The creator explains the concept of arbitrage in finance, defining it as a guaranteed investment with a return higher than its risk, essentially a 'money machine'. He differentiates between pure arbitrage (identical cash flows trading at different prices, very rare) and near arbitrage (similar but not identical cash flows with residual risk). The discussion then moves to how arbitrage can occur in futures and fixed income markets, using a storeable commodity as an example to illustrate the principles.
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Session 27 (of 42): Too Good to be True - Pure Arbitrage
Mar 24, 2026
The creator explains the concept of arbitrage in finance, defining it as a guaranteed investment with a return higher than its risk, essentially a 'money machine'. He differentiates between pure arbitrage (identical cash flows trading at different prices, very rare) and near arbitrage (similar but not identical cash flows with residual risk). The discussion then moves to how arbitrage can occur in futures and fixed income markets, using a storeable commodity as an example to illustrate the principles.
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