Unwinding is a strategy used to close out an arbitrage position and realize the profit. It involves selling the stock in the cash market and buying it back in the futures market. This is done to:

- Close out the position

- Realize the profit

- Eliminate any further market risk

The steps involved in unwinding an arbitrage position are:

1. Sell the stock in the cash market at the higher price

2. Buy the stock in the futures market at the lower price

3. Close out the position, realizing the profit

By unwinding the position, the arbitrageur locks in the profit and eliminates any further exposure to market risk. This strategy is commonly used in cash-futures arbitrage, where the goal is to exploit the price difference between the cash and futures markets.

For example, let's say an arbitrageur buys 100 shares of XYZ stock in the cash market at $50 and simultaneously sells 100 shares of XYZ futures at $52. To unwind the position, the arbitrageur would sell the 100 shares of XYZ stock in the cash market at $52 and buy 100 shares of XYZ futures at $50, realizing a profit of $2 per share.