  An arbitrage strategy allows a financial agent to make certain profit out of
nothing, i.e., out of zero initial investment. This has to be disallowed on
economic basis if the market is in equilibrium state, as opportunities for
riskless profit would result in an instantaneous movement of prices of certain
financial instruments. The principle of not allowing for arbitrage
opportunities in financial markets has far-reaching consequences, most notably
the option-pricing and hedging formulas in complete markets.
