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However it resolves, COVID-19 should not be expected to have significant lasting effects on long distance travel. Worst case scenario is a slight sustained drop

However it resolves, COVID-19 should not be expected to have significant lasting effects on long distance travel. Worst case scenario is a slight sustained drop due to the global population being cut by as much as two percent. And at the risk of being controversial or callous, the bulk of the deaths are likely to be the elderly. Premature deaths of elderly people wouldn’t have a long term effect on population.

chaostheory 7y ago
> And at the risk of being controversial or callous, the bulk of the deaths are likely to be the elderly. Premature deaths of elderly people wouldn’t have a long term effect on population. That’s assuming that the virus doesn’t mutate any further. (Did not downvote you. It isn’t a good subject, but we do need to talk about it)
- sjwright 7y ago
  I agree, there's a lot of unknowns.
chillacy 7y ago
I'm gonna channel Nicholas Taleb and bring up a couple points: 1. Nobody really knows for sure. Predicting the future worst case by comparing it the worst instance from the past in the category is a fallacy (I get the sense you're comparing it to the spanish flu, but consider that the past "worst case" was already surprising to people back then because it was worse than the "past's past") 2. It's not enough to look at pure probabilities, it's also necessary to consider the magnitude of loss for each outcome. For example, Russian Roulette with 100 slots for $100 has a median gain of $100 per round, but you wouldn't want to play that game. 3. I'm not brave enough to put my money on the line but if you're confident you could buy long term options on airline companies and make out like a bandit when travel recovers.
- onlyrealcuzzo 7y ago
  4. this virus could have similarly severe outbreaks for years.
  - remarkEon 7y ago
    I've thought about this too. What is the probability this becomes endemic to China, and occurs annually in the fall/winter? Related question: why didn't swine flu become endemic (maybe it did, I haven't read anything about swine flu since 2009)?
    - officialjunk 7y ago
      because regardless of what you hear, china takes outbreaks very seriously and responds aggressively. the general population in china also takes it very seriously. normal behavior response in china looks like over reaction in the us. please watch this video by 3blue1brown https://www.youtube.com/watch?v=Kas0tIxDvrg https://www.youtube.com/watch?v=Kas0tIxDvrg china is past its inflection point and we have yet to determine where our inflection point will be. everyone should be changing your behavior now. the fact that sars-cov didn’t get as far in 2002 as sars-cov-2 virus is currently going should be concerning. the us could ignore prior outbreaks because china is aggressive to stop it.
      - SuoDuanDao 7y ago
        I was in China during the swine flu scare (I'm Canadian originally). I agree that China takes these sorts of things very seriously based on what I saw. That doesn't necessarily mean they'll succeed every time though, or that they'll respond as aggressively to a dangerous background virus as to a novel one.
      - honestoHeminway 7y ago
        China says it takes outbreaks very serious. Saying is not doing. Saying is saying. Stalin said he worried about the workers. The workers starved. Words are cheap. The Subversion of public moral by facade action and routine subversion by blackmarket egoism in any socialist country is not helping. China is a disaster waiting to be exported once the borders reopen.
- PhantomGremlin 7y ago
  you could buy long term options on airline companies Not right now. The implied volatility, aka the cost of options, is too high. For example, American Airlines, symbol AAL, closed Friday at about $16 per share. If you go to January 2021, the cost of a $20 strike call is about $3. So you need AAL to rise from $16 to $23 just to break even. That's almost a 50% gain needed, in less than a year. The cost of options will get much cheaper once the market settles down (even if current price levels stay the same). If the market sits in the doldrums for a few months (not moving up or down very much) then option prices will fall. You need to buy options when they're cheap, not when they're crazy expensive.
  - kolinko 7y ago
    I’m curious - why is that so? I would assume that with higher volatility there are more people participating in the futures markets, and the margina should be lower - not higher
    - the_pwner224 7y ago
      Margins will be lower but the prices will still be higher. In low vol periods: if stock is at $2, it is likely to stay at $2 since vol is low. So maybe a $3 option is worth 10 cents. But there are very few people in the market so there's going to be a large big-ask spread. Nobody's going to sell it at 10c; there are few other sellers so you can offer it at 15c and rip off the buyer since they have no choice. At high vol periods everyone wants to be in the market so the price will actually be close to the 10c theoretical price - less spread (what you. All margin). But since there is high vol the stock is more likely to get to $3 so the option could be worth 20 cents instead of 10. Volatility affects price; market volume affects spread.
  - chillacy 7y ago
    If you think options are overpriced you can sell options too. They're crazy expensive because people think they'll print.
hyperbovine 7y ago
Actually if this results in a lot of young people staying at home what you will probably see is a mini baby boom, same as what happened in previous recessions.

