An arbitrage operation in which traders take a long or short position in a portfolio of stock and the opposite position in one or more futures contracts in the same portfolio. Program trading is undertaken in order to take advantage of a difference in market values between two essentially identical portfolios of securities. Both sides of the trade are closed out on or near the day the futures contract expires, when the values of the positions should be equal. Because of the size of the trades and the complexity of the technique, program trading is practiced almost exclusively by large institutions. Compare basis trading.