Add training workflow, datasets, and runbook

training_data/curated/text/d86268adcc60a63d5d2a2f8a4dc210928d908276d53c84a61586c101e9fc259f.txt

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+Expected Stock Volatility
+Option traders must have an even greater focus on volatility, as it plays a
+much bigger role in their profitability—or lack thereof. Because options can
+create highly leveraged positions, small moves can yield big profits or
+losses. Option traders must monitor the likelihood of movement in the
+underlying closely. Estimating what historical volatility (standard deviation)
+will be in the future can help traders quantify the probability of movement
+beyond a certain price point. This leads to better decisions about whether to
+enter a trade, when to adjust a position, and when to exit.
+There is no way of knowing for certain what the future holds. But option
+data provide traders with tools to develop expectations for future stock
+volatility. IV is sometimes interpreted as the market’s estimate of the future
+volatility of the underlying security. That makes it a ready-made estimation
+tool, but there are two caveats to bear in mind when using IV to estimate
+future stock volatility.
+The first is that the market can be wrong. The market can wrongly price
+stocks. This mispricing can lead to a correction (up or down) in the prices
+of those stocks, which can lead to additional volatility, which may not be
+priced in to the options. Although there are traders and academics believe
+that the option market is fairly efficient in pricing volatility, there is a room
+for error. There is the possibility that the option market can be wrong.
+Another caveat is that volatility is an annualized figure—the annualized
+standard deviation. Unless the IV of a LEAPS option that has exactly one
+year until expiration is substituted for the expected volatility of the
+underlying stock over exactly one year, IV is an incongruent estimation for
+the future stock volatility. In practice, the IV of an option must be adjusted
+to represent the period of time desired.
+There is a common technique for deannualizing IV used by professional
+traders and retail traders alike. 1 The first step in this process to deannualize
+IV is to turn it into a one-day figure as opposed to one-year figure. This is
+accomplished by dividing IV by the square root of the number of trading
+days in a year. The number many traders use to approximate the number of