A form of arbitrage that has some risk associated with it. Commonly refers to potential takeover situations where the arbitrageur buys the stock of the company about to be taken over and sells the stock of the company that is effecting the takeover.
See Also:
Arbitrage: The simultaneous purchase and sale of two different, but related, securities with the intent of profiting by the price discrepancy.
Risk: The potential financial loss inherent in the investment.