Add training workflow, datasets, and runbook

training_data/relevant/text/c6a01ff42809107c13245a136707c8261c0b3f00071ad29f0d5b192f88343e48.txt

@@ -0,0 +1,33 @@
+Chapter 28: Mathematical Applications 413 
+ed an annualized total return (capital gains, dividends, and commissions) of at least 
+12%. This would eliminate many potential writes, but would leave him with a fairly 
+large number of writing candidates each day. He knows the downside break-even 
+point at expiration in each write. Therefore, the probability of the stock being below 
+that break-even point at expiration can be computed quickly. His final list would rank 
+those writes with the least chance of being below the break-even point at expiration 
+as the best writes. Again, this ranking is based on an expected probability and is, of 
+course, no guarantee that the stock will not, in reality, fall below the break-even 
+point. However, over time, a list of this sort should provide the rrwst conservative cov­
+ered writes. 
+Example: XYZ is selling for 43 and a 6-month July 40 call is selling for 8 points. After 
+including dividends and commission costs for a 500-share position, the downside 
+break-even point at expiration is 36. If the annualized volatility of XYZ is 25%, the 
+probability of making money at expiration can be computed. The 6-month volatility 
+is 17.7% (25% times the square root of½ year). The probability of being below 36 
+can be computed by using the formula given earlier in this section: 
+The expected probability of XYZ being below 36 in 6 months is 15.8%. Therefore, 
+this would be an attractive write on a conservative basis, because it has a large prob­
+ability of making money (nearly 85% chance of not being below the break-even point 
+at expiration). The return if exercised in this example is approximately 20% annual­
+ized, so it should be acceptable from a profit potential viewpoint as well. It is a rela­
+tively easy matter to perform a similar calculation, with the aid of a computer, on all 
+covered writing candidates. 
+The ability to measure downside protection in terms of a common denomina­
+tor - volatility - can be useful in other types of covered call writing analyses. The 
+writer interested in writing out-of-the-money calls, which generally have higher 
+profit potential, is still interested in having an idea of what his downside protection 
+is. He might, for example, decide that he wants to invest in situations in which the 
+probability of making money is at least 60%. This is not an unusually difficult 
+requirement to fulfill, and will leave many attractive covered writes with a high prof­
+it potential to choose from. A downside requirement stated in terms of probability 
+of success removes the necessity of having to impose arbitrary requirements. Typical