Trade recap for November 12th: Reverse pseudo-arbitrage

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”

  1. 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.

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