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Who is on the other side? · Part 3 of 3
An asset is worth 99 or 101 with equal probability. A fraction α of the people who trade with you know the true value and buy only if it is 101, selling if it is 99; everyone else buys or sells with probability ½ each, whatever the value.
The informed share rises to α = 0.5. What is the new break-even half-spread around 100?
Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.
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