##  [# Arbitrage Opportunity Definition](/sections/arbitrage-opportunity-definition) 

 

# Arbitrage Opportunity Definition

 

 

Learn the definition of asset allocation and other ETF terminology from the etf.com glossary.



 

 

 

 

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[By ETF Glossary](/authors/etf-glossary)

 Dec 08, 2023

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## Learn more about Arbitrage Opportunity

An arbitrage opportunity in the context of ETFs occurs when the market price of an ETF is different from its net asset value (NAV). This can happen for a number of reasons, such as differences in market liquidity, pricing errors, and market inefficiencies. Arbitrageurs can take advantage of these opportunities by buying the ETF at a discount and selling it at a premium, or vice versa. This can be a profitable strategy, but it can also be risky. Arbitrage opportunities are often short-lived, and they can be difficult to identify and execute.

### Related Terms

[Bid/Ask Spread](/etf-education-center/etf-glossary/bid-ask-spread), [Derivatives-Based ETF](/etf-education-center/etf-glossary/derivatives-based-etf), [Net Asset Value (NAV)](/etf-education-center/etf-glossary/net-asset-value-nav), [Premium](/etf-education-center/etf-glossary/premium), [Futures](/etf-education-center/etf-glossary/futures)

 
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 [ ETF Glossary ](/authors/etf-glossary) 

 

 

  ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock…   [View Bio](/authors/etf-glossary)

 



 

 


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