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Dispersion trading is an ETF/index arbitrage strategy that consists of trading the difference in the volatilities between an ETF/index and its individual stocks. One can set up a dispersion trade by buying straddles on the stocks and selling straddles on the ETF/index. Dispersion trading works, because ETF/indices tend to move less than stocks, opening up chances to profit from these mispricing.

https://thetatitans.com/home/dispersion-trading/

https://huggingface.co/datasets/Dispersion/Dispersion/blob/main/readme.txt

https://github.com/arctictrader13/Dispersion-trading/blob/main/README.mdhttps://en.wikipedia.org/wiki/Correlation_trading

https://r1.community.samsung.com/t5/others/3-usa-states-are-hoping-for-samsung-to-invest-in-their-chip/m-p/25172766/highlight/true#M23594

https://www.quora.com/Why-are-dispersion-trades-short-volga-Going-short-index-implied-volatility-and-going-long-single-stock-implied-volatility/answer/Arctictrader?ch=15&oid=1477743722378172&share=e2c71c35&srid=XvvWu&target_type=answer

https://medium.com/@dispersiontrader/dispersion-trading-0bdf6f46b656

https://www.imdb.com/title/tt25187488/

https://medium.com/@dispersiontrader/dispersion-trading-0bdf6f46b656

https://www.slideshare.net/slideshows/dispersion-trading-is-an-etfdocx/265531920

https://maxonblog.hatenablog.com/

https://forums.developer.nvidia.com/t/accelerated-portfolio-construction-with-numba-and-dask-in-python/192696

https://deusexdao.substack.com/p/grid-trading-part-i-an-alternative/comments

Dispersion trading exploits the variance in expected volatility between index options and options on the individual stocks of the index. Generally, the implied volatility in index options is not low enough compared to the implied volatility in stock options. This inconsistency leads to opportunities to benefit from the fluctuating spread.

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