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...particularly canny and complex form of program trading. It is a kind of arbitrage in which traders make lightning transactions to take advantage of fleeting discrepancies in the prices of related financial instruments in different markets. One of the most popular such plays involves the Standard & Poor's 500 index, which rises and falls according to the performance of 500 stocks. A program trader will use a computer's calculating ability to monitor constantly the difference between the level of the S&P index and the price of an S&P 500 index future, a financial instrument that has been...
...futures price, since it registers the market's expectations of where the actual S&P stocks are heading, often veers substantially above or below the current level of those stocks. When the futures price strays far enough from the real index, it creates a golden door for the arbitrage traders. They play both sides of the gap, knowing they will make money on the difference. For example, if an arbitrager sees the S&P futures price rising well above the S&P stock index, the trader would buy a package of the 500 stocks that make up the index, which...
...creates distress for other, unsuspecting investors. As traders load or unload enormous amounts of stock, they can magnify the rise or fall of the market. Sharp volatility has occurred at the so-called triple witching hour (on the third Fridays of March, June, September and December), just before stock-index futures and two related types of financial instruments expire at the same time. That is the last point at which arbitragers can decide what to do with the stock they have accumulated, and their herdlike decisions have often wrenched the stock market in wild and woolly one-day movements...
...complex, computer-assisted trading techniques that, in taking the stock exchanges by storm, have become a major cause of the market's extraordinary peaks and valleys. The most controversial is known as program trading, in which computers, for example, launch massive buy and sell orders for stocks and stock-index futures simultaneously (see following story...
...worked in Cambridge. With a generally balanced policy, it has protected the naturally adversarial interests of landlords and tenants. Fifteen years of regulation have maintained rents at approximately two-and-a-half times those of 1967, an increase which is slightly less than the increase in the consumer price index. This increase can recover normal operating costs and maintain a fair profit in most cases...