Tenbaba stock is trading at ¥ 100 per share. Tenbaba is going through an antitrust trial with a verdict scheduled 30 days from now.
This trial case is make or break --- If Tenbaba wins the case, the stock price will rise significantly, otherwise it will drop significantly.
You believe the option market has not fully incorporated this information regarding the Tenbaba trial. Design the most suitable portfolio for profiting from the Tenbaba trial.
What security (securities) should you buy or sell?
Draw the payoff graph of your portfolio as a function of ST, price of Tenbaba stock 30 days from now.
