Through Rigorous Quantitative Analysis, Geoff Develops a Trading Algorithm That

Essay

Through rigorous quantitative analysis, Geoff develops a trading algorithm that will permit him to gain a competitive advantage over his previous dartboard method of selecting stocks.What he has noticed is that a stock's value at the end of the month can be accurately forecast using the equation Price_END = + Price_START where Price_START is the stock price at the start of the month and x is the number of days until the next full moon.At what point in time will the stock be at its maximum and minimum? If SBUX is trading at $50 per share at the start of the month, what profit can Geoff realize if he buys 100 shares at its minimum price and sells all 100 shares at its maximum price.Assume Geoff pays a $10 fee for the buy order and another $10 for the sell order.