Intraday chart of the SPY Arbitrage Model. The spreads were HUGE today offering great opportunities to profit from the spread.
We should all love a little arbitrage. A close to risk free method of making profits in the market. I have continued to give my readers the chance to profit through arbitrage from a S&P 500 arbitrage model provided by the guys over at Capital Context. Simply put, capital context has created a model to mimic the SPY (S&P 500 index ETF) The spread between the model and the SPY is always very tight meaning the model and the ETF never decompress. However, there are times when the model and the SPY ETF get loose and decompress. The model always reverts to mean after a time and aligns perfectly with the SPY ETF.
The model can be created by buying an equal weight of these three ETF’s: HYG (high yield corporate debt), TLT (U.S. Treasuries), and VIX (volatility)
When the model decompresses from the SPY, (the arbitrage spread model can be viewed here daily: http://capitalcontext.com/intraday/intraday-spy/) you can profit from the spread.