[Coronavirus]

https://fivethirtyeight.com/features/infectious-disease-experts-dont-know-how-bad-the-coronavirus-is-going-to-get-either/

 

Just as flu season can have two peaks, the surveyed experts think there’s a good chance there will be a second wave of coronavirus-related hospitalizations sometime between August and December. Individual estimates for the likelihood of that second round of cases ranged from 40 percent to 96 percent, with an expert consensus of a 73 percent chance.

[What are you buying today?]

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've also been buying puts. I started a short position recently on the VIX to hedge off some volatility, but not nearly enough. Exited some of my puts today because I'm not sure if volatility will remain at record highs.

[Last 30 Minutes Of The Day]

Here's a theory that variance swaps have increased end of day volatility because dealers are hedging:

 

ZeroHedge doesn't have the best credibility, so I'm curious what others think of that theory.

[Coronavirus]

We are concerned because the a) mortality rate is 3.4% vs <0.1% for the flu, b) COVID-19 is more infectious than the flue, c) there is no vaccine.

 

So you have the potential to infect more than 35M people that got infected with the flu with a 34x higher mortality rate. I think you can run the numbers yourself Or you can just have a hunch and stick your head into the sand.

 

And it's not just us, but epidemiologists seem concerned as well.

 

I've been following Marc Lipsitch, an epidemiologist from Harvard, on Twitter to try to cut through to the experts' opinions.

 

To piggyback off of your post with some more numbers:

 

1. COVID-19 is more infectious than the flu, but there's still a lot of uncertainty on how far it'll spread. Lipsitch estimates 20-60% of the adult population will be infected. The range is wide because of uncertainty around the R0. He specifies adults because at the time of his writing, there weren't many cases involving kids.

 

 

2. You can't just multiply the above estimate by 2-3% because that's the estimate for the Case Fatality Rate (CFR). The Infected Fatality Rate (IFR) is certainly lower because of all the mild infections that go unreported.

 

 

3. There's a great deal of uncertainty over the CFR. The 3.4% estimate comes from WHO, but experts are also looking at South Korea's 0.6% CFR as a more accurate measure. The reason is South Korea is testing the crap out of everyone with 140,000 people tested and 6k cases found. And the more thorough the testing, the more accurate the true CFR is (as opposed to only testing severe cases).

 

I'm dumb when it comes to this stuff, but it seems to me that 0.6% is very much a lower bound. They get this by dividing 40 deaths by 6000 current cases. But when a) cases grow exponentially, and b) deaths lag by say a week, you're going to underestimate the CFR by quite a bit due to exponential denominator growth while the numerator bakes.

 

 

4. There's worry that this will overwhelm the healthcare system. The flu infects 10-50m people each year in the US. Lipsitch's estimates puts COVID-19 infecting 40-125m in the US. Are we ready for the load?

 

My dumb opinion is that Korea's 0.6% might also be low also because cases haven't saturated the system like in Wuhan. And that maybe we can slow down COVID-19 by social distancing so that never happens.

 

 

All in all, COVID-19 might infect 2-4x more people than the flu and kill at a rate 6-30x higher.