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Legal Definitions - time arbitrage

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Definition of time arbitrage

Time arbitrage is a type of arbitrage where an investor buys a commodity or security in the present and sells it for future delivery. The hope is to profit from the difference in prices between the present and future delivery.

  • An investor buys a stock in the present and sells it for future delivery, hoping to profit from the difference in prices.
  • A farmer sells their crop for future delivery at a higher price than the current market price, hoping to profit from the difference in prices.

These examples illustrate how time arbitrage works. By buying a commodity or security in the present and selling it for future delivery, investors and farmers can take advantage of the difference in prices and make a profit.

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Simple Definition

Time arbitrage is when someone buys something now and sells it in the future for a higher price. This is often done with stocks or commodities. The hope is to make a profit from the difference in prices between when they bought it and when they sell it. It's like buying a toy on sale and then selling it for more money when it's no longer on sale.

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