forward foreign exchange

100. large trader

Note: Maximum 100 records reached. Please narrow your search.

Featured term of the day

Definition / Meaning of

Stale Price Arbitrage

Categories: Finance,

for a number of assets, the most recent transaction price at 4PM ET does not fully reflect all available market information. One example is international equities that trade on exchanges that are located in different time zones and close 2-15 hours before U.S. markets. In addition, domestic small-capitalization equities and high-yield and convertible bonds often trade infrequently and have wide bid-ask spreads. This can cause the most recent transaction price to be much different from the price that one would see in a liquid market at 4 PM, even for assets that trade on exchanges that are open at that time. Investors can take advantage of mutual funds that calculate their NAVs using stale closing prices by trading based on recent market movements. For example, if the U.S. market has risen since the close of overseas equity markets, investors can expect that overseas markets will open higher the following morning. Investors can buy a fund with a stale-price NAV for less than its current value, and they can likewise sell a fund for more than its current value on a day that the U.S. market has fallen. Similar opportunities exist when the values of infrequently or illiquidly-traded domestic assets have recently changed. With normal market arbitrage, as more traders learn where to buy an item at relatively low cost and where to sell it at relatively high value, market pressures from such traders tend to stabilize prices. With stale price arbitrage, there is no corresponding pressure for market correction. That is, a fund always pays the going market rate even if that fund has an agreement with its customers to only charge them the price from the prior day closing. Accordingly, even if such agreements ultimately impact the prices of trades by the mutual funds, there is no impact on the price paid by the customer of the mutual fund. In that sense, the stale price arbitrage opportunity can last as long as a mutual fund honors its stale price agreement with its customers. Also referred to as net asset value arbitrage or nav arbitrage.

Most popular terms

1. Discrimination
2. Inflation-protected Security (TIPS)
3. Community Reinvestment Act Of 1977
4. Consensus Recommendation
5. Severance Pay
6. Mere Descriptiveness
7. Hacker
8. Section 9 Renewal Application
9. Netting
10. Lump-sum Distribution

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