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This is what it boils down to in my opinion. Putting your seatbelt on after the wreck doesn’t do much good. When the potential risk on one side is ruin, even if there is low probability of achieving an extreme outcome, then it’s necessary to take precautions to prevent that outcome from occurring. One thing we learn here at SO is that even if probability is low, it’s a mathematical certainty that eventually we experience the extreme result if we have repeated exposure to such risk. Many traders have learned this the hard way.

I'm no expert, but I suspect that much of the decisionmaking came down to simply a logical weighing of the relative hypothetical worst-case scenarios depending on which path you choose: If you shut things down aggressively and it turns out that hey, maybe this virus isn't so bad after all, the hypothetical worst-case scenario is a bad economy, a protracted recession or depression, and some specific industries that either need a bail out or never recover. The economy and parts of the populace will suffer for awhile, but we've recovered economically from much worse things than a voluntary shutdown of certain industries, and we'll recover from this too. And in the meantime, developed governments have plenty of stopgap measures they can take to somewhat ease that economic pain. On the flip side, if you don't shut things down and that turns out to be wrong, the hypothetical worst-case scenario is devastating and completely irreparable. Hospitals overrun. Hundreds of thousands or millions dead, including critical personnel who we need to keep functioning as a society. Potential for widespread panic and civil unrest. The list goes on. And with most of these things, there's nothing the government can do. The government can't resurrect the dead. It can't infuse our healthcare system with thousands of new doctors and nurses if the current ones get sick or die en masse. (And by the way, at some point this outcome has just as bad or worse of an impact on the economy. An economy is made up of people. People have to be healthy to work productively. The whole "save lives" versus "save the economy" thing has always been a false choice.)

Going back to trading, I just went back to some PMs I had with @Yowster back in February and found this: I had a feeling from the beginning of February that the market is severely underestimating the potential impact of the virus. I have the same feeling now. With all the bad news coming almost every day, I think we can see at least 5-10% correction from the current levels, potentially more. In my personal opinion, this rally is built on hope. I'm not sure why the market doesn't realize it, but re opening will cause a big second wave. Which will force the governments to implement lockdowns once again. Whole industries will be devastated: tourism, restaurants, taxis, etc. Commercial real estate will collapse. Healthcare industry will suffer tremendous losses. These industries employ massive numbers of people. Increased diplomatic and economic tensions between the US and China will also have a big negative impact. Latest comments from Buffet and Munger also show that they are bearish short term. In my opinion, it will get much worse before it gets better. Please note that I DO NOT make trading or investment decisions based on my opinions, and I encourage everyone to do the same. I would like to position our SO portfolio in a way that we can benefit from the next leg down, but at the same time not to lose if I'm wrong. Our straddles and hedged straddles will benefit greatly if the next leg down comes, but at the same time they can make small gains even during consolidation phase or rallies.

I was going to make this exact same analogy, but I didn't want to sound flippant about something much more serious than trading (you didn't sound flippant at all, so I think my concern was unfounded!).

You mention the problem correctly - SHIT in SHIT out - or as Churchill put it: I only believe the statistics I falsified myself. The data input due to China lying about the real numbers wrongfooted everyone. The rest of your argumentation falls when you see that a modern healthcare state like Northern Italy and the Netherlands was unable to cope with the flow of patients. This wasnt theory or data analytics - this was reality. So the answer was brutal and you are right confinement also costs lives - in fact people that are unemployed can be shown to live shorter lives than people who work. However they do not cause the collapse of the healthcare system. Right now there is no realiable data like AC Nielsen - the closest you can get to real numbers are those from Germany as they test really widely but even that is a presumption that they are doing it right for which there is no proof. Its easy being the Monday morning quarterback - my gravest concern right now is that the same people who got burnt advocating herd immunity and have switched to lockdown are unable to let go of the extreme control they have imposed. We are going to have to relax the system and sooner rather than later, if they hold onto strict rules for too long morale will start to falter among the population and it will be worse. We took a huge emergency step and by and large the reaction of the population has been admirable - the authorities should now trust them to work at getting back to normal gradually. If they let it come to a boil that people have had enough of it we are sure to see a bad resurgence of the virus. A resurgence which we will see by the way, its unavoidable.

