Add training workflow, datasets, and runbook

training_data/curated/text/c1b82698e7db441ac836cc9b20b3c6d13bae7121e9b3b661ef2c5a6dc5b996bd.txt

@@ -0,0 +1,34 @@
+156  •   The Intelligent Option Investor
+I’ll break the process into three steps:
+1. Create a BSM cone.
+2. Overlay your rational valuation range on the BSM cone.
+3. Look for discrepancies.
+Create a BSM Cone
+The heart of a BSM cone is the forward volatility number. As we have seen, 
+as forward volatility increases, the range of future stock prices projected by 
+the BSM (and expected by the market) also increases. However, after hav-
+ing looked at the market pricing of options, we also know that a multitude 
+of volatility numbers is available. Which one should we look at? Each strike 
+price has its own implied volatility number. What strike price’s volatility 
+should we use? There are also multiple tenors. What tenor options should 
+we look at? Should we look at implied volatility at the bid price? At the ask 
+price? Perhaps we should take the “kitchen sink” approach and just average 
+all the implied volatilities listed!
+The answer is, in fact, easy if you use some simplifying assumptions 
+to pick a single volatility number. I am not an academic, so I don’t neces-
+sarily care if these simplifying assumptions are congruent with theory. 
+Also, I am not an arbitrageur, so I don’t much care about very precise 
+numbers, and this attitude also lends itself well to the use of simplifying 
+assumptions. All we have to make sure of is that the simplifying as-
+sumptions don’t distort our perception to the degree that we make bad 
+economic choices.
+Here are the assumptions that we will make:
+1. The implied volatility on a contract one or two months from expi-
+ration that is ATM or at least within the 40- to 60-delta band and 
+that is the most heavily traded will contain the market’s best idea 
+of the true forward volatility of the stock. 
+2. If a big announcement is scheduled for the near future, implied 
+volatility numbers may be skewed, so their information might 
+not be reliable. In this case, try to find a heavily traded near ATM 
+strike at an expiry after the announcement will be made. If the 
+announcement will be made in about four months or more, just try