Alberto Monteiro <[EMAIL PROTECTED]>
> Imagine that you, me, and a few other stupid guys believe that
> some stock prices will go up tomorrow by 10%. What should we do?
Not enough information. What probability will they go up by 10%. What
are other possible outcomes and probabilities? How much money do
we have to risk?
> Now suppose that some smart guy _knows_ that there's a 50% chance
> that tomorrow's price will raise by 100% and there's a 50% chance
> that tomorrow's price will get back to 0%, and that whenever he
> puts money in that, the g*vernment steals 1% from him.
That is straightforward to profit from with any number of options strategies.
Look up "long straddle" and "long strangle" for example.
> Would s/he be wise to put his/her money into this lottery just
> to prove that we are fools?
I would.
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