Been trying to keep a little out of this because one my main clients is a vaccine manufacturer. However the 'why' be summarised in one word 'Italy'. All the hypothetical discussions on herd immunity are intellectually stimulating and have a high degree of scientific plausibility. UK and Netherlands originally opted for this approach based on the first advice of the scientists. In The Netherlands at the time that advice was couched in very posh terms: "We really ONLY approach this scientifically." The mathematical models will indeed show that herd immunity could be achieved based on the rapid spread of the virus. However it did not take into account practical realities that were not included in the original models namely the ability of healthcare to cope with the flow of patients and the disruption from sick workforce as well as more lateral issues like: what are the neighbours doing. When the reality of what was happening in Northern Italy filtered through and specifically Bergamo all of that nice hypothetical: yeah we will have a few unavoidable deaths but it will be better to get through the worst of it quickly went out the door. You have to realise Northern Italy is highly developed, its infrastructure is on par with Germany or any developed nation it is quite different from middle or southern Italy where there are structural weaknesses in the fabric of their organisation. In this modern centre of the world people were left to die in the halls of hospitals, waiting in ambulances because the health services were completely overwhelmed. Doctors and nurses had to do triple shifts and even then they could not care for everyone. Those who are arguing that we should have opted for herd immunity have to take into account that their loved or themselves might be the ones left to die alone as the sacrifice to obtain herd immunity. It also became clear that China had been economical with the truth on the infection rate and the fatalities as they vastly exceeded the ones reported from China. This threw a spanner in the 'scientific' decision to opt for herd immunity and try with limited means to reduce the spread of the virus to a lower level than 1:15 ratio that is its natural state. In the Netherlands in Brabant - a major province and again far from some underdeveloped backwater - saw the healthcare system bend (but not break) within days and even the most optimistic projections showed that the country as a whole was unable to absorb the amount of patients. This is a human tragedy we are talking about, you can say that it would be better for those few 100,000 to die so that the rest of us can get on with our lives, but who will do this choosing? It also showed that this was NOT like the flu outbreak which also kills quite a few people but - barring peaks - doesnt stress the healthcare system for more than a week a year or so. All of this happened very quickly, the Dutch decision to go for herd immunity was reversed the same day practically when the reality of Italy and what was happening in the South of the Netherlands filtered through. As Napoleon said: "No plan survives contact with the enemy."

After reading some of the responses and the articles, I would like to ask a simple question. Except for very few countries (Sweden, Belarus, maybe couple more) that did not follow the rest (and the impact of their policy is still not clear), 95%+ of the countries followed the path of the lockdown. I'm sure the leaders had a pretty good idea about the impact of their decisions on the economy, the businesses and people's lives. So why did they do it? Did anyone force them? In case of Trump, it might actually cost him the elections if the economy does not improve dramatically by November. And still he and other leaders made this decision. Maybe, just maybe, it's because they knew that the alternative is much worse? Again, I'm not a medical expert and not pretending to understand all the models and the statistics. But I really would like to know how this can be explained. I'm sure many countries could handle it better, and nobody is perfect. But as @RapperTmentioned, this is a very complicated problem with no clear right answers. It's easy to criticize from the sidelines when you have zero responsibility and accountability (this applies to all of us). But when you have to make decisions that will impact millions of lives, things look a bit different. So I repeat my question: why they decided to implement the lockdowns, knowing the devastating impact it will have?

