Question: A day trader buys an option on a stock that will return $100 profit if the stock goes up today and lose $400 if it

A day trader buys an option on a stock that will return $100 profit if the stock goes up today and lose $400 if it goes down. If the trader thinks there is a 75% 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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