Ajay, curious to understand how are arbitrageurs benefiting from the growth of exchange traded derivatives in India. For example is it possible for investors to borrow a stock, go long on a the stock's call option, sell the borrowed stock, invest the money in call market, exercise the call, return the stock (and borrowing fees) and still make profits (of course if the option prices and borrowing fees) allows it. For the above is there an equally liquid stock lending and borrowing market available. If not is there a crucial piece of price discovery mechanism missing from Indian markets?
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Ajay, curious to understand how are arbitrageurs benefiting from the growth of exchange traded derivatives in India. For example is it possible for investors to borrow a stock, go long on a the stock's call option, sell the borrowed stock, invest the money in call market, exercise the call, return the stock (and borrowing fees) and still make profits (of course if the option prices and borrowing fees) allows it.
ReplyDeleteFor the above is there an equally liquid stock lending and borrowing market available. If not is there a crucial piece of price discovery mechanism missing from Indian markets?