Pro?t from the large trader transaction upward

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This exercise is related to a trading practice called faster warming, which occurs hen a small trader places an order one uptick (downtickj from that of a large trader so as to pro?t from the large trader's transaction upward (downward) price pressure, or to use the large trader as a trade counterparty should prices decrease (increase). Suppose that Stock X has inst sold for $10,015. An institutional investor places a limit order to purchase 1 million shares at $10.00: which is now the best bid. The best offer is currently $10.10. A trader, ho reasons that the stock is equallyT likely to have an intrinsic value (true worth) of either $10.00 or $10.10 (EU?) = $10.05}. Place a limit order to but- 200.000 shares of the stock for $10.01.

Reference no: EM133075161

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