LC

Agreed. And if vol really spikes, you can sell OOM covered calls to recoup some premium.

Many ways to skin a cat! Congrats :)

LC, .can you walk me through one example of this. It eats a lot of margin, non? Yes, does require some margin for coverage depending on your holdings. For example I was buying various SP500 companies when the index was in the 2800 range - around Feb 28. And then again as the index moved down to 2600, 2500 but let's leave those out. This brought my average cost for these stocks to a price range where the SP500 is around 3000. Come March 11, 12, now the index is in the 2500s or thereabouts. And volatility is crazy high. I am thinking, well damn, I averaged down too early (of course). And everything I owned prior to COVID is bombed out. So where can things go from here? Well, up down or neutral (duh). In terms of selling calls: -Neutral I wasn't too concerned about as (1) volatility is crazy; (2) quality information is sparse (see the COVID thread for my thoughts on that). Nobody really knows what the outcome of all this will be. And if the market remains neutral around the 2500 mark, well those calls will expire worthless anyways. -If the market tanks further, well my portfolio is going to continue to crater. But that's a sunk cost, I will want more cash to buy stocks I like even cheaper, and ride it out. And again here, the calls expire worthless but at least provide some premium to buy now-lower-priced stocks. -If the market rebounds, well now the majority of my portfolio is looking just fine. I bought some when the index was at 2800, bought a little more around 25, 2600. So, that's a good situation for me, but I am giving up any upside above 2800 (strike price of the calls). So I sold SPY calls, 280-strike, expiring Mar 31 (only 2.5 week tenor!). I already had sold covered calls on other stocks I owned back when the index was 3000+; I closed all those positions out for next-to-nothing. So I was totally un-hedged, and then sold enough SPY calls to cover about 50% of my portfolio's notional. Essentially, it was getting paid 3% premium for 3 weeks of exposure to 3.5% of upside losses. I.e. I would potentially have to lock in losses for stocks initially purchased at index-weighted-average prices of 3000, but forced to sell at 2800 if called (7% total loss, but again I was only 50% exposed so 3.5% total)

This is incorrect, and dangerous thinking. It is true: accurate information is a critical factor, but it is not possible for humans to obtain such early in these viral outbreaks. The pandemic response is warranted - the precautionary principle is the only guide that would ensure the survival of the species. In these situations, you don't need accurate knowledge of the probabilities in order to know what to do. Our emotions and stress are wiser guide than our intelligence in deciding how to react. I disagree with the bolded statements. The first, we can obtain accurate (i.e. representative) information with widespread testing. The second, you cannot possible know this without knowing the first. The most you can say is, a pandemic response may be warranted: Pandemic responses are warranted in one of two cases: Case 1- We do know that we are dealing with a high-magnitude pandemic. Case 2- We don't know, and therefore are taking a precautionary stance. The US (and the world) is in Case 2. Globally we do not have reliable information as the article posted by minten illustrates. We are extrapolating from tens, hundreds, and thousands of cases to ten and hundred millions of cases. Statistically, our conclusions are subject to excessive sampling bias. We want to be in Case 1 - where we do know. The only way to do that is widespread testing, which did not happen. Now, we are potentially making inaccurate decisions. We are slowly moving from Case 2 to Case 1. I am arguing the speed of this movement is too slow, particularly from the US point-of-view where we had both the resources and head-start to achieve a Case 1 decision more efficiently.

Another area in terms of telemedicine is for regular script renewals. We picked up an inhaler at the local walgreens for my wife, from a script written by a teledoc service that her company offers as part of their benefits package. She's never really needed one as an adult (had bronchitis as a kid apparently) but it's good to have on hand - especially with COVID19 flying around. Same goes for things like epinephrine. This seems like an area easy to consolidate. Maybe now is a good time to grow the business as much as possible and sell to a larger market participant (TDOC)?

We can only derive outcomes from information. Quality of information determines precision. Let's look at the responses: The market has seen massive swings in either direction. Trump's administration is flailing about like a fish FRB is pumping money on autopilot - they've got a hammer and everything is turning into a nail State responses have been on either end - Colorado shuts down its skiing, Beaches still open in Florida. NYC is a ghost town. I would argue the volatility (i.e. imprecision) in all these actions is all driven by lack of information. Trump's administration shat the bed on this one 1.5 months ago when they should've been preparing test kits.

Dalio posted an article on his thoughts on zero interest rates: https://www.linkedin.com/pulse/implications-hitting-hard-0-interest-rate-floor-ray-dalio/ This is about the only concisely quotable passage. The article is well done, it tackles 'next steps' in terms of fiscal stimulus and is region-specific. Maybe you do not agree with all of his second- and third- order reasoning but it is the first attempt to write down the answer to, "what will we do next and what are the those potential outcomes".

minten, thank you for posting. This explains why testing i.e. accurate information is a critical factor in early stage viral outbreaks. For all we know, widespread testing could show the severity of this virus is totally overblown as critics on this thread have suggested, and therefore the pandemic responses are unwarranted. Our portfolios and emotions could have been spared much stress.

Bought V, Sold some IRM calls Bought back some SPY calls that I sold earlier in the week. I had a pretty good experience selling calls last week with such high volatility premiums. I was selling calls that would have me breakeven at equity prices seen in the early market response to COVID19 (prices at SP500 levels of 28/2900). With short tenors too, for example 3/31 expiry. I figured, if the markets stay depressed I pocket some nice premiums, if the markets rebound I lose out on the calls but the remainder of my portfolio will outperform.

