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Jun 01, 2012, 12.48 PM IST
ICICIdirect.com has come out with its report on Ambuja Cement. According to the research firm, one can buy one lot Ambuja Cement June futures at Rs 145.8 and sell 2000 shares (demat holding) at Rs 150.10.
ICICIdirect.com has come out with its report on Ambuja Cement . According to the research firm, one can buy one lot Ambuja Cement June futures at Rs 145.8 and sell 2000 shares (demat holding) at Rs 150.10.
Whenever futures are trading at a substantial discount to spot, a reverse arbitrage opportunity arises. Minimum one lot of the underlying future is bought and the delivery existing of the same number of shares is sold in cash to lock-in the price difference.
We can lock in the difference of 286 bps at current prices. This will result in risk-free profit of Rs 4.3 per share including brokerage and transaction cost.
Probable dividend expected in the stock is Rs 1.8, which is yet to be announced. Historically, the stock has observed ex-dividend dates in August. Hence, in the worst case scenario, even if the dividend is announced and ex-date falls in June series itself, one can still lock in the difference of 165 bps. However, in the first quarter, no dividend was announced. Even if an interim dividend is announced for a six-month period, there are more chances that the ex-date would fall in July or August.
How to execute:
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