Add training workflow, datasets, and runbook

training_data/curated/text/88b785c80dddd1a1b76ba03e60e15e8d94ae2f3c4e11a376f8b1f60ff3bdd1bf.txt

@@ -0,0 +1,36 @@
+574 Part V: Index Options and Futures 
+tion. He would both sell calls and buy puts with the same striking price in order to 
+create the hedge. This is similar to a conversion arbitrage. 
+When attempting to hedge the S&P 500, one could use the S&P 500 futures 
+options or the S&P 500 cash options, but that would not necessarily present a more 
+attractive situation than using the futures. On the other hand, there is not a liquid 
+S&P 100 (OEX) futures contract, so that when hedging that contract, one generally 
+uses the OEX options. As mentioned earlier, inter-index option spreads between var­
+ious indices, including the S&P 100 and 500, will be discussed in the next chapter. 
+There is not normally much difference as to which of the two is better at any 
+one time. However, since a full option hedge requires two executions (both selling 
+the call and buying the put), the futures probably have a slight advantage in that they 
+involve only a single execution. 
+In order to substitute options for futures in any of the examples in these chap­
+ters on indices, one merely has to use the appropriate number of options as com­
+pared to the futures. If one were going to sell OEX calls instead of S&P 500 futures, 
+he would multiply the futures quantity by 5. Five is the multiple because S&P 500 
+futures are worth $250 per point while OEX options are worth $100 per point, and 
+because the S&P 500 Index (SPX) trades at twice the price of OEX (OEX split 2-for­
+l in November 1997). Thus, if an example calls for the sale of 20 S&P 500 futures, 
+then an equivalent hedge with OEX options would require 100 short calls and 100 
+long puts. 
+One could attempt to create less fully hedged positions by using the options 
+instead of the futures. For example, he might buy stocks and just write in-the-money 
+calls instead of selling futures. This would create a covered call write. He would still 
+use the same techniques to decide how much of each stock to buy, but he would have 
+downside risk if he decided not to buy the puts. Such a position would be most attrac­
+tive when the calls are very overpriced. 
+Similarly, one might try to buy the stocks and buy slightly in-the-money puts 
+without selling the calls. This position is a synthetic long call; it would have upside 
+profit potential and would lose if the index fell, but would have limited risk. Such a 
+position might be established when puts are cheap and calls are expensive. 
+TRADING THE TRACKING ERROR 
+Another reason that one might sell futures against a portfolio of stocks is to actually 
+attempt to capture the tracking error. If one were bullish on oil drilling stocks, for 
+example, and expected them to outperform the general market, he might buy sever-