Add training workflow, datasets, and runbook

training_data/curated/text/f52e80fb47609274d2a36f6a5b8b9169a2b33962cc9291fddbe1ca1dc5c38ae1.txt

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+544A COMPleTe gUIde TO THe FUTUreS MArKeT
+ Choosing an Optimal Strategy 
+ It the previous sections we examined a wide range of alternative trading strategies. Now what? How 
+does a trader decide which of these alternatives provides the best trading opportunity? This ques-
+tion can be answered only if probability is incorporated into the analysis. The selection of an optimal 
+option strategy will depend entirely on the trader’s price and volatility expectations. Insofar as these 
+expectations will diff  er from trader to trader, the optimal option strategy will also vary, and the 
+success of the selected option strategy will depend on the accuracy of the trader’s expectations. In 
+order to select an optimal option strategy, the trader needs to translate his price expectations into 
+probabilities. 
+ The basic approach requires the trader to assign estimated probability levels for the entire range 
+of feasible price intervals. Figure   35.23   illustrates six diff  erent types of probability distributions for 
+August gold futures. These distributions can be thought of as representing six diff  erent hypothetical 
+expectations. (The charts in Figure   35.23   implicitly assume that the current price of August gold 
+futures is $1,200.) Several important points should be made regarding these probability distributions: 
+   1.  The indicated probability distributions only represent approximations of traders’ price expec-
+tations. In reality, any reasonable probability distribution would be represented by a smooth 
+curve. The stair-step charts in Figure   35.23   are only intended as crude models that greatly sim-
+plify calculations. (The use of smooth probability distributions would require integral calculus 
+in the evaluation process.) 
+Price of August gold futures at option expiration ($/oz)
+Profit/loss at expiration ($)
+1,000
+25,000
+12,500
+−12,500
+−25,000
+0
+1,050 1,100 1,150 1,200 1,250
+Breakeven price on long
+2 calls = $1,238.80
+Long futures
+Long 2 calls
+1,300 1,350 1,400
+37 ,500
++37 ,500
+Futures price at time
+of position initiation
+    FIGURE   35.22    Profi  t/loss Profi  le: Two long Calls vs. long Futures