Add training workflow, datasets, and runbook

training_data/curated/text/a0cc4dd38033ce51862a3366c5f0ba1ccc3f4ba94b771eff8ddeee08abca3811.txt

@@ -0,0 +1,35 @@
+60  •   The Intelligent Option Investor
+it is because it is also the definition of the BSM cone. To the extent that 
+expectations are not directly observable, forward volatility can only be 
+guessed at.
+The option market’s best guess for the forward volatility, as expressed 
+through the option prices themselves, is known as implied volatility. We 
+will discuss implied volatility in more detail in the next section and will 
+see how to build a BSM cone using option market prices and the forward 
+volatility they imply in Part III.
+The one other measure of volatility that is sometimes mentioned is sta-
+tistical volatility (a.k.a. historical volatility). This is a purely descriptive statis-
+tic that measures the amount the stock price actually fluctuated in the past. 
+Because it is simply a backward-looking statistic, it does not directly affect 
+option pricing. Although the effect of statistical volatility on option prices 
+is not direct, it can have an indirect effect, thanks to a behavioral bias called 
+anchoring. Volatility is a hard concept to understand, let alone a quantity to 
+attempt to predict. Rather than attempt to predict what forward volatility 
+should be, most market participants simply look at the recent past statistical 
+volatility and tack on some cushion to come to what they think is a reason-
+able value for implied volatility. In other words, they mentally anchor on the 
+statistical volatility and use that anchor as an aid to decide what forward vola-
+tility should be. The amount of cushion people use to pad statistical volatility 
+differs for different types of stocks, but usually we can figure that the market’s 
+implied volatility will be about 10 percentage points higher than statistical 
+volatility. It is important to realize that this is a completely boneheaded way 
+of figuring what forward volatility will be (so don’t emulate it yourself), but 
+people do boneheaded things in the financial markets all the time.
+However people come to an idea of what forward volatility is rea-
+sonable for a given option, it is certain that changing perceptions about 
+volatility are one of the main drivers of option prices in the market. To 
+understand how this works, let’s take a look at what happens to the BSM 
+cone as our view of forward volatility changes. 
+Changing Volatility Assumptions
+Let’s say that we are analyzing an option that expires in two years, with a 
+strike price of $70. Further assume that the market is expecting a forward