arbitrageur
Noun: * Arbitrageur: A person or entity that engages in arbitrage. This involves simultaneously buying and selling the same asset (like a security, currency, or commodity) in different markets to profit from a price difference between those markets.
An arbitrageur acts to exploit temporary market inefficiencies. Their activity typically involves: 1. Identifying a price discrepancy for an identical asset in two different markets. 2. Purchasing the asset in the market where the price is lower. 3. Selling the asset in the market where the price is higher. 4. Profiting from the difference, minus any transaction costs.
This activity is considered risk-free in theory, as the buying and selling are simultaneous, and it helps correct price disparities between markets.
- The arbitrageur quickly bought euros in London and sold them in New York, capturing a small but risk-free profit from the exchange rate difference.
- Sophisticated computer algorithms allow modern arbitrageurs to execute trades in milliseconds.
- By purchasing a company's stock on one exchange and selling its convertible bond on another, the arbitrageur locked in a guaranteed return.
- Statistical Arbitrageur: An arbitrageur who uses mathematical models to identify trading opportunities based on expected statistical relationships between securities, rather than on a single identical asset.
- Merger Arbitrageur: A specialist who seeks to profit from the price differential between a company's current stock price and the price it is expected to reach upon the completion of a announced merger or acquisition.
- Arbitrage (n): The practice of buying and selling assets to profit from price differences.
- Arbitrage (v): To engage in arbitrage.
- Arb (n, informal): A common abbreviation for "arbitrageur" used in financial circles.
- Arb (informal)
- Arbitrager
The core meaning is specifically tied to the simultaneous purchase and sale for a risk-free profit. It is distinct from a general "trader" or "speculator," who takes on risk by betting on future price movements. The term is almost exclusively used in the context of finance and economics.
- someone who engages in arbitrage (who purchases securities in one market for immediate resale in another in the hope of profiting from the price differential)
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