Why can you assume that? The contract is written clearly and specifically calls itself an arbitrage contract.
Was it unethical to exploit the fact that the mythical king didn't bother to calculate exponents? The request itself was stated clearly.
Yes, it is clearly unethical to enter into a contract with someone when you know that the other person would never agree if he actually understood what the contract says. Also, in many jurisdictions, such a contract would be void.
If I offer to sell you 10 nickels for a dollar, it's your own damn fault if you agree.
Btw, if you think that the words and the signatures on the paper are the contract, you are wrong. The contract is what you agreed to, and if there is no agreement, there is no contract.
Here is an example that I actually experienced: we proposed a deal to person A. That person agreed and sent the signed contract back. We then also put our signatures onto the contract and put it into a drawer. However, we unfortunately did not notify A that we signed the contract as well, rendering the contract void. I.e.: in my jurisdiction (and many others in Europe), it does not suffice that everyone signed a contract, one also needs to ensure that everyone knows that everyone signed the contract. Otherwise, it is invalid because there was no agreement everyone knew about.
The law requires that knowingly enter a contract and understand its terms. If this contract had been written such that they didn't realize he could reallocate investments after the fact, then you might have a point.
The law does not protect you from making bad decisions and entering contracts you probably shouldn't, provided you understand the contracts themselves. That would mean a huge majority of contracts are invalid because people frequently and routinely enter contracts which are inadvisable. (For example, subprime loans.)
Not understanding a contract and not thinking through the implications of said contract are completely different things.