10

According to the general introduction to the HMRC manual on CGT: Chargeable gains accrue on the disposal of assets. There's a bunch of other material but none of it seems to put any qualification on timing. If you carried out an arbitrage you must have bought and sold one or more assets. So by that definition it seems like your profit is a capital gain, ...


10

Anyone who wants to buy something from Zimbabwe or pay taxes in Zimbabwe will need to buy Zimbabwean dollars. A company in Zimbabwe that pays its workers in Zimbabwean dollars but sells products in US dollars will need to buy them too. Because there is an existing economy in Zimbabwean dollars, one has to buy the currency to be part of it. If the economy ...


9

You're missing the cost-of-carry aspect: The cost of carry or carrying charge is the cost of storing a physical commodity, such as grain or metals, over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential ...


7

Here in the UK it's certainly possible. We call it stoozing. The basic steps are Get a credit card with a long 0% period for purchases and a savings account with as high a rate as possible. Do your regular shopping on the credit card, make minimum payments each month Put the money you would normally spend on your regular shopping into the high rate savings ...


7

It's still possible, but current money market and other guaranteed rates are so low that it's usually not worth the time and energy. However, even if interest rates were higher and it possibly would be worth it, it's not something that credit card companies worry about. They don't care if you're making money on the side. All they care about is that they make ...


7

Price is everything. There is a price high enough that the best asset will be desired by no one, and a price low enough that the worst asset will be desired by everyone. If the price is constrained (e.g., by an official exchange rate), then there may indeed be no natural buyers. Governments that maintain unrealistic exchange rates for their currencies do ...


6

As the comments say it is still arbitrage. Arbitrage has nothing to do with the speed of execution or the type of order placed, it is commonly associated with automated trading but is not limited to it, which might be where the confusion comes in. The speed of execution is important for arbitrage trading because it lowers Execution risk Here is some ...


5

Depending on the Price of the ETF and the hedging you may well simply be guaranteed to make a small loss.


5

Depends on your time scale, but generally, I don't think it would work. What you'd really be betting on in this case is mean-reversal, which does not hold true in the equity universe (atleast not in the long run). If you look at the historical prices of the S&P, you'll notice it increases in terms of absolute dollar value. On the short term, however, if ...


5

Perhaps this may be helpful to think of in terms other than currency. It seems obvious that gold bullion is more valuable than rice. So, if you have some rice to sell, and get gold in return, it would seem that you've won out. You gave something less valuable and got something more so; the other person gave something valuable and got something less so. ...


4

Arbitrage is basically taking advantage of a difference in price. Generally extending to "in different places for the same thing". A monetary version would be interlisted stocks, that is stocks in companies that are on both the NYSE/Nasdaq and Toronto stock exchanges. If somebody comes along and buys a large number of shares in Toronto, that will tend to ...


4

No. The hole in the plan is that not only is there some small risk in bonds (Orange County 1994?), but also bond issuers can and do refinance just like mortgage holders can when interest rates drop. Original answer: Whether or not there may be some investment opportunity that is sufficiently low risk and high yield to be worth mortgaging your primary ...


3

This is taxed as ordinary income. See the IRC Sec 988(a)(1). The exclusion you're talking about (the $200) is in the IRC Sec 988(e)(2), but you'll have to read the Treasury Regulations on this section to see if and how it can apply to you. Since you do this regularly and for profit (i.e.: not a personal transaction), I'd argue that it doesn't apply.


3

Above is the snapshot for this Google January 2018 call. The key to this OP's question is 2 fold. Stale quotes, as you can see the bid/ask nowhere near the last trade prices. And the low open interest. Your reasoning fails in that the orders would never fill at those prices. The spread is so deep in the money it would sell for over $9, in my opinion, not ...


3

Top 10 holdings is related to the ETF in question, ranked according to the weight of holdings in each of the issuer. Top 10 issuers primarily means the top 10 among the holdings(of the ETF), who have issued the highest number of convertible bonds(in total not only new), they can issue new bonds after the ETF has bought it's current holdings or they might ...


