Hi,
I am reading this book Guide to Future & Options by Ankit and Jitendra Gala.
In this book, the authors have mentioned: -
" When F < (S + CC - CR) Buy the (under priced) futures contract, short-sell the underlying asset in spot market and invest the proceeds of short sale until the maturity of futures contract. This is called 'reverse cash and carry' arbitrage.
Where F is the Future Contract's Price, S is the Spot Price of the underlying security, CC is the Carry Cost and CR is Carry Return (income).
Can someone please explain this para with an example, how can I short sell shares in the spot market?
thanx
Devin
I am reading this book Guide to Future & Options by Ankit and Jitendra Gala.
In this book, the authors have mentioned: -
" When F < (S + CC - CR) Buy the (under priced) futures contract, short-sell the underlying asset in spot market and invest the proceeds of short sale until the maturity of futures contract. This is called 'reverse cash and carry' arbitrage.
Where F is the Future Contract's Price, S is the Spot Price of the underlying security, CC is the Carry Cost and CR is Carry Return (income).
Can someone please explain this para with an example, how can I short sell shares in the spot market?
thanx
Devin