[ta1234567890]

Open question: If, for one stock, you could predict tomorrow's closing price today (with 80% accuracy within 2% of the actual price), how would you trade that stock?

[kgwgk]

It's easy to predict tomorrow's closing price with that accuracy: it will be the same as today's closing price.

For a large majority of S&P 500 stocks this prediction will be within 2% of the actual price very often (more than 80% of the days). In aggregate, the hit rate is over 80% as well.

[ta1234567890]

Great, so how do you use that for a trading strategy?

[hartator]

You can't. What parent tries to explain is your predictions is no different than regular fluctuations, so you can't use it to get an edge.

[toomuchtodo]

Weekly out of the money options trades with short expires. It’s more gambling than anything else fwiw.

[hueving]

How far will it move if it doesn't land within the "80% accuracy"?

[18nleung]

Try an iron condor - you’ll profit if the price of the underlying asset stays between two points

[pmalynin]

Buy call / puts (depending on the current price) near the target price, with very close expiry dates. This would maximize your convexity.

[thisisit]

The bigger question is - what happens if you get the price 20% wrong? This might look like a winning strategy in a normal and calm market. But, it'll take only one day to wipe out all the gains.

[ta1234567890]

That's an excellent question. It all depends on the strategy. How would you address that scenario?

[hartator]

More than 80% of stocks will close within 2% of previous day closing price.