Well, you could try to sell puts at crazy OTM prices.

One of my wife's friends "had it" (or so she/we think) - cough, intense fever for a day or two, then a lingering cough. My wife had a terrible cough and body aches back in January. Hope you feel better...drink warm liquids and get enough rest!

Everyone saw this coming? Like who on this MB bought puts or shorted the market on Friday??? You guys have all been buying the dip when you should have been selling into any strength. I meant based on yesterday's policy announcement ;)

Added a bit to ATT around 31 this morning.

Another crazy morning. I guess everyone saw this coming but still, to see bank stocks drop 1/5th in a day is something I've never experienced before.

That may be the point

Wow, Trump is really showing his lack of ability. “How not to lead a nation” on display here.

I think it's much higher than 2%. The reality is many people are sick and not dying of pneumonia - I would assume a portion of posters on this very thread are experiencing symptoms as well as the rest of the population, or had experienced symptoms in Jan/Feb and recovered. The first reported US case was January 21. This is an incredibly fast transmitting virus. The odds are, cases existed prior to Jan 21. And further, the odds are that the spread of this virus across the US was much faster than official reports claim. This is due to lack of testing i.e. lack of timely, accurate information. But ultimately, I agree w/ the principle of: better safe than sorry. For the obvious reason, and for the secondary reason as it provides a "trial-run" on a global basis for future pandemics. I am about 20% cash btw. If I didn't suffer from biases like anchoring and all that stuff I would think about 1/3 cash is the ideal amount right now.

I think you have an excellent understanding of this at this point, and apparently able to put it down on paper better then me. Thanks. Just trying to make sure I fully understand the various perspectives. Again, apologies again for the comment before re: the profession you've chosen. It meant no disrepect. I do want to ask you - if you were to take a step back and think about your position, where could you be wrong? I could be wrong by how much of a hit this will be to the ICU/need for respirator, ie breakdown of health system. I can only think back to working during the H1N1 outbreak and the 17-18 flu season and that volume load which was ~15 million cases if I recall correctly. The system was stretched, but did not collapse, My opinion is the virus has been here for 6 weeks/months and cases are vastly under reported. So in my mind we are currently in an environment of where many think we will be from documented patient 1 say 4-6 weeks from now, already! Its in this mind frame I have a hard time rectifying a wickedly high death rate and medical system collapse if we are operating in this environment currently. I certainly could be wrong on this, I hope I'm right of course. We will see. The fact of the matter is if the cases are severely under estimated and we are handling it now maybe we are further along on the curve then we think, and handling it fine. Again, hope Im not wrong. We will see I guess.... Here's a question. I am no medical professional so maybe this is a silly question: Let's assume you are correct - coronavirus in some form has been in N America, say since January or early Feb. Therefore people have been experiencing flu-like symptoms and/or perhaps slightly more elevated symptoms than a normal flu. And some must have been going to a doctor or perhaps hospital. Doctors perform a flu test which would presumably come back negative. Would there have been some communication that doctors/hospitals are noticing a pretty decent amount of patients with flu-like or slightly elevated flu-like symptoms but testing negative for the flu? An amount of patient records to corroborate this? I am not saying it's impossible - frankly it may very well be true, and is therefore worth exploring - so would there some records to prove/disprove this?

Paul, I was actually thinking of the C Munger quote earlier this week as we saw such crazy volatility: "In fact, you can argue that if you're not willing to react with equanimity to a market price decline of 50% two or three times a century you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations"

It was autumn, and the Indians on the remote reservation asked their new Chief if the winter was going to be cold or mild. Since he was an Indian Chief in a modern society, he had never been taught the old secrets. When he looked at the sky, he couldn't tell what the weather was going to be. Nevertheless, to be on the safe side, he replied to his tribe that the winter was indeed going to be cold and that the members of the village should collect firewood to be prepared. Also, being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked, "Is the coming winter going to be cold?" "It looks like this winter is going to be quite cold indeed," the meteorologist at the weather service responded. So the Chief went back to his people and told them to collect even more wood in order to be prepared. A week later, he called the National Weather Service again. "Is it going to be a very cold winter?" "Yes," the man at National Weather Service again replied,"it's definitely going to be a very cold winter." The Chief again went back to his people and ordered them to collect every scrap of wood they could find. Two weeks later, he called the National Weather Service again. "Are you absolutely sure that the winter is going to be very cold?" "Absolutely," the man replied. "It's going to be one of the coldest winters ever." "How can you be so sure?" the Chief asked. The weatherman replied, "The Indians are collecting wood like crazy."

Why ask the question if you're unwilling to provide information to answer it?

While the situation remains fluid ;D

https://uk.reuters.com/article/us-health-coronavirus-southkorea/south-korea-reports-more-recoveries-than-coronavirus-cases-for-the-first-time-idUKKBN210051 SEOUL (Reuters) - South Korea reported more recoveries from the coronavirus than new infections on Friday for the first time since its outbreak emerged in January, as a downward trend in daily cases raised hopes that Asia’s biggest epidemic outside China may be slowing. The Korea Centers for Disease Control and Prevention (KCDC) recorded 110 new coronavirus cases on Friday compared with 114 a day earlier, taking the national tally to 7,979. The death toll rose by five to 72 as of late Friday. In contrast, 177 patients were released from hospitals where they had been isolated for treatment, the KCDC said.

Thanks for posting. Interesting is BG claims on cost of investment. You look at what the federal gov't has spent over the past few days, compare that to, if we just spent a portion the last few years. And wonder what the case in America would look like today.

Two types of people in this world: