How to play the Corona Virus from a macro perspective
I am not a virologist, but I understand sentiment and a large part of my trading is looking at where people are overly fearful and where they are too complacent (at a basic level)...
It's why I use Twitter so much.
It's a great sentiment resource.
If you were to do a search for Corona Virus on Twitter, 90% of people are bricking it.
But step away from that and you find that people are still going to work, there's only small columns in newspapers talking about it and there's little mention of the amount of people the Influenza (flu) virus kills each year...
This will sound crude, harsh and morally reprehensible, but I said to to people that follow me this morning that we want to be selling AUDJPY as a risk proxy (and because the Japanese 10 year is in for a rally, and AUDJPY follows the Japanese 10y yield, paradoxically) and to be taking some off with each new death toll announced, which seems to be revised every few days.
As each death toll is announced, we get a greater understanding of the severity, which leads to a greater pricing of risk, and therefore, flattening of volatility.
I always say, be aggressive when vol picks up and reduce your position when it flattens.
Rinse and repeat, until another big theme emerges.
I think the understanding of risk and trade management through the understanding of volatility is one that flies many by...
So if you'd like to know how to better manage trades in this fashion, don't hesitate to shoot me a PM!
It's why I use Twitter so much.
It's a great sentiment resource.
If you were to do a search for Corona Virus on Twitter, 90% of people are bricking it.
But step away from that and you find that people are still going to work, there's only small columns in newspapers talking about it and there's little mention of the amount of people the Influenza (flu) virus kills each year...
This will sound crude, harsh and morally reprehensible, but I said to to people that follow me this morning that we want to be selling AUDJPY as a risk proxy (and because the Japanese 10 year is in for a rally, and AUDJPY follows the Japanese 10y yield, paradoxically) and to be taking some off with each new death toll announced, which seems to be revised every few days.
As each death toll is announced, we get a greater understanding of the severity, which leads to a greater pricing of risk, and therefore, flattening of volatility.
I always say, be aggressive when vol picks up and reduce your position when it flattens.
Rinse and repeat, until another big theme emerges.
I think the understanding of risk and trade management through the understanding of volatility is one that flies many by...
So if you'd like to know how to better manage trades in this fashion, don't hesitate to shoot me a PM!
FREE 100+ page bond trading guide! pro.fink.money/subscribe
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.