Thanks Kim. I try to not to put politics in this forum (i personally pushed myself to read from both sides and get outside my bubble), but i have followed very closely this virus since the end of january. What got my attention was the lockdown of Wuhan and start my research when the consensus from experts at that time was 'look at the flu, it's not worse' or 'we don't have evidence, let's wait and see'. On the link you linked, i do think that there are 2 points that we can't say definitively if they are true or not : 'The virus escaped from a Chinese lab' and 'COVID was created as a biological weapon'. There are multiple sources that talk about the research at the Wuhan lab about gain of function research (messing around with virus to increase transmissibility or lethality to do reseach). Do i believe it was a 'biological weapon' ? No, probably not. But that type of research to mess around with viruses happened, and is dangerous. I don't think there is a scientific consensus on whether doing that gives us more benefits than the risk a releasing a pandemic-type virus. Is it possible that an accidental release happened ? Yes, there are multiple incidents in the past even in the US. What we do know is that the index patient is not from the Wuhan wet market. So where did it come from ? That we don't have definitive facts to decide which the theory is the correct one : a jump from a wild animal ? an accident from a research lab where they were doing gain of function research on exactly this type of virus and is few miles from the wet market ? For me, until we get more facts, we should keep an open mind and keep critical thinking as this is a very new virus and there is not much that we do know. https://www.vox.com/2020/5/1/21243148/why-some-labs-work-on-making-viruses-deadlier-and-why-they-should-stop https://www.washingtonpost.com/national-security/chinese-lab-conducted-extensive-research-on-deadly-bat-viruses-but-there-is-no-evidence-of-accidental-release/2020/04/30/3e5d12a0-8b0d-11ea-9dfd-990f9dcc71fc_story.html https://www.economist.com/science-and-technology/2020/05/02/the-pieces-of-the-puzzle-of-covid-19s-origin-are-coming-to-light

For the calendars, the short leg is the first expiry after the earning date, the long leg is the monthly leg after the short leg. They are opened at T=0 and closed at T+1. So opened the last trading session before the earning announcement and closed at the close of the trading session following the earning announcement. The return is simply the p&l / debit. I don't have the code (yet) to compute the margin for short positions. In = In. O = Out. If the absolute value of the max move is smaller than the straddle RV, then it's IN, if not it's OUT. It's just to get an idea of the stock move after earnings compared to the 'straddle rv' at T=0.

