Corona Doom, Lambda Variant

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by Portfolio Armor
Thursday, Aug 05, 2021 - 5:28

"Corona-Chan" meme. 

State Of Fear Intensifies

Over the weekend (Corona Doom 2.0), we mentioned Michael Crichton's observation about fear being used to facilitate social control, and we predicted governments would use threats of lockdowns to drive increased vaccination rates. We also wrote that one of our recent top names, BioNTech (BNTX) would likely benefit from that. It's been a busy week so far on the Covid front; let's get up to speed. 

New Covid Variant Drops

Just when we were getting used to hearing about the Delta Variant, virologists apparently skipped half a dozen letters of the Greek alphabet to name the Lambda Variant, which reportedly is more resistant to vaccines than the Delta Variant. 

A Crackdown On The Unvaccinated 

In a sign of the accelerating crackdown on the unvaccinated, New York City will now require proof of immunization to go to gyms, restaurants, and other indoor activities. 

One awkward aspect of this crackdown for Blue State pols is that the least vaccinated demographic in the U.S. is African Americans. 

Establishment pundits are calling for no-fly lists for the unvaccinated...

Matthew Yglesias tested the waters for forcible vaccinations in a tweet he subsequently deleted. Maybe next week.  

About the only area where American authorities have been taking a laissez-faire attitude toward Covid is at the border, were as Bill Melugin reported, the federal government has released thousands of infected migrants into city of McAllen Texas this year, including 1,500 in the past week. 

As Expected, The Vaccine Boon Continues

A day after announcing their big price increase in Europe, Pfizer (PFE) and partner BioNTech scored a $3.5 billion deal with the U.S. military. 

More Gains For BioNTech

In our post over the weekend, we mentioned BioNTech had been one of our top names on May 13th. 

Screen capture via Portfolio Armor on 5/13/2021.

After climbing another 17% on Wednesday, BioNTech is now up 129% since then. 

If you're long BNTX now, and you haven't hedged it yet, we've posted an updated hedge for it below. 

An Updated Hedge For BioNTech

As BioNTech has gone up this week, it's gotten a bit more expensive to hedge. Last time we were able to use a 30% cap on a similar optimal collar; this time, we had to use a 27% cap. 

This was the optimal collar, as of Wednesday's close, to hedge 100 shares of BNTX against a >25% drop by next March, while not capping your possible upside at less than 27% by then. 

Here, the net cost was negative, meaning you'd collect a net credit of $2,490 when opening this hedge. That worked out to about 6% of position value, so your maximum upside here was about 33%, rather than 27%. If you want more upside possibility than that, you can try scanning for an optimal collar with more downside risk, or you can try scanning for optimal puts, which have uncapped upside. 

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