CALSIG2000
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how do institutions account for n number of players for their arbitrage programs?
... seems to me that if too many people start shorting something the effect they desired might be overdone and create an arbitrage opportunity the opposite way. how do the players account for the "n" number of players in the game?
Think you may be talking a touch at cross purposes here John. If I understand correctly, the original post pertains to very short term risk free arbitrage, basically (allowing for the fact that there is some basis risk in doing the cash / futures equity trade of course) whereas what you are referring to, if I'm not mistaken, is larger scale, longer term statistical arb? (i.e. what did for LTCM in 98).
Forgive me if I'm wrong, but I reckon your post was a tad off topic.