A stock moves up or down 1 dollar each day with equal chance. You buy a share after each up day and sell one after each down day. What is the expected profit after T days?
Unlock detailed company stats for this questionUpgrade
A stock price follows a symmetric random walk: each day it rises 1 dollar with probability 1/2 or falls 1 dollar with probability 1/2. Your strategy is to buy one share whenever the stock rose that day and sell one share whenever it fell, with short selling allowed. Over a horizon of T days, what is the expected profit? Prove your answer.
Community answers
No answers contributed by the community yet.
Related questions
A stock is at $100 and each day a coin flip moves it up $1 on Heads or down $1 on Tails. What is the probability it is exactly $100 after 10 days?An asset goes up 20% or down 20% each day with probability 1/2. What is the probability its price is unchanged after n days?You double your bet after every loss on a fair coin, starting at $1 and stopping at the first win, with a $63 bankroll. What is your expected profit?Related courses
Course
Course