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I'm currently looking into economic applications of scoring play combinatorial game theory. Details of the theory can be found in this paper.

http://arxiv.org/abs/1202.4653

A friend of mine suggested options trading. But I really don't know enough about these things to come up with any substantial ideas.

Does anyone have any thoughts?

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  • $\begingroup$ A classic is Cox and Rubinstein, Option Markets, or more up to date, Robert McDonald, Fundmentals of Derivatives Markets. These give intuition and market details along with pricing formulae. $\endgroup$ – Trurl May 17 '13 at 13:06
  • $\begingroup$ I imagine (and suppose from the basics of McDonald I've read) all of the hidden information at play in markets makes them a very poor place to try to apply any CGT. $\endgroup$ – Mark S. May 18 '13 at 13:36
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Taking most fundamental characteristics, this theory could potentially be applied in trading of:

-currencies (to a certain extent you can simplify 2 players, Left - Right movements, but information remains imperfect due to many underlying factors that can't be included in this theory)

-commodities, it may be applicable from money management, rather than trading approach (this theory relates to finite "number of points" hence resources, it can work well providing that winning party most likely takes it all). In trading when "winning" in such style by buying early what is available, one "blocks or immobilizes opponent" by becoming majority controlling prices - buy only very big players can do so, then it usually ends up in the press (hello aluminium?).

For smaller markets and when gradually buying in, it would be better to reverse the final certainty of winning when approaching majority, as with increased price there would be less buyers.

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