Options arbitrage is a trading strategy using arbitrage in the options market to earn small profits with very little or zero risk.
Traders perform conversions when options are relatively overpriced by purchasing stock and selling the equivalent options position.
In practice, actionable option arbitrage opportunities have decreased with the advent of automated trading strategies.
A conversion position is: The call and put have the same strike value and expiration date.
One reason a trader may take this position would be to extend the holding period of the underlying position for capital gains tax purposes, while locking in the current price.