Disclaimer: Please use the information here for entertainment purposes only as we are not financial advisors. Trading involves financial risks and we are not making any recommendations or responsible for any loss.
According to the Center for Disease Control, the CoronaVirus has spread to 14 countries in about 4 weeks This outbreak has caused concerns to the stock market as a whole, along with some casino related stocks (youtube) that we had reviewed (MGM Grand Resorts blog post). We will look at some ideas to trade the coronavirus scare, and in particular, Moderna Inc. stock (MRNA).
Countries with confirmed coronavirus infections
Infected countries in alphabetical order (as of December 31, 2019)
- Hong Kong
- United States
The CEPI (Coalition for Epidemic Preparedness Innovations) has awarded a $9M grant to Inovio (INO) and has partnered with Moderna Inc. (MRNA) to develop vaccines to the strain of coronavirus. We will look at some stock charts for Moderna and provide some ideas to trade Moderna (MRNA) stock.
Before proceeding, please note that in previous pandemic outbreaks, many of these stocks rally in the short term and falls hard as the fear of the virus is contained. With that in mind, here is the weekly chart for Moderna Inc, note that this company has been public for only 1 year.
Moderna Stock – Weekly Chart
Before assuming Moderna stock will continue to go up, let’s take a closer look at the Daily chart below:
Moderna Stock – Daily Chart
Moderna Stock – Support & Resistance Levels
Moderna stock is trending nicely upwards in a channel so our trade bias on this stock will be long, with the information we have right now. We have also observed that it has support around the $18/$19 areas and resistance at around $23/$24 levels.
Ideas to trade CoronaVirus Stock Moderna (MRNA)
Below are a few trade ideas for Moderna, Inc. if you concur with the idea that it will continue it’s upward move even though Oppenheimer had downgraded the stock to ‘outperform’.
Once again please take all content here as entertainment and education purposes only; trading involves risks to capital losses.
Trade MRNA with stocks if you are bullish long term
One can watch the lower timeframe charts and accumulate MRNA stock when it drops close to the support levels listed above. This buy stock and hold strategy will allow you to average your cost basis down.
Trade MRNA with put options if neutral or slightly bullish short term
Sell to open either the $22.5 (~$2 credit) or $20 (~$0.80 credit) put options if you want to own the stock or consider the $17.5 ($0.15 credit) put options otherwise. All with the February 21, 2020 expiration. If MRNA does not drop to those levels, you get to keep the credits received per share.
2 potential drawbacks to this idea. First is if MRNA drops to $0, you will end up having to purchase stock at your strike prices ($22.5/$20/$17.5). Second is if MRNA rockets to $30, you only get to keep the credits received.
These are just a few ideas to trade the coronavirus outbreak and vaccines that are on the roadmap to development. Once again this will be very sensitive to the news on the outbreak so only trade if you can stand the volatility. In the meantime, get some anti-viral masks for yourself or your children now before supplies run out!
Check out our site for more trading ideas.