Add training workflow, datasets, and runbook
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Index • 313
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Optionality, 4
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Options, 3–28
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buying (see Exposure-gaining
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strategies)
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characteristics of, 4
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defined, 4
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directionality of, 9–20
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examples of, 5–6
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expiration of, 187
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history of, 6–9
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investment leverage from, 166–168
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misconceptions about, 1
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mispriced, 143–162
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(See also specific types)
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Options Clearing Corporation (OCC), 8
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Options contracts:
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counterparties for, 295n1 (Chapter 1)
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examples of, 5–6
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front-month, 270
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private, 6–8
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Oracle, 107–108, 144, 146, 148–153,
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155, 157, 159–162
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Organic revenue growth, 97
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Out-of-the-money (OTM) options:
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ATM options vs., 233–234
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call vs. put, 27
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collars, 258–262
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defined, 13, 16, 17
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investment leverage for, 171–172
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levered strategy with, 180, 181
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long calls, 193, 195–197
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long diagonals, 235–237
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long puts, 203, 204
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long strangles, 205–207
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and market makers, 147
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pricing of, 150
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protective puts, 248, 250–253
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realized losses and, 187
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rising volatility and, 70–74
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short diagonals, 238–240
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short puts, 213, 215
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short strangles, 231
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short-call spreads, 221–224
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time decay for, 66–67
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unrealized losses, 187
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Overconfidence, 118–122
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Overexposure, 247
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Overlays, 23, 234
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Owners:
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cash flows generated on behalf of,
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80–82
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free cash flow to (see Free cash flow
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to owners (FCFO))
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Owners’ cash profit (OCP):
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defined, 82
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nominal GDP growth vs., 104–108
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profitability as, 99–102
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P
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Parity, 288
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Pattern recognition, 114–118
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Peaks (business-cycle):
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operational leverage in, 284
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and troughs, 302–303n2
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Pension funds, 135, 136
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Percent delta, 169–173
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Percent profit, 172–173
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Percentage return, 229
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Portfolio management:
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for long calls, 196–201
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for long puts, 204–205
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for long strangles, 207
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for short puts, 216–220
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for short-call spreads, 228–230
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Portfolios:
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hedging, 251–252
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investment leverage in, 174–183
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Precision, false, 93, 96–97
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Premium, 13
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Prepaid interest, 170
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Present value of future cash flows, 87–89
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Pricing power, 98
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Principal (financial), 168
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Principals, agents vs., 131–132
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Problem solving, X- vs. C-system,
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115–118
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