Add training workflow, datasets, and runbook
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252 • The Intelligent Option Investor
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ETF [tracking the Standard and Poor’s 500 Index (S&P 500), which closed
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at 1,685.73 when these data were retrieved] expiring in about 10 months:
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Strike/Stock ($) Ask Price ($) Premium as Percent of Stock Price
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0.99 106.60 6.3
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0.89 50.90 3.0
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0.80 25.80 1.5
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This is still a hefty chunk of change to pay for protection on an index but
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much less than the price of protection on individual stocks.
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1
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Common Pitfalls
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Hedge Timing
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Assume that you had talked to me a year ago and decided to take my ad-
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vice and avoid buying protective puts on single-name options. Instead, you
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took a protective put position on the S&P 500. Good for you.
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Setting aside for a moment how much of your portfolio to hedge, let’s
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take a look at what happened since you bought the downside protection:
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S&P 500
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1,800
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1,700
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1,600
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1,500
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1,400
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1,300
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1,200
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1,100
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1,000
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8/1/20129/1/201210/1/201211/1/201212/1/20121/1/20132/1/20133/1/20134/1/20135/1/20136/1/20137/1/2013
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GREEN
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