​Arbitrage tracking: the basic principles of arbitrage trading

The so-called arbitrage refers to the trading behavior of futures market participants using the difference between different months, different markets, and different commodities to buy and sell two different types of futures contracts at the same time to obtain risky profits. It is a special way of futures speculation, and makes futures speculation not only limited to changes in the absolute price of futures contracts, but more to changes in the relative price of futures contracts.

The basic principle of carrying out futures arbitrage to achieve low-risk and stable returns is that regardless of whether futures prices are in an upward or downward trend, the same futures varieties in different months, different markets, or closely related different commodities, the overall trend of changes is always the same. That is, the same rise and fall. When carrying out arbitrage transactions, the positions of the specific operations are always one short and one long. Therefore, in an uptrend or downtrend, there is always one position that is profitable, which is sufficient to offset or resolve the position generated by the other direction. Most of the risks are lost. Therefore, futures arbitrage trading is a low-risk futures trading behavior. It can be said that the final return of futures arbitrage trading is not necessarily directly related to the direction of the rise or fall of the futures price, but has a direct relationship with the "spread".

Macro Quick View

Ye Yanfei, head of the Policy Research Bureau of the China Banking and Insurance Regulatory Commission: We must vigorously support the development of new energy and low-carbon energy and continue to support the development of low-carbon transportation. There is also a field with great potential in the field of low-carbon buildings.

Inflation data continues to soar, and the Fed’s interest rate hike expectations are higher to boost the US dollar; the Canadian central bank seems to have nailed down further debt reduction, but Citigroup warned that there is still a possibility of a “neutral” statement.

OPEC+ internal strife is still in a stalemate, adding a lot of uncertainty to the subsequent oil price trend. Under the neutral forecast that the production reduction agreement will not fall apart, OPEC+ is still expected to advance its production increase plan during the year. However, the increase in production is expected to be difficult to bridge the gap in crude oil supply and demand. In addition, the US shale oil production will only increase slightly during the year. Therefore, unless Iran has full capacity Return, otherwise crude oil supply will continue to be tight during the year.

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