I got a Doubt How do we sell when we don’t buy that asset underlying Is short selling done in reverse cash and carry ? And we have to find the theoretical price of the forward/future contract then compare with actual price to check if it is underpriced or over priced
You bought the stock ( underlying) then you have the obligation to sell the forward contract. (short ) For my understanding, We make profit when selling price is high , and cost is lower. Then we earn the arbitrage profit.
when you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later you must "close" the short by buying back the same number of shares (called "covering") and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.
the concept that's fkin with me is in the reverse carry arbitrage. how on earth are u getting 100 from selling the asset in the spot? u even said u don't have but u'll sell it. so there can only be 2 cases. u've owned the asset earlier and sold it or borrowed money at Rf to sell it, the latter cancels out the arbitrage profit. so plz tell me how did u get the money or the asset to sell it in step 1 of "Today" transaction
Wrong strategy ITC short 1 lot(1000 shares) ITC buy 1000 shares at the same price isn't possible, if only 200 shares are bought and price goes up Then its loss
4:17 is great! Explains Cash and Carry well!
thank you !
impressively well explained, thank you!
Really good explained! Thank you.
Thank you so much sir. It was very helpful 🥰🥰
clear explanation ! thank you :)
Thx for the video... got a new subscriber!
thanks ! now I understand how it works
well explained thank you but I have a question, when do I know if it is cash and carry or a reverse arbitrage?
I think that if the forward is overpriced, and you can make a profit by taking a long position, it is cash and carry and vice versa.
what is risk free rate of interest?
(y) grateful to you for the nice explanation :) it was really helpful
When we short we will get the profit when the price of contract fall...
lol .. this guy's voice was clear as fuck.. I need him to teach in my university. revert me back if you are up to do it mr. professor
I got a Doubt
How do we sell when we don’t buy that asset underlying
Is short selling done in reverse cash and carry ?
And we have to find the theoretical price of the forward/future contract then compare with actual price to check if it is underpriced or over priced
You bought the stock ( underlying)
then you have the obligation to sell the forward contract. (short )
For my understanding, We make profit when selling price is high , and cost is lower.
Then we earn the arbitrage profit.
In the reverse cash n carry arbitrage how did we get the money? How did we short sell the stock when we didn't even have that
when you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later you must "close" the short by buying back the same number of shares (called "covering") and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.
the concept that's fkin with me is in the reverse carry arbitrage. how on earth are u getting 100 from selling the asset in the spot? u even said u don't have but u'll sell it. so there can only be 2 cases. u've owned the asset earlier and sold it or borrowed money at Rf to sell it, the latter cancels out the arbitrage profit.
so plz tell me how did u get the money or the asset to sell it in step 1 of "Today" transaction
hello, how can I find the cash e carry opportunities? is there a specific platform?
noo bro...only theory
Thank you but what if it is for 9months and not one year?
+Samuel Steven If it's nine months , then the formula becomes F = Spot * (1+R)^0.75.
The carrying cost is always adjusted for time period
Thanks....i appreciate
excellent thankyou
Do u sell These online lecture
Yes. You can buy Complete online course, get more info on www.fintreeindia.com/
Thankyou sir.
Wrong strategy
ITC short 1 lot(1000 shares)
ITC buy 1000 shares at the same price isn't possible, if only 200 shares are bought and price goes up
Then its loss
thank you SO much!!
Bhot bekar samjata hai tu
what accent , I can't concentrate