Good question: The answer I think has partially to with modeling and advertising. Other questions: I think the other question that needs to be asked is why isn’t credence being given to other deaths caused by the shutdown? Not an either deaths vs $s : Not only does the shutdown create the hardships you mentioned but it kills. Suicides are already the #10 leading cause of death in the U.S., almost 48,000. Every 1% increase in unemployment results in .9% increase in suicide and thousands more committing suicide. ( medical journal Lancet) and the increases tend to be chronic lingering for years. For a concise analysis see the following that estimates an increase from suicide and drugs of 70,000. These don’t count? https://www.realclearpolitics.com/articles/2020/04/13/shutdown_could_kill_more_americans_than_covid-19_142934.html According to OC Register there has been an 8,000 % increase to suicide prevention calls. Normally one center that gets 22 calls a month last month got 1,800 calls, and sadly an increase in calls does correlate to an increase in suicide https://www.ocregister.com/2020/04/19/suicide-help-hotline-calls-soar-in-southern-california-over-coronavirus-anxieties/ Advertsing pays. In advertising there is a measure called GRP, gross rating points, it measure the breadth and depth of advertising. Marketers can predict with uncanny accuracy that if you increase the GRPs on an item it increase awareness an sales, just test yourself with some advertising slogans, The point is simple increase the GRPs and the GRPs on Covid-19 have been off the charts, more on any single day than the football on Superbowl Sunday. Modeling in Medical Field vs Facts: My background is in data analytics, but over 30 years I have met with friends in the health profession and we would discuss how poor the health field is with data analytics and computer science in general. Many studies done in the medical field fail to establish what the baseline vs incremental are and what the health field calls meta -studies have sample sizes that are so small that they would be laughed off the table by a consumer company. I could access AC Nielsen's 60,000 person database on any food item to check trends and had baseline numbers of over 1 million. I could distinguish the difference between baseline and incremental. The health field cannot easily do this To fill this void, the health field uses models. The problems with models is there is a high degree of supposition. You just change a number or two in a spreadsheet. And you can prove bumble bees cannot fly. Dr Faucci , who btw has never practiced a day of medicine, said as late as a Feb. 29, 2020, interview, Dr. Fauci said that at that time and under the circumstances pertaining to that date, “Americans didn't need to change their behavior patterns.” Then on March 31st he reversed course and cited models that said we could have 1.5 to 2 million deaths (not cases but deaths). This was widely repeated again and again without any allowed challenges to the model. What the baseline might be: Those of us in data analytics have been saying for some time either the infection rate , the basic reproduction Number (R0) is wrong or the fatality rate is wrong. Otherwise millions would be dead already. Remember the double a penny every day question, well in 34 days a penny ends up being worth over $ 160 million and the (R0) factor was stated at over 2x. It looks like the fatality rate is much much lower. This will only create cognitive dissonance for some people who are running with the emotion of the constant message, GRPs, but these are the facts on the ground. I know emotion almost always wins over logic but for a fact based study/analysis see comments by MD Dan Erickson, who with his partner has done half of the test in Kern County , over 5,200 hundred at last count. He has done 5,213 COVID-19 tests at its five Bakersfield locations, Erickson said — which is more than half the 9,197 tests done so far in Kern County. Of those, 340 were positive (6% of those tested) , according to Erickson. He says that If that percentage of positive cases (65) were assumed to represent the entire population of Kern County, which is roughly 900,000, it would mean about 58,000 people in Kern have had the virus, far more than the nearly 700 official confirmed, Erickson said. Using the same calculation, Erickson estimates 12 percent of the population statewide, or some 4.7 million Californians, have already had COVID-19. "Well we have 39.5 million people, if we just take a basic calculation and extrapolate that out, that equates to about 4.7 million cases throughout the state of California. Which means this thing is widespread, that's the good news. We've seen 1,227 deaths in the state of California with a possible incidents or prevalence of 4.7 million. That means you have a 0.03 chance of dying from COVID-19 in the state of California," said Dr. Erickson. Dr. Erickson asked if numbers that low necessitated people sheltering in place, shutting down medical systems and putting people out of work. "I also wanted to mention that 96 percent of people in California who get COVID recover," he said. He has been censored for even asking these questions, if you want to see it I think you can still see it here: https://www.kget.com/video/local-doctor-from-accelerated-urgent-care-gives-take-on-covid-19-in-kern-county/5416469/ And to try and understand the censorship I understand them to say yes, but he hasn’t tested everyone in the US, extrapolating isn’t right but bear in mind he wasn’t advocating running around but essentially asked the same questions Kim did But this is the 5th study that confirms this, much lower fatality rate 1) First Iceland that randomly tested people in the population then 2) Stanford study of Santa Cruz, 3) USC Study (numbers similar to Kern County) and even 4) NY. Governor Andrew Cuomo Cumo said a preliminary survey of New York state residents found that nearly 14% of those tested had antibodies against the novel coronavirus, suggesting that some 2.7 million may already have been infected. And even Public Health Director Barbara Ferrer said of the USC study, "the study suggests that 0.1 percent to 0.2 percent of people infected by the virus will die, which would make COVID-19 only somewhat more deadly than the seasonal flu". That finding is consistent with the results of an earlier antibody study in Santa Clara County. "The mortality rate now has dropped a lot," Ferrer conceded. I’m not suggesting anyone does anything different right now as we will find out more as more studies come in but it is interesting to see the resistance to any questioning of this shutdown and after this long post I have more questions than answers.

Well guess what, in America the administration listened to experts after realising the cost of not doing so and being wrong was untenable. Experts who cringe in the background whilst a president suggest disinfectant as a cure - beyond stupid. A whole lot of opinions on google or the media don't matter much.The numbers don't lie, America came late to the party and isn't doing a good job and can't until the testing numbers get much higher. https://www.worldometers.info/coronavirus/#countries

Yep, I got that same message and loaded the boat on In/Out put spreads when SPY was at 240/250. Now I'm praying for it to go down. Every tick up is painful.... Praying is a strategy right!!?? Lol

At this point I see no reason to continue this exchange. Whoever bothered to read it will come (or came long ago) to their own conclusions.

seems like an example of biased media reports others were referencing. It’s bad on both sides in my opinion. They explicitly said in one of their press briefings that no one model was used for decision making. If you google right now you will find reference to various models over the last 6 weeks. These guys also changed their model over and over and based the initial one on data from viral pneumonia. If In fact it was basis for policy making ( it wasn’t), it’s interesting that the White House and Downing Street came to completely different conclusions from the same model. somone recently told me that all models are wrong, some are useful. I think that’s a good Mindset with which to approach these things. that said, we have no idea what the impact would be without any social distancing. People want to boil a complicated multi variate unknown risk down to simple factors based on politics. It’s silly.

