ISL, arbitrageurs extraordinaire, just bought three shares...we'll see what happens.Question:
You are buying three shares at 100gr and are getting 3x0.6g or 1.8g individends.
that's correct...
You then sell them at 99.75g, loosing 3x0.25g or 0.75g, right?
True.
I suppose I could sell them at 99.999 (it goes to three digits - am I right?) and then the next buyers that come up in line, would get those.
(I think last month doing the same trick I did "99.99" or something - greedy!)
However, and this may not even be correct, but I figured by offering a BIGGER discount, Robert, it would more encourage liquid purchase of the 3 shares...it is more newsworthy etc.
(Who doesn't want to buy TGC shares at 99.75? that's fantastic)
So your arbitrage profit is 1.05g minus fees,
Note -- there are no fees at all I know of.
or about $12.00. You are investing $3,400 for 24 hours (if everything goes well) and make $12 in profit. WoW! That's a mind blowing 0.35%!!!
That's arbitrage!
HOWEVER
(i) note that it all depends on someone buying the shares. ISL is more than happy to own the shares, forever, if it doesn't work out. But it's not a liquid market, it's sort of a micromarket.
(ii) note that if it was "happening a lot," indeed the arbitrageurs would be arbitraged (that is exactly the nature of true arbitrage opportunities). (a) someone else would start paying OVER 100 (!) just before they go exdividend, and better than my abovementioned 99.75 after the dividend. Indeed, and this is literally what the big arbitrage departments in brokerages do, someone would mathematicallly shave it down to the smallest possible (ie - most reliable) profit more or less instantly.
The bottom line is, yes, so long as some party promptly buys the cheap shares after noon tomorrow, ISL wins! Indeed everyone wins, as the party buying the shares is all stoked since they got shares truly at a discount. How's that? That's arbitrage!
Indeed, this is alll exactly and precisely what happens with "normal" like NYSE or whatever shares around the time the go exdividend !
Cheers, Robert.
shaved
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