Arbitrage (套利)

Arbitrage (套利 tào lì) refers to the purchase and sale behavior that can make a profit (利润 lì rùn) from a difference in the asset’s price between markets.

Part 1: Breakdown of Words 

“套” (tào) as in “trap” (圈套 quān tào) or “quilt” (被套 bèi tào).

“利” (lì) as in “beneficial”(有利 yǒu lì) or “interest” (利益lì yì). 

Part 2: Examples:

1. Interest arbitrage transaction (套利交易 tào lì jiāo yì).
2. Arbitrage strategy (套利策略 tào lì cè lüè).