arbitrage

1 of 2

noun

ar·​bi·​trage ˈär-bə-ˌträzh How to pronounce arbitrage (audio)
1
: the nearly simultaneous purchase and sale of securities or foreign exchange in different markets in order to profit from price discrepancies
2
: the purchase of the stock of a takeover target especially with a view to selling it profitably to the raider

arbitrage

2 of 2

verb

arbitraged; arbitraging

intransitive verb

: to engage in arbitrage

Examples of arbitrage in a Sentence

Recent Examples on the Web
Noun
This ability to take advantage of time arbitrage has served the company and shareholders well over the years. Bill Stone, Forbes, 25 Feb. 2024 Others pick their homes as a form of tax arbitrage. Diane Brady, Fortune, 16 Feb. 2024 The firm focused on arbitrage trading, whereby profits are realized on tiny differences in the prices of assets across different exchanges. WIRED, 28 Sep. 2023 Since the bid, then worth $61 billion, was unveiled in May 2022, hedge funds had amassed large VMware stakes in anticipation of a payout when the deal closed, in what is known as merger arbitrage. Ben Dummett, WSJ, 21 Nov. 2023 This contrasts with the previous method, which required payment in accordance with the fluctuating market price of oil on the day of purchase, making arbitrage difficult. Nate Dicamillo, Quartz, 13 June 2023 Jane Street specializes in arbitrage, or taking advantage of subtle price discrepancies in the market, which would later become Alameda’s bread and butter. 2017: SBF approaches Wang, then a software engineer at Google, asking him to help create crypto trading firm Alameda Research. Marco Quiroz-Gutierrez, Fortune Crypto, 28 Sep. 2023 Such a body, with authority rooted in government support, would be well positioned to prevent global tech players from engaging in regulatory arbitrage or hiding behind corporate domiciles. Ian Bremmer and Mustafa Suleyman, Foreign Affairs, 16 Aug. 2023 But that fund-raising tool was followed by AMC looking to converge the APE units and common shares to stop investors buying the lower-cost APE shares and shorting the higher-cost AMC common shares as part of an arbitrage trade. Etan Vlessing, The Hollywood Reporter, 24 Aug. 2023
Verb
Another potential explanation for these fluctuations is that traders are arbitraging spreads between these assets to make incremental profits on their existing trading strategies. Steve Larsen, Forbes, 29 Nov. 2023 These assets tend to be difficult to value using fundamental analysis and difficult to arbitrage. Hersh Shefrin, Forbes, 17 July 2023 Multinational corporations could arbitrage the best of a country’s competitive advantages, whether that be research and development or cheap and plentiful labor, driving down their manufacturing costs as part of the deflationary trend toward globalization. Christiaan Hetzner, Fortune, 13 Apr. 2023 Most are basically thin wrappers seeking to arbitrage LLM pricing, with virtually no differentiation or competitive moat. Rob Reid, Ars Technica, 9 Mar. 2023 The company’s vertical integration into refining enables it to arbitrage internationally across the crack spread by switching from selling crude oil to refined fuels. David Trainer, Forbes, 21 Dec. 2021 One popular service in DeFi -- though not offered by Uniswap -- is yield farming, also known as liquidity harvesting, where users lend crypto to arbitrage different digital tokens or get interest. David Pan, Bloomberg.com, 13 Oct. 2022 The authors attribute this problem in part to the profit fees paid by winning bettors, which reduce the incentive for traders to arbitrage between contracts and improve their accuracy. Tim Fernholz, Quartz, 8 Aug. 2022 CEOs may arbitrage the best and cheapest job seekers across the country—and potentially globally. Jack Kelly, Forbes, 28 June 2021 See More

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'arbitrage.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

Etymology

Noun

borrowed from French, literally, "decision-making, judgment," going back to Old French, "judgment pronounced by an arbiter," from arbitrer "to pass judgment" (borrowed from Latin arbitrārī "to consider, judge, decide," verbal derivative of arbitr-, arbiter "onlooker, arbiter") + -age -age

First Known Use

Noun

1875, in the meaning defined at sense 1

Verb

1857, in the meaning defined above

Time Traveler
The first known use of arbitrage was in 1857

Dictionary Entries Near arbitrage

Cite this Entry

“Arbitrage.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/arbitrage. Accessed 3 Mar. 2024.

Legal Definition

arbitrage

noun
ar·​bi·​trage ˈär-bə-ˌträzh How to pronounce arbitrage (audio)
1
: the purchase of a security, commodity, or foreign currency in one market for the purpose of immediately selling it at a higher price in another market
2
: the purchase of the stock of a takeover target especially for the purpose of selling it to the raider for a profit
Etymology

Noun

French, literally, arbitration, decision-making

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