Do arbitrage opportunities exist for retail investors?

EquityGuy4321 said:
From Wikipedia:

In economics and finance, arbitrage (US /ˈɑrbɨtrɑːʒ/, UK /ˈɑrbɨtrɪdʒ/, UK /ˌɑrbɨtrˈɑːʒ/) is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs. For instance, an arbitrage is present when there is the opportunity to instantaneously buy low and sell high.

Even if someone gives you a 0 priced call there is no guarantee of a positive payoff. I concede someone might be given free options that are in-the-money and immediately exercise-able for a riskless profit, but that falls in the category of a niche market (CEOs or company directors, for example).
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The definition is: No chance of loss, possible chance of profit.
 
Give me an example of an arb that's risk free and I'll tell you how it's not..... This strict definition is not useful... It's more aligned with the ideology that you can't make money as a retailer arbing liquity differentials or anything else... Trading dispersion or any pair trading... What do you think the market makers are doing really... Taking risk!!!!
 
newwurldmn said:
Jesus. The ignorance here is amazing.

Risk Arb is a form of pair trading but it's not a form of statistical arbitrage.
There are stat arb strategies that are not pair trades.
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Please watch your tone. Marketsurfer is a renowned asset manager and knower of really important people. Ask him, he'll tell you himself. If he says, risk arbitrage is equivalent to stat arb, then you should believe him. He has almost 11000 posts. That makes him an expert on all things trading.
 
Pure Arb is an HFT/infrastructure play. There will always be opportunities for Stat Arb but they are diminishing with higher correlations as indexing moves most markets in unison.
 
newwurldmn said:
Jesus. The ignorance here is amazing. Risk Arb is a form of pair trading but it's not a form of statistical arbitrage. There are stat arb strategies that are not pair trades.
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Stat arb can be thought of as generalized, multi-instrument, pairs trading. Risk arb is different; in the hf space it's not spoken of as a pairs strategy.
 
Semantics..... This isn't really worth talking about in this respect... Some talk about trading and think baseball cards or coins...
 
debitspread said:
Stat arb can be thought of as generalized, multi-instrument, pairs trading. Risk arb is different; in the hf space it's not spoken of as a pairs strategy.
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This is not true marketsurfer.

Risk Arb can be pairs traded or not (if your deal is stock for stock or stock for cash). My point is that stat arb does not equal pairs trading as proven that risk arb is a form of pairs trading that is clearly not stat arb.

For that matter stat arb does not have to be traded as pairs. You can have stat arb strategies that aren't relative value trades. Often it is pair traded, but that doesn't mean by definition it is.
 
debitspread said:
Well, I can't fix stupid, but anyway no one in the hedgefund space talks about riskarb as a form of "pairs trading." The term just isn't used that way.
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Yeah, not sure where these arrogant folks get their information but my bet is they skim a book or two and become instant geniuses.
 
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