Add training workflow, datasets, and runbook

training_data/relevant/text/cea5f20dab14526e50b71da3ceac88fef4db675409da1b03d077ba5346d63cf0.txt

@@ -0,0 +1,37 @@
+274 Part Ill: Put Option Strategies 
+At the opposite end of the spectrum, the stock owner might buy an in-the­
+money put as protection. This would quite severely limit his profit potential, since the 
+underlying stock would have to rise above the stiike and more for him to make a 
+profit. However, the in-the-money put provides vast quantities of downside protec­
+tion, limiting his loss to a very small amount. 
+Example: XYZ is again at 40 and there is an October 45 put selling for 5½. The stock 
+owner who purchases the October 45 put would have a maximum risk of½ point, for 
+he could always exercise the put to sell stock at 45, giving him a 5-point gain on the 
+stock, but he paid 5½ points for the put, thereby giving him an overall maximum loss 
+of ½ point. He would have difficulty making any profit during the life of the put, 
+however. XYZ would have to rise by more than 5½ points (the cost of the put) for 
+him to make any total profit on the position by October expiration. 
+The deep in-the-money put purchase is overly conservative and is usually not a 
+good strategy. On the other hand, it is not wise to purchase a put that is too deeply 
+out-of-the-money as protection. Generally, one should purchase a slightly out-ofthe­
+nwney put as protection. This helps to achieve a balance between the positive feature 
+of protection for the common stock and the negative feature of limiting profits. 
+The reader may find it interesting to know that he has actually gone through this 
+analysis, back in Chapter 3. Glance again at the profit graph for this strategy of using 
+the put purchase to protect a common stock holding (Figure 17-1). It has exactly the 
+same shape as the profit graph of a simple call purchase. Therefore, the call purchase 
+and the long put/long stock strategies are equivalent. Again, by equivalent it is meant 
+that they have similar profit potentials. Obviously, the ovvnership of a call differs sub­
+stantially from the ownership of common stock and a put. The stock owner continues 
+to maintain his position for an indefinite period of time, while the call holder does not. 
+Also, the stockholder is forced to pay substantially more for his position than is the call 
+holder, and he also receives dividends whereas the call holder does not. Therefore, 
+"equivalent" does not mean exactly the same when comparing call-oriented and put­
+oriented strategies, but rather denotes that they have similar profit potentials. 
+In Chapter 3, it was determined that the slightly in-the-money call often offers 
+the best ratio between 1isk and reward. When the call is slightly in-the-money, the 
+stock is above the striking price. Similarly, the slightly out-of-the-money put often 
+offers the best ratio between risk and reward for the common stockholder who is buy­
+ing the put for protection. Again, the stock is slightly above the striking price. Actually, 
+since the two positions are equivalent, the same conclusions should be arrived at; that 
+is why it was stated that the reader has been through this analysis previously.