Selling a stock at the ultimate maximum (Q2389600)

The authors consider the problem of selling a stock at the ultimate maximum where the stock price follows geometric Brownian motion. They use two different formulations for this predictive problem and derive optimal strategies for both problems. The predictive problems are reduced to optimal stopping problems which are solved by using the methods of free boundary problems and local space-time calculus. Both solutions support the financial view that one should sell bad stocks and keep good ones.