Bets and decisions · Trading desk
A call option on dice
A trading desk sells a contract on the total S of 2 fair six-sided dice that will be rolled tomorrow. It pays $100 for every point by which S beats 7: $100 × (S − 7) if S is above 7, and nothing otherwise. What is the fair price of the contract, in dollars, meaning its expected payout?
Answer with an expected value. First lock in a gut guess with an 80% range, then solve it properly, then watch a simulation settle on the truth.
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