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HSX Forum

Playing & Trading Strategy

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Arbitrage

Posted by: Rohit on Feb 25, 20:34

21OVR (current price) = 37.91

21OVR.OW (current price) = 16.30

At the time of adjust the stock adjusts by 2.7*Opening Weekend. So at current prices 16.3 * 2.7 = 44.01

Hence, $6.1 arbitrage opportunity?

21OVR.OW = 100000 Short

21OVR = 37037 Long

Irrespective of what the weekend gross is, arbitrage gain = $6.1(44.01 - 37.91) * 37037 = $ 225,926

Investment = 37.91*37037 + 16.3 * 100000 = $ 3,034,073

Arbitrage Returns = 7.4463%

- Commission = 2%

Riskless Profit = 5.4463%

Does that make sense? Is there any flaw in the logic?

Arbitrage Rohit Feb 25, 20:34

Sorry the prices have moved since I wrote this and forgot to paste it {nm} Rohit Feb 25, 20:41

There still is an arbitrage opportunity though {nm} Rohit Feb 25, 20:42

It is not arbitrage since its box office is 0 at the moment. Prices ore often higher/lower than expected the gross before a release. tatoufan Feb 26, 03:37

Yes. Arbitrage on HSX is only about comparing HSX prices to real world reported box office. The moviestock price being out of sync with RogerMore Feb 26, 07:56

This is Arbitrage in the real world sense. You can play the MovieStock and its OW derivative against each other for very small gains. {nm} Antibody Feb 26, 10:34

OK, I've put together a model in Excel, and your math is correct, in that you'll make a guaranteed gain if you hold the moviestocks in those RogerMore Feb 26, 11:39

Thanks for the responses everyone {nm} Rohit Feb 27, 09:41

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