Arbitrage Strategies

How many possible arbitrage strategies are out there and which ones are they?

There are many many arbitrage strategies out there. The problem is they typically take a lot of money. Arbitrage means that you find an imbalance between the prices of two securities that should be balanced. So you make the trade while unbalanced, and close the trade when things are back in balance. The idea is to have a trade that can't typically lose, but can more likely win by going back into balance.

For example, if you can find some stock or options on the Philly exchange that are priced differently than NASDAQ or ARCA or others, you could simultaneously buy stock from one exchange and short it on another. Then you wait for parity and close the trades.

The pros might look at the price of some bonds in London vs. the price of similar bonds in Singapore and make that trade with knowledge that the prices of those bonds typically move together. Could you buy sugar in Chicago and sell it in Paris? You get the idea.

Not quite an arbitrage scenario, but something you could play with is Pairs Trading. If you look at WYNN and MGM, for example, and see that on average they trade at a ratio of 9:1, then if you see the ratio at 8:1, you could buy some WYNN and sell some MGM, and wait for parity. I'm sure there are better examples than WYNN/MGM, but you get the idea.