LC

I have been buying puts on the up bounces. Sold some stock, some profitable, some at a loss. Probably a net of zero. I cleared all my long orders. The puts are my currency to buy Leaps later on. I figure the US Covid case load exceeds China by Monday morning. I am doing the same but with selling short-tenor (1-3 month) calls on the dividend-paying portion of my portfolio. Difficult to exit sometimes, perhaps puts are better in that regards.

Oh, yea - not illegal, but morally corrupt, they all need to go. At least four senators dumped their stocks after receiving a briefing on Jan 24. Trump had the exact same information -- and did mostly nothing to prepare. The buck stops at the top, doesn't it? Is Trump required to disclose equity transactions? And Senators are only required to disclose for themselves & their spouse. Who knows what their kids are doing.

Raised cash - about 20% now. Moved most non-dividend paying holdings into 2 year ITM LEAP exposure. Probably will sit tight for a bit and raise some more cash over the next few weeks, see how this whole thing (starts) to shake out as we approach the warmer months.

So here's a question - when does it stop? And, when does society emerge from the "shelter in place" policies? Let's say come end of April, May the virus retreats. Do we still sit inside all day? I mean, look at the uncoordinated response and lag-time that government took to enforce the start of quarantines. Will we see the same lag time when removing quarantines? If so it could be July, August before thing return "to normal". Most people simply do not have the resources to last that long without work.

Not sure I understand this. A month ago, no one was dead in Italy. Now 3000+ plus are dead with an additional 400-500 coming in daily despite the fact the entire country has been shut down for 9 days. Similar numbers in the US would be 15,000 dead in 2 weeks time with a full shutdown - but we haven't done that yet. LA just announced it. Nowhere else has and we have over 100k confirmed cases w/o testing. This is already on course to be way worse than the 30k annually from the flu even w/ the shutdown which hasn't been implemented yet. I'm not trying to fear monger - just extrapolating the data that's available What I find mind-boggling is that the first confirmed case in Italy was on Jan 31. The first confirmed case in the USA (WA state) was on Jan 21. Obviously the two areas are different, but to date there are 74 coronavirus deaths in WA, versus 3,400 in Italy. On the flip side, let's compare Italy vs NYC: Italy first case: Jan 31 NYC first case: March 1 NYC has about 4500 cases and about 30 deaths. When Italy had about 4600 cases, deaths were around 175.

The best part? He dumped his portfolio on 2/13: https://www.propublica.org/article/senator-dumped-up-to-1-6-million-of-stock-after-reassuring-public-about-coronavirus-preparedness Oh and he's on these committees: Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure Subcommittee on Health Care Subcommittee on Taxation and IRS Oversight Committee on Health, Education, Labor, and Pensions Subcommittee on Children and Families Subcommittee on Primary Health and Retirement Security Select Committee on Intelligence (Chairman)

Colorado: about 3K tested, 275 positives, 4 deaths.

I opted for calls to protect downside. Cost was not much more vs. margin. Until we know more about long-term situation, I felt it was the more conservative choice.

Eric, difficult to say: Around a dozen reporters could be required to leave, in a move that Beijing said was reciprocation for the United States’ forcing out of about 60 Chinese reporters, who worked for propaganda outlets, this month Best guess is to (1) trust international groups operating within China; and (2) overweight data sources outside China

Poll results seem to indicate that people have no damn idea ;D

I raised cash, converting my entire V position into ITM LEAPS. I'll be holding the cash and trying my darnedest not to buy too early.

Unemployment estimates: https://www.bloomberg.com/opinion/articles/2020-03-18/coronavirus-recession-is-already-causing-staggering-job-losses A spike in initial claims for unemployment insurance is among the earliest signs that a recession is underway. The most recent official number is from the first week of March, and it shows 221,000 claims, roughly on par with the average of the last several months. State unemployment offices, however, are reporting huge increases in the volume of more recent claims. Hawaii reported 1,500 claims on Monday, five times the previous Monday. From Friday to Tuesday, Connecticut saw 30,000 claims, about 10 times the average for a whole week. Pennsylvania received a staggering 50,000 claims on Monday alone, compared to 12,000 claims for the first week of March. Again, using back-of-the-envelope math, that implies a rise in the unemployment rate to about 27% — even higher than the 20% Treasury Secretary Steven Mnuchin has warned as possible. It would exceed the highest unemployment on record, 24.9%, set during the Great Depression. To repeat: These are rough estimates based on early data.

PM today as well. Not sure how exactly a cigarette producer will fare in a post-respiratory virus world, but hey let's find out! :-X

There are other structures you can use to achieve the same, for example You can buy the full 100 shares for 14,500 and margin the 7800 against it; use some of the 7800 to purchase a put option to prevent a margin call, and invest the remainder.

Not a bad idea at all. What would this look like in practice? Lets say I own 100 shares of Visa, average cost is 170. Current price is 145 or so. Buy 1 Call, strike price 85, expiration Jun-2022, for about 67/sh. Essentially you're buying 100 shares for 152/share (85 strike + 67 call price). But you only need to put up 6700 rather than 14,500 in the market. So your cost here is 7/share premium divided by the amount of cash you are borrowing ie 14500-6700 or 7800, about 9% or so. Pricey, but again it depends what your expectations are for that freed-up-cash.

Not a bad idea at all. some of those premiums are pretty high looking Yeah that's the only setback. You'll have to calculate how much the leverage will cost you. On some stocks it's far worse than others. But freeing up 50% of capital, if you can put that to work and generate expected return higher than your premium cost, it can be useful. Use thoughtfully.

Viking, while I agree, the cynic (realist?) in me says, "Never gonna happen." Trump needs a partially effective vaccine. It's the only way he can calm the tides of angst we see. And it's the only way people will feel "safe" returning to life-as-normal, at least before the November elections. orthopa, this is exactly why widespread testing was, and is needed. If we know beyond a shadow of a doubt that this is a real shit-your-pants pandemic, people will not say "fuck it". If we find out it's just, well, a really bad flu-like virus and there's not much we can do about it, well that helps us justify lifting some quarantine procedures. Screw everything else that has happened with Trump, he has put a crater in this country with how he handled this.

Not a bad idea at all.

Mr. Market either caught COVID-19 or has been taking meth.

Unless you run out of cash to invest. :D :D :D :'(

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.

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".