I bought some put options on the S&P index a couple weeks ago.
https://www.google.com/search?q=S%26P&rlz=1C1GCEB_enUS862US8...
* delta, ie the slide itself,
* vega, ie the increased expectation of volatility for the remaining duration of the option contract,
* skew, which will increase more for index options than for single names due to implied correlation resetting higher.
I have noticed that the market seems to be in a "buy any dip" mentality, so be aware of that. If the market sells off, it may come right back the next day. Look at what happened already with the coronavirus outbreak, as well as Iran's missile launches before that.
Trading options is extremely risky and a lot of people teaching it, teach it because doing it is normally not profitable and they have already lost their money.
Unless you have some huge edge, which no one does, options are the last place to spend your time and blow your money.
It's something like:
1-50: nothing
51-70: a little
70-90: what you would get from a FAANG
90-99: millionaire
100: you're a billionaire
And then goes on to note that there is no 100 on a 99 sided die, seems like options are similar :) I have no belief in my ability to beat the market and treat them like a fun thing to spend some money on, not like an investment.
I hope there is a dip as I want to put more in.
I don't think this Coronavirus thing will be the trigger though. Flu still far worse.
I was thinking deep out of the money gold calls...
A worldwide pandemic would primarily exert its economic effect through supply shocks. The productive capacity of the economy genuinely shrinks. Stores can't open during a quarantine. Sick workers can't show up at the office.
A pandemic might have second-order demand shocks, particularly if panicking investors flee to quality. But there'd still be a genuine contraction in real and potential GDP, most of which would get absorbed by contracting corporate profits. Monetary stimulus can't route around those constraints.
Seriously, though; S&P puts yields are implicitly discounted by inflation — do we really think they won’t sacrifice the dollar on the alter of asset price nominal “stability”?
Gold calls get you a positive real yield on both stock market drop & inflationary response, no?