Whether you like it or not, traders and investors are profiting from the volatility instigated by the coronavirus outbreak.
While the most obvious play is being short the market via stocks, futures and the like — or owning puts — the wicked up days with 1,000-point Dow Jones rallies are difficult to handle.
With respect to purchasing put options, timing is such a critical component that the best thought-out plan may yield a little profit or even a loss.
Majority Of Investors Are Biased To Long Side
Aside from active traders and hedge funds, most of the public has a bias to the long side and rarely if ever will initiate short positions — and for good reason.
One cannot dispute that the long-term trend of the market is up, and although the market has had some vicious corrections, being a perma-bear has not paid off over the long term.
That's especially true over the last 10 years, as the market moved has higher and higher until its recent pullback.
Speculative Bullish Coronavirus Plays
There are many speculative biotechnology plays, with investors banking on a company creating a cure or vaccine that may or may not come to fruition.
Mask and hazmat supply companies have soared in anticipation of large purchases to combat the virus.
With these issues, investors run the risk that companies will not have ample supplies to meet demand or will falter if the virus becomes less of a story, which eventually should occur.
Banking On A Total Collapse Of The In-Office Medical Industry
Teledoc Health Inc. (NASDAQ: TDOC) operates worldwide and is a telemedicine and virtual health care company. They provide telehealth via medical opinions, artificial intelligence and analytics, and offer licensable platform services.
Long-Term Teladoc Price Action
The company had its IPO in July 2015 at $30 per share and faltered at first.
Teladoc did not find a bottom until May 2016, at $9.28. The issue peaked in October 2018 at $89.05 and was cut by more than half by that year's end, when it bottomed in December at $42.08 and ended the year at $49.57.
In 2019, the stock crept back near its all-time-high and ended the year at $83.74. The move higher continued in January and accelerated in February so far, peaking Feb. 27 at $148.
Short-Term Teladoc Price Action
Interestingly, as the panic over the virus has reached epic proportions over the past week, the issue has not revisited its all-time high.
After ending last week at $124.46, Teladoc has done no better than $140.58 in Friday's session and had backed off to the $135 area as of noon.
A lot of doom and gloom has already been baked into this stock, and it could very well continue to move higher if citizens refuse to leave their homes, even to go to the doctor.
Yet if the virus becomes contained and does not reach forecasted projections, there could be a whole lot of downside in the issue.
Benzinga's PreMarket Prep podcast is live from 8-9.a.m. every morning.
During that fast-paced, highly informative hour, investors tune in to hear the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks picked by the co-hosts of the show, Joel Elconin and Dennis Dick, along with their producer, Spencer Israel.
In addition, the crew entertains at least one knowledgeable guest from the industry. They can include traders, both fundamental and technical; Wall Street analysts; and even a comedian who has learned just about everything he knows about the markets from listening to the show.
For those who do not have the time to listen to the show live or a recap on YouTube, Soundcloud, iTunes, Tunein or Stitcher, Benzinga is sharing a "stock of the day" from the show.
Photo courtesy of Teladoc.