Symmetric or skewed? Compare the two books
You're long shares of a stock worth whose position P&L has per-share variance dollars (so \sigma = \0.20$). You're choosing between two quoting styles for the next interval:
- Symmetric: quote / . Expected spread income \60q = +4{,}000$.
- Skewed: quote / . Expected spread income \40q = +1{,}500$.
Score each with the risk-adjusted objective , using risk aversion .
Which strategy wins, and why?
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.