Related Experiment Video
Updated: Oct 6, 2025

Experimental Research Examining How People Can Cope with Uncertainty Through Soft Haptic Sensations
Published on: September 16, 2015
The price of COVID-19-induced uncertainty in the options market
Jianhui Li1, Xinfeng Ruan1, Jin E Zhang1
1Department of Accountancy and Finance, Otago Business School, University of Otago, Dunedin 9054, New Zealand.
Abstract:
This paper investigates the pricing of uncertainty associated with the COVID-19 responses for 28 countries/regions in 2020. We find that such uncertainty is priced in the equity options market. Specifically, there is a price premium for options that provide protection to hedge against price risk, variance risk, and tail risk caused by a variety of World Health Organization (WHO) announcements and the lockdown announcements from governments on COVID-19. Moreover, such options tend to be more expensive when the governments place stricter restrictions.
More Related Videos
Related Concept Videos
Uncertainty: Overview
Uncertainty: Confidence Intervals
Propagation of Uncertainty from Random Error
Psychological Responses to Stress
The Availability Heuristic
Propagation of Uncertainty from Systematic Error

