Good recap today that explains how I practice share-class pseudo-arbitrage. Watch it.
+ BOT 1,000 CNLG false Stock (SCM) 1.815 USD ARCA 09:36:18 5.00
+ SLD 1,000 CNLG false Stock (SCM) 1.850 USD SMART 09:45:23 5.00
+ SLD 1,000 PLA false Stock 3.930 USD SMART 11:39:39 5.00
+ BOT 1,000 PLA false Stock 3.830 USD SMART 11:44:16 5.00
+ BOT 400 VRMLQ false Stock 21.500 USD SMART 12:49:06 2.00
+ SLD 200 VRMLQ false Stock 22.450 USD SMART 12:55:49 1.00
+ BOT 1,200 KNDI false Stock (SCM) 4.014 USD DRCTEDGE 13:56:07 6.00
+ SLD 200 VRMLQ false Stock 23.260 USD SMART 13:56:20 2.00
+ SLD 1,200 KNDI false Stock (SCM) 4.050 USD SMART 14:10:12 6.00
SLD 30 BRK B false Stock 3396.70 USD NYSE 14:53:56 1.00
BOT 1 BRK A false Stock 101965.00 USD NYSE 14:53:58 1.00
BOT 1 BRK A false Stock 101989.00 USD NYSE 14:56:02 1.00
SLD 30 BRK B false Stock 3396.54 USD NYSE 14:56:37 1.00
+ BOT 400 VRMLQ false Stock 22.268 USD SMART 15:43:27 2.38
Daily profit: $684.23
Disclosure: Long 60 BRK-B, short 2 BRK-A, long 400 VRMLQ. I have a disclosure policy and you can find all my disclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.
One thought on “Trade recap for November 12th: Reverse pseudo-arbitrage”
There has to be some problem with this … you cannot in real life have a strategy that generates profits under all circumstances, or it would be arbitraged away. I assume that the problem with this is that fees / commissions would kill it.
And yes, my strategy is not true arbitrage. I call it reverse pseudo-arbitrage because it is in essence betting against the typical pseudo-arbitrage strategy of betting that spreads will decrease. While my risk is certainly not guaranteed, in practice this works well for me and my downside is limited. Even better, this strategy will perform best in times of crisis (when spreads widen as pseudo-arb traders get killed).
Of course academics would call it fake arbitrage because there is risk. Real arbitrage has no risk.