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A day trader buys an option on a stock that will return $150profit if the stock goes up today and lose $650if it goes down.
A day trader buys an option on a stock that will return $150profit if the stock goes up today and lose $650if it goes down. Complete parts a and b below given that the trader thinks there is a 80%chance that the stock will go up.
a) What is her expected value of the option's profit?
b) What do you think of this option?
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