The strategy of buying or selling a basket of stock while making an offsetting trade in stock-index futures or options. Stock-index arbitrage is designed to take advantage of the temporary discrepancies in value between stock and the index futures or options.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.