Consider the following 3-period-market-model:
The discounted price of the risky asset $S$:
How can I find an arbitrage opportunity in this model?
I know that there would be no arbitrage if we replace the first $8$ by something in $(8,12)$ or if we replace the second $8$ by something in $(5,8)$ but I don't know how I can explicitly state the arbitrage opportunity in the given market. So I'm looking for a portfolio which is an arbitrage opportunity.