If data keeps coming out in the next week confirming that the new COVID strain is 70% more transmissible, I think the modal outcome is that ~50% of Americans will get it by the early summer. The market may take a few days to realize and react to this (as it was in March), but also just buying June put option on the SP500 seems very naïve (since the SP500 is at all-time highs and a fourth COVID wave doesn’t necessarily affect much the NPV of future earning of huge corporations). So if I think that the probability of everyone getting COVID in the next six months is much likelier than the market, at least for a few days, what trade would capture that?
[Question] What trade should we make if we’re all getting the new COVID strain?
If data keeps coming out in the next week confirming that the new COVID strain is 70% more transmissible, I think the modal outcome is that ~50% of Americans will get it by the early summer. The market may take a few days to realize and react to this (as it was in March), but also just buying June put option on the SP500 seems very naïve (since the SP500 is at all-time highs and a fourth COVID wave doesn’t necessarily affect much the NPV of future earning of huge corporations). So if I think that the probability of everyone getting COVID in the next six months is much likelier than the market, at least for a few days, what trade would capture that?