Template-Type:ReDIF-Paper 1.0  
Title: The Impact of Trading Restrictions on the Profitability of Arbitrage Exploitation 
Author-Name:Kuon, Bettina
Classification-JEL:
Keywords: 
Abstract: The paper presents a favorable trading environment for the binomial option pricing model, which allows to
	study optimal trading strategies, and incorporates the core feature that all traders with an increasing utility for money
	value the option with its arbitrage free price. We study three trading restrictions, but only under the bankruptcy
	restriction, the exploitation of arbitrage is profitable for all traders which prefer more money to less. Under the other
	restrictions arbitrage possibilities may persist. The results are of special interest for questions of experimental design
	and for institutions which aim to impose loss controlling restrictions which conserve the profitability of arbitrage
	exploitation. In an option market the potential losses of traders can be controlled by the introduction of trading
	restrictions. 
Length: pages
Creation-Date: 1996
Revision-Date: 
Handle: RePEc:bon:bonsfb:375