Definition

Law of One Price

Meaning ⎊ The economic principle requiring identical assets to trade at the same price across all markets to prevent arbitrage.
Greeks.liveMarch 14, 2026

Law of One Price

The Law of One Price states that in the absence of transaction costs and trade barriers, identical goods must sell for the same price in different markets. In financial terms, if two assets provide identical cash flows in all possible future states, they must have the same price today.

This law is the foundation for the No Arbitrage Principle and is essential for cross-exchange trading in cryptocurrency. If Bitcoin is trading at a higher price on one exchange than another, traders will buy on the cheaper exchange and sell on the more expensive one until the prices converge.

This process ensures that global markets function as a unified entity rather than isolated silos. The Law of One Price is maintained by arbitrageurs who monitor price discrepancies across multiple venues.

It is a vital concept for understanding how global liquidity flows and how pricing parity is established in decentralized finance protocols.

Cross-Exchange Arbitrage
Hash Function
Cross-Margin Liquidation Cascades
Isolated Margin Vs Cross Margin
Transaction Costs
Market Interdependence
Cross-Protocol Liquidation Cascade
Modified Duration

Glossary

Smart Contract Vulnerabilities

Exploit ⎊ This refers to the successful leveraging of a flaw in the smart contract code to illicitly extract assets or manipulate contract state, often resulting in protocol insolvency.

Financial Market Regulation

Regulation ⎊ Financial market regulation, within the context of cryptocurrency, options trading, and financial derivatives, represents a rapidly evolving landscape demanding adaptive frameworks.

Network Effect Analysis

Framework ⎊ Network Effect Analysis within cryptocurrency derivatives functions as a structural evaluation of how incremental platform participation increases the intrinsic utility of a financial instrument.

Information Efficiency

Analysis ⎊ Information efficiency, within cryptocurrency, options, and derivatives, represents the degree to which market prices reflect all available relevant information.

Liquidity Provision Dynamics

Supply ⎊ This refers to the aggregate quantity of capital or assets committed by participants, such as automated market makers or dedicated liquidity providers, to maintain tight bid-ask spreads on exchanges or within decentralized finance pools.

Cross-Market Price Alignment

Price ⎊ Cross-Market Price Alignment, within cryptocurrency derivatives, options trading, and broader financial derivatives, describes the statistical tendency for related assets or contracts to converge in price over time.

Legal Framework Analysis

Framework ⎊ The Legal Framework Analysis, within the context of cryptocurrency, options trading, and financial derivatives, represents a systematic evaluation of applicable laws, regulations, and judicial precedents governing these activities.

Price Discovery Mechanisms

Market ⎊ : The interaction of supply and demand across various trading venues constitutes the primary Market mechanism for establishing consensus price levels.

Trading Volume Analysis

Analysis ⎊ Trading Volume Analysis, within the context of cryptocurrency, options, and derivatives, represents a quantitative assessment of the magnitude of transactions occurring over a specific period.

Market Integration Challenges

Analysis ⎊ Market integration challenges within cryptocurrency derivatives stem from fragmented liquidity across disparate exchanges and decentralized finance protocols, hindering efficient price discovery.