Thanks for posting @Yowster As someone who is observing from the outside and not involved in the US politics, I'm shocked how biased the mainstream media has been against Trump from the beginning. I know it's a sensitive issue, and I'm not taking sides (although I have a very strong political opinion, but this is obviously not the place, especially considering I'm not a US citizen). But the media bias was very clear from the first day of Trump administration, and it's not surprising that during the election year it became much stronger. I believe a LOT of the COVID-19 related coverage is political and not medical, and should be taken with a grain of salt. Expecting from the media to be objective, not biased, and act for the "public best interest" is not realistic and naive. It's like expecting from CNBC to help the small investor, while we know that their first priority is to increase ratings to sell more advertising.

Pinto, it’s not a bunch of BS. Had we not gone into lockdown here in the US, we’d be absolutely screwed right now. Everyone would be like NY. And to open things back up, and I don’t know how we don’t, as our economy will be crippled for years as it is to pay off this debt, is going to cause a second wave. I have been a hospital CEO for 15 years and we are dealing with Covid 19 patients aplenty. Yet we still can’t get our NORMAL supply of gowns, gloves, masks, etc. We are running with about a 20 day supply and if we have another major surge, we will be in about the worst position I could imagine for our hospital. We do have about 15 hospitals within an hour of us, so it’s spread out some, but we are the second largest and with our resources, we’ll get hit hard. I urge everyone to take this 100% serious and not to think it’s just overblown by the news. And as for the “herd immunity” in Sweden? Their situation isn’t even remotely close to ours and had we attempted this, our death count right now would be in the hundreds of thousands with many hospitals collapsing.

I have been with SO pretty much from the beginning. I can tell that 1) the performance is real 2) there are some wild fluctuations in monthly numbers 3) yes, it is possible to replicate the official numbers or come very close, but it requires a lot of work and commitment. @Kim is talking about expectations all the time, and it is very true. Some months will produce double digit returns when the environment is right, and there will be periods of lower returns.

The average monthly gain of Steady Options, dating back to the beginning of this service, is actually 7.2% per month. Even if one would earn 6% per month, that would actually double your acct every year or if you had an acct of say $100K, one could make an additional $100K trading with Steady Options. Not easy but very doable with effort and diligence. I know many people who work 60 hours/week and don’t come close to earning $100K/year. I do get what you’re saying though. You want to know which strategies work best in up markets, flat markets and down markets. It’s a great question for sure!

This is actually an excellent question. Lets take an example of 5 trades per month returning 10% each. Some services would report it as sum of all trades (50% return). This assumes that you had just one trade open at any given time and allocated 100% of your portfolio to each trade. But some services would report it this way even if they had more than one trade open which would make it simply impossible to allocate 100% to each trade. The next method is to report an average of all trades. This assumes you allocated 20% per trade, with no cash balance. Some services specifically recommend to keep at least 20% of the portfolio in cash, but report performance based on full allocation. This is simply not realistic and not reproducible. I report model portfolio performance based on my recommended allocation of 10%. So in the above example, I would report 5% since I allocated 10% per trade and had 10% return per trade. For my portfolio, I have maximum 6 position at any given time, so 40% of the portfolio is in cash, but I still report return on the whole portfolio, not on the maximum invested capital. This reporting is called cash adjusted because it takes the cash reserves into consideration. Reporting returns this way grossly underestimates the return compared to other services, but I want to be as realistic and transparent as possible. My model portfolio performance reports what was possible with fairly conservative allocation.