chaostheory 7y ago

> And at the risk of being controversial or callous, the bulk of the deaths are likely to be the elderly. Premature deaths of elderly people wouldn’t have a long term effect on population. That’s assuming that the virus doesn’t mutate any further. (Did not downvote you. It isn’t a good subject, but we do need to talk about it)

sjwright 7y ago
I agree, there's a lot of unknowns.

chillacy 7y ago

I'm gonna channel Nicholas Taleb and bring up a couple points: 1. Nobody really knows for sure. Predicting the future worst case by comparing it the worst instance from the past in the category is a fallacy (I get the sense you're comparing it to the spanish flu, but consider that the past "worst case" was already surprising to people back then because it was worse than the "past's past") 2. It's not enough to look at pure probabilities, it's also necessary to consider the magnitude of loss for each outcome. For example, Russian Roulette with 100 slots for $100 has a median gain of $100 per round, but you wouldn't want to play that game. 3. I'm not brave enough to put my money on the line but if you're confident you could buy long term options on airline companies and make out like a bandit when travel recovers.

onlyrealcuzzo 7y ago
4. this virus could have similarly severe outbreaks for years.
- remarkEon 7y ago
  I've thought about this too. What is the probability this becomes endemic to China, and occurs annually in the fall/winter? Related question: why didn't swine flu become endemic (maybe it did, I haven't read anything about swine flu since 2009)?
  - officialjunk 7y ago
    because regardless of what you hear, china takes outbreaks very seriously and responds aggressively. the general population in china also takes it very seriously. normal behavior response in china looks like over reaction in the us. please watch this video by 3blue1brown https://www.youtube.com/watch?v=Kas0tIxDvrg https://www.youtube.com/watch?v=Kas0tIxDvrg china is past its inflection point and we have yet to determine where our inflection point will be. everyone should be changing your behavior now. the fact that sars-cov didn’t get as far in 2002 as sars-cov-2 virus is currently going should be concerning. the us could ignore prior outbreaks because china is aggressive to stop it.
    - SuoDuanDao 7y ago
      I was in China during the swine flu scare (I'm Canadian originally). I agree that China takes these sorts of things very seriously based on what I saw. That doesn't necessarily mean they'll succeed every time though, or that they'll respond as aggressively to a dangerous background virus as to a novel one.
    - honestoHeminway 7y ago
      China says it takes outbreaks very serious. Saying is not doing. Saying is saying. Stalin said he worried about the workers. The workers starved. Words are cheap. The Subversion of public moral by facade action and routine subversion by blackmarket egoism in any socialist country is not helping. China is a disaster waiting to be exported once the borders reopen.
PhantomGremlin 7y ago
you could buy long term options on airline companies Not right now. The implied volatility, aka the cost of options, is too high. For example, American Airlines, symbol AAL, closed Friday at about $16 per share. If you go to January 2021, the cost of a $20 strike call is about $3. So you need AAL to rise from $16 to $23 just to break even. That's almost a 50% gain needed, in less than a year. The cost of options will get much cheaper once the market settles down (even if current price levels stay the same). If the market sits in the doldrums for a few months (not moving up or down very much) then option prices will fall. You need to buy options when they're cheap, not when they're crazy expensive.
- kolinko 7y ago
  I’m curious - why is that so? I would assume that with higher volatility there are more people participating in the futures markets, and the margina should be lower - not higher
  - the_pwner224 7y ago
    Margins will be lower but the prices will still be higher. In low vol periods: if stock is at $2, it is likely to stay at $2 since vol is low. So maybe a $3 option is worth 10 cents. But there are very few people in the market so there's going to be a large big-ask spread. Nobody's going to sell it at 10c; there are few other sellers so you can offer it at 15c and rip off the buyer since they have no choice. At high vol periods everyone wants to be in the market so the price will actually be close to the 10c theoretical price - less spread (what you. All margin). But since there is high vol the stock is more likely to get to $3 so the option could be worth 20 cents instead of 10. Volatility affects price; market volume affects spread.
- chillacy 7y ago
  If you think options are overpriced you can sell options too. They're crazy expensive because people think they'll print.

hyperbovine 7y ago

Actually if this results in a lot of young people staying at home what you will probably see is a mini baby boom, same as what happened in previous recessions.