Page "Arbitrage" Paragraph 17

* One example of arbitrage involves the New York Stock Exchange and the Security Futures Exchange OneChicago ( OCX ).

When the price of a stock on the NYSE and its corresponding futures contract on OCX are out of sync, one can buy the less expensive one and sell it to the more expensive market.

Because the differences between the prices are likely to be small ( and not to last very long ), this can be done profitably only with computers examining a large number of prices and automatically exercising a trade when the prices are far enough out of balance.

The activity of other arbitrageurs can make this risky.

Those with the fastest computers and the most expertise take advantage of series of small differences that would not be profitable if taken individually.