Add training workflow, datasets, and runbook

training_data/curated/text/946480128132163d91915a4735ea9ac0d76ca6e16492232bd849c64d2978045d.txt

@@ -0,0 +1,43 @@
+Chapter 23: Spreads Combining Calls and Puts 331 
+vantages are connected with some of the methods of establishing the butterfly 
+spread. 
+Example: The following prices exist: 
+Strike: 
+Call: 
+Put: 
+XYZ common: 60 
+50 
+12 
+60 
+6 
+5 
+70 
+2 
+1 1 
+The method using only the calls indicates that one would buy the 50 call, sell two 60 
+calls, and buy the 70 call. Thus, there would be a bull spread in the calls between the 
+50 and 60 strikes, and a bear spread in the calls between the 60 and 70 strikes. In a 
+similar manner, one could establish a butterfly spread by combining either type of bull 
+spread between the 50 and 60 strikes with any type of bear spread between the 60 and 
+70 strikes. Some of these spreads would be credit spreads, while others would be debit 
+spreads. In fact, one's personal choice between two rather equivalent makeups of the 
+butterfly spread might be decided by whether there were a credit or a debit involved. 
+Table 23-1 summarizes the four ways in which the butterfly spread might be 
+constructed. In order to verify the debits and credits listed, the reader should recall 
+that a bull spread consists of buying a lower strike and selling a higher strike, whether 
+puts or calls are used. Similarly, bear spreads with either puts or calls consist of buy­
+ing a higher strike and selling a lower strike. Note that the third choice - bull spread 
+with puts and bear spread with calls - is a short straddle protected by buying the out­
+of-the-money put and call. 
+In each of the four spreads, the maximum potential profit at expiration is 8 
+points if the underlying stock is exactly at 60 at that time. The maximum possible loss 
+in any of the four spreads is 2 points, if the stock is at or above 70 at expiration or is 
+at or below 50 at expiration. For example, either the top line in the table, where the 
+spread is set up only with calls; or the bottom line, where the spread is set up only 
+with puts, has a risk equal to the debit involved - 2 points. The large-debit spread 
+(second line of table) will be able to be liquidated for a minimum of 10 points at expi­
+ration no matter where the stock is, so the risk is also 2 points. (It cost 12 points to 
+begin with.) Finally, the credit combination (third line) has a maximum buy-back of 
+10 points, so it also has risk of 2 points. In addition, since the striking prices are 10 
+points apart, the maximum potential profit is 8 points (maximum profit = striking 
+price differential minus maximum risk) in all the cases.