3

There are many kinds of index arbitrage, but I will stick to your example. If you are buying the future and selling the underlying basket (or the opposite), either you are arbitraging future mispricing versus fair value or you are taking a position in dividends, as the future does not provide dividends. Holding a future and selling the underlying is ...


3

Anything else that I may be missing? I can't speak to municipal bond arbitrage, but this piece caught my eye: outgoing interest payments from mortgage pre-tax would be $10,000. Since mortgage is tax deductible at federal and state level, then post-tax it would be ~ $6,000 outgoing payment. Many people do not get full benefit from mortgage interest ...


3

When the bust came in 2008, hedge funds were force to settle out liquid positions (such as treasury bonds) in order to raise cash in order to meet margin calls on their illiquid positions. These hedge funds would have been sitting on large positions in collaterallized debt obligations (specifically mortgage backed securities) for which there was suddenly no ...


2

Academic research into ADRs seems to suggest that pairs-trading ADRs and their underlying shares reveals that there certainly are arbitrage opportunities, but that in most (but not all cases) such opportunities are quickly taken care of by the market. (See this article for the mexican case, the introduction has a list of other articles you could read on the ...


2

Gold is traded on the London stock exchange (LSE) and the New York stock exchange (NYSE) under various separate asset tickers, mainly denominated in sterling and US dollars respectively. These stocks will reflect FX changes very quickly. If you sold LSE gold and foreign exchanged your sterling to dollars to buy NYSE gold you would almost certainly lose on ...


2

To Chris' comment, find out if the assignment commission is the same as the commission for an executed trade. If that does affect the profit, just let it expire. I've had spreads (buy a call, sell a higher strike call, same dates) so deep in the money, I just made sense to let both exercise at expiration. Don't panic if all legs ofthe trade don't show ...


2

Mutual funds don't do what ETFs do because, according to how the fund was built in their contract, they can't. That is not how they are built and the people that invested in them expect them to act in a certain way. That is ok, though. Many people still invest in mutual funds partially because of their history but there are some advantages to mutual funds ...


2

Real world example. AGNC = 21.79 time of post. Upcoming .22 cents ex-div Mar 27th Weekly options Mar 27th - $22 strike put has a bid ask spread of .22 / .53. If you can get that put for less than .21 after trade fee's, you'll have yourself a .22 cent arbitrage. Anything more than .21 per contract eats into your arbitrage. At .30 cents you'll only ...


2

with the semi-strong form of the Efficient Market Hypothesis expected dividends are priced into the options and security already. If you are able to locate such an arbitrage opportunity then you should take it, but I suspect it will be more more difficult than you think. Remember that many dividends require you to have been a shareholder by a certain date ...


2

For many years, any balance transfers cost between 3 and 5 % one-time fee, in addition to the interest, which is often advertized in large letters to be 0%. It is typically in the fine print, so you might miss it, but there are no offers without it. So no, it is not possible.


2

I dont think what you are attempting to do is possible with a retail forex account. Imagine you buy 10,000 EUR/USD, meaning you will profit from a rise in the euro or a fall in the dollar or both. However you do not actually have the right to ownership on those 10,000 euros, you only have the right to make a profit or loss from movements in the exchange rate....


2

If you get your income in the currency you have the new loan in, there is no exchange risk for the future. Assuming that you are able to get and serve that loan, it reduces your cost, so go for it. Yes, if the currency exchange rate changes the right way over the next years, you could have made a better deal - but consider it could also go the other way. ...


2

If that situation ever existed where I could turn $1000 into $1009 after commissions guaranteed with a total round trip time of seconds I would do that all day long, and so would everybody else. The people who can trade millions of dollars at a time would do so. They have programs looking for these opportunities. That window of opportunity would be shut so ...


2

Why wouldn't you pay it back now, and then invest it inside the 401(k) in that ETF - that way you get the profit tax deferred? Basically, you're taking the same game as if you take on a loan and invest the money right away (which is generally considered a bad idea because of the risk), just with the additional negative of losing the tax-deferring.


1

Normal index funds don't have such pressure. The NAV is arrived at every day based on asset value. The redemption and purchase are managed. The excess is invested or some assets sold. An index based ETF can diverge from underlying asset. This is where AP either sell excess ETF or buy ETF to maintain the price with in the tolerance


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