Add training workflow, datasets, and runbook
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308 • Index
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d
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Debt, investment leverage from, 165–166
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Dell, 101
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Delta, 151–155, 300n1 (Chapter 8)
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Demand-side constraints, 84–86
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Depreciation, 282–284
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Diagonals, 233
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long, 235–237
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short, 238–240
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Directionality of options, 9–20
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calls, 12–16
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and exposure, 18–20
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importance of, 27–28
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puts, 16–18
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and stock, 10–11
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volatility and predications about,
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68–74
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Discount rate, 87–89, 298n5
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Dispersion, 302n1 (Chapter 11)
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Distribution of returns:
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fat-tailed, 45
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leptokurtic, 45
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lognormal, 36–37
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normal, 32, 36, 40, 43–45
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Dividend arbitrage, 223, 288–293
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Dividend yield, 67
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Dividend-paying stocks, prices of,
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35–36
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Dividends, 86
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Downturns, short puts during, 214–215
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Drift:
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assumptions about, 32, 35–36
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effects of, 67
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and long calls, 202–203
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and long puts, 191
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and long strangles, 206
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Drivers of value (see Value drivers)
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e
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Early exercise, 223
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Earnings before interest, taxes,
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depreciation, and amortization
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(EBITDA), 99
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Earnings before interest and taxes
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(EBIT), 99
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Earnings per share (EPS), 99
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Earnings seasons:
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and tenor of short puts, 217–218
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volatility in, 301n5
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EBIT (earnings before interest and
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taxes), 99
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EBITDA (earnings before interest,
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taxes, depreciation, and
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amortization), 99
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EBP (see Effective buy price)
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Economic environment, profitability
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and, 101
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Economic life of companies:
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and golden rule of valuation,
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82–86
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improving valuations by
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understanding, 93–94
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Economic value of companies,
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137–139
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Effective buy price (EBP), 24–25,
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213, 244
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Effective sell price (ESP), 25–26
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Efficacy (see Investing level and
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efficacy)
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Efficient market hypothesis (EMH),
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33, 34, 40–43
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Endowments, 135, 136
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Enron, 110
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EPS (earnings per share), 99
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ESP (effective sell price), 25–26
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European-style options, 296n2
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(Chapter 1)
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Exchange-traded funds (ETFs),
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options on, 251–252
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Execution of option overlay strategies:
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collars, 259–262
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covered calls, 242–245
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protective puts, 250–252
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Exercising options, 13,
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296n2 (Chapter 1)
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Expansionary cash flows, 82, 104–108
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