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A Time Traveler and a Trade

  #10 (permalink)

Denver
 
Trading Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker/Data: Stage 5 Trading
Favorite Futures: ZN
 
lax99's Avatar
 
Posts: 433 since Jun 2015
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tpredictor View Post
@TheShrike In this case case he said there was X% chance of quadrupling and Y% chance of losing then it means either (1) he wants to convey this is a very good trade but why the disclaimer? or (2) he knows the true distribution of returns or (3) he lies. We will ignore 3 because it wasn't part of the original information.

He says "your current trade" but only repeatable events can have a probability. It means there must be both a 100% certainty that you can quadruple your wealth if you hold the trade and a 100% certainty that you will lose it if you hold the trade beyond triple beyond your net worth. The only variant in this case is your free will and what you decide to do. This is the only information the time traveler doesn't have. As such, I would hold the trade until a few percent below quadrupling my wealth and then close it.

In addition, if I am allowed to trade the options, I would also open a huge risk limited bet on volatility. However, I would be sure to risk less then my net worth so it that it could not have impacted the information he imparted on me. I would also be sure to open it as a "new trade" so that it would not be subject to the prior.

Yeah, that blows the whole premise though.

What do you think about the -8 premise? How would you approach that?

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