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Complementary contracts

Market makingEasy

Contract YES pays $1$ if an event happens and contract NO pays $1$ if it does not. YES can be bought at $0.48$ and NO can be bought at $0.49$ . A trader buys $1000$ units of each. What is the guaranteed profit?

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Hint

Exactly one of these contracts pays $1$ .

Solution

Buying one of each costs $0.48 + 0.49 = 0.97$ and always returns $1$ .
The profit per pair is $1 - 0.97 = 0.03$ .
The guaranteed profit on $1000$ pairs is $30$ .

Answer: $30$

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