Add training workflow, datasets, and runbook

training_data/curated/text/3643b0865be222db0e2db9f9d21eb74e1d1090fffccb3e4993a907627ede8b4d.txt

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+476 Part IV: Additional Considerations 
+vt == volatility for the time period, t 
+a == a constant (see below). 
+The constants, a and t, are fixed under the assumptions in steps 1 and 2. The first 
+constant, a, is the number of standard deviations of movement to be allowed. In our 
+example, a == I. That is, the analysis is being made under the assumption that the 
+stock could move up by one standard deviation. The second constant, t, is .25, since 
+the analysis is for a 90-day holding period, which is 25% of a year. In this example: 
+Vt == v-ft == .30 {is== .30 X .50 == .15 
+so 
+q == 4le· 15 == 41 X 1.16 == 47.64 
+Thus, this stock would move up to approximately 475/s if it moved one standard devi­
+ation in exactly 90 days. 
+Step 4: Using the Black-Scholes model, the XYZ January 40 call can be priced. 
+It would be worth approximately 81/s if XYZ were at 475/s and there were 90 days' less 
+life in the call. 
+Step 5: Calculate the profit potential. For this example, commissions will be 
+ignored, but they should be included in a real-life situation. 
+81/s-4 41/s Percent profit == --- == - == 103% 4 4 
+Thus, if XYZ stock moves up by one standard deviation over the next 90 days, this call 
+would yield a projected profit of 103%. Recall again that there is only about a 16% 
+chance of the stock actually moving at least this far. If all options on all stocks are 
+ranked under this same assumption, however, a fair comparison of profitable options 
+will be obtained. 
+Step 6 is omitted from this example. It would consist of performing a similar 
+profit analysis (steps 4 and 5) on all other XYZ options, with the assumption that XYZ 
+is at 475/s after 90 days. 
+Step 7: Calculate the downside potential of XYZ. The formula for the downside 
+potential of the stock is nearly the same as that used in step 3 for the upside poten­
+tial: 
+q = pe-avt 
+== 4lc· 15 = 41 x .86 = 35.39 
+XYZ would fall to approximately 35¼ in 90 days if it fell by one standard deviation. 
+Note that the actual distances that XYZ could rise and fall are not the same. The