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How Do Standardized Contracts Facilitate Arbitrage Opportunities?

Easy comparison of identical contracts reveals mispricing relative to the underlying.
Greeks.Live23.11.25

How Do Standardized Contracts Facilitate Arbitrage Opportunities?

Standardization allows traders to easily compare the price of a futures contract with the price of its underlying asset across different markets. When the relationship between the two prices deviates from theoretical parity, arbitrage opportunities arise.

The ease of trading identical contracts facilitates quick execution of the arbitrage strategy.

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