Coronavirus outbreak likely now ‘gathering steam’

* 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.

Quoting the relevant section:

> GAZETTE: Is it significant that there are so few cases internationally compared with the number in China? Is that an indication that control measures are working or is it just gathering steam internationally?

> LIPSITCH: Unfortunately, I think it’s more likely to be that it’s gathering steam. We’ve released a preprint that we’ve been discussing publicly — and trying to get peer reviewed in the meantime — that looks at the numbers internationally, based on how many cases you would expect from normal travel volumes. And a couple of things are striking. One is that there are countries that really should be finding cases and haven’t yet, like Indonesia and maybe Cambodia. They are outside the range of uncertainty you would expect even given variability between countries. So our best guess is that there are undetected cases in those countries. Indonesia said a couple of days ago that it had done 50 tests, but it has a lot of air travel with Wuhan, let alone the rest of China. So 50 tests is not enough to be confident you’re catching all the cases. That’s one bit of evidence that to me was really striking. Second, I was reading The Wall Street Journal that Singapore had three cases so far that were not traced to any other case. Singapore is the opposite of Indonesia, in that they have more cases than you would expect based on their travel volume, probably because they’re better at detection. And even they are finding cases that they don’t have a source for. That makes me think that many other places do as well. Of course, we’re making guesses from limited information, but I think they’re pretty likely to be correct guesses, given the totality of information.

First, note that Eric Feigl-Ding is a nutritional epidemiologist, not an infectious disease epidemiologist. Infectious diseases are weird for a lot of reasons, and require something of a different skillset.

For example, in a Tweet of his he has now deleted: "never seen an actual virality coefficient outside of Twitter in my entire career." about the estimate for R0 for this novel coronavirus.

Similar R0 estimates existed for SARS, and MERS. Measles, Rubella and a number of other diseases have vastly higher R0s.

He also messed up some things like conflating R0 with secondary attack rates, and was generally very sensationalistic. Basically, the things that boosted him to prominence in this epidemic built on fairly sloppy reasoning from someone outside the field.

He's calmed down now, but one might as well go to sources for people who are both good at science communication and actual outbreak scientists.