Reverse Arbitrage: Follow Up

Few things we need to perceive before executing reverse arbitrage trade,

Let's say you're gonna execute reverse arbitrage in heromotoco, 

Stock	No. of lots & Quantity	Block in capital with lender (125%)	Capital to buy 4 lots of heromoto	Total Capital	Excepted profit	Interest Rate for lending
HeroMoto	4*125= 600	(1972*600) + 25% =15 lacs	30K * 4 = 1.2lac	17.2 lacs	Spot/Future difference: 86 * 600 = 51600(3%)	depends upon the broker

So 3% gain of capital in one month period is a good money, but the really catch is borrowing cost of stock and stock going ex-dividend might erode your profit 

Things to watch out:

1. What is the borrowing cost of lending the stock(SLB) ?
2. Is the stock going ex-dividend ?

Happy Trading !