Stock Market affecting by coronavirus

Stock market crash!" read the panicked headlines last week, after the spread of the coronavirus continued with outbreaks of COVID-19, the disease the virus causes, in Iran, Italy, Japan, South Korea, and the United States.

The resulting fear caused the US stock market to have its worst week since the start of the 2008 recession.

But should people be stressing about the market upheaval? Is your money at risk? We look at the experts for advice on how the coronavirus is affecting the markets.

What exactly is going on and why is the stock market freaking out?

Markets really don't like uncertainty, because it makes it hard for businesses to plan. So the spread of a potential global disease fuels huge panic.

Investors have been selling their stock to get their money out of the market, or into "safer" investments. Last week $5 trillion was wiped from global financial markets.

The Dow — short for the Dow Jones Industrial Average, an index of 30 major blue-chip stocks that is often used as an indicator for the market itself — had its single biggest one-day drop in history, falling 1,191 points on Thursday.

But the drop felt even more dramatic because two weeks earlier the Dow hit a record high.

"Part of the stock market decline is the result of stocks being overvalued," economist Mark Weisbrot, codirector of Center for Economic and Policy Research, a Washington think tank focused on economic policy, told BuzzFeed News — meaning the drop was partly just the market correcting itself.

While it was the biggest point drop in history, there have been much larger drops in terms of percentage of the Dow overall. For some historical comparison, the Dow dropped 4.4% last Thursday, however during the Wall Street crash of 1929, it dropped 13% one day and 12% the day after.

Plus, it's not like years and years of investment gains got wiped out last week.

"The stock market saw its worst week since the financial crisis as coronavirus fears gripped markets," said Greg McBride, chief financial analyst at Bankrate.com, in a statement. "But the market is still higher than it was as recently as last August."

Budget 2020

New Income Tax Slabs | Income tax rate cut: Budget gives option of lower income tax rates, new tax slabs minus 70 exemptions .

   

Here are all the key highlights from Nirmala Sitharaman's Budget speech: Taxation: * New optional tax slabs: New income tax slabs will be available for those who forgo exemptions. * To simplify the tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have been removed.

As per the proposed amendments, a citizen of India would be deemed to be a resident of India in any financial year, if such individual is not liable to tax in any other country.

As per the existing provisions, an Indian Citizen or Person of Indian Origin, who being outside India, comes on a visit to India in any financial year, would be considered as a resident in India, if such individual stays in India for 182 days or more. The amendment proposed by the budget provides for such an individual to be resident in India in either of the two scenarios – (i) the individual’s stay in India during the financial year is 182 days or more; or (ii) the individual’s stay in India is 120 days or more in the current financial year and 365 days or more in the preceding 4 financial years.

Call/Put

               Call and Put Options

Options are a type of derivatives security. An option is a derivative because it's price is intrinsically linked to the price of something else. If you buy an options contract, it grants you the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date.

A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a Stock. Think of a call option as a down-payment for a future purpose.

                    Long Calls/Puts

The simplest options position is long call (or put) by itself. The position profits if the price of the underlying rises (falls), and your downside is limited to loss of the option premium spent. If you simultaneously buy a call and put option with the same strike and expiration, you've created a straddle.

This position pays off if the underlying price rises or falls dramatically; however, if the price remains relatively stable, you lose premium on both the call and the put. You would enter this strategy if you expect a large move in the stock but are not sure which direction.

Basically, you need the stock to have a move outside of a range. A similar betting on an outsized move in the securities when you expect high volatility is to buy a call and buy a put with different strikes and the same expiration-known as a strangle. A strangle requires larger price moves in either direction to profit but is also less expensive than a straddle. On the other hand, being short either a straddle or a strangle (selling both options) would profit from a market that doesn't move much.