Jobs Reports

[Nater]

I have a couple of questions about how the upcoming jobs report (and other major economic news) affects the markets and how options can be used with it.

Now, the first thing is volatility. From what I read, and what common sense also verifies, is that implied volatility for various equities and ETFs that could be affected by the economic news should be vary high. Of course, if this is the case, I would want to be selling options and using strategies that utilize a high volatility. But when I use the Quotes, Volatility and Calculator tool on ISE, it shows that QQQ's IV is fairly low. It has been steady decreasing since May. Now, I could be reading the chart wrong, or perhaps QQQ isn't affected by the jobs report as much as I thought it would be, but even checking the price of QQQ's one week options, which expire tomorrow, there is a lot of intrinsic value, implying that there is actually a lot of IV built into the price.

And when I check an equity that should be affected by the job report, like BAC, there seems to be very little intrinsic value for the one week options, implying that there is little IV for these.

What do you guys think? And how are you guys handling tomorrow's Job Report?

 

[Strangler]

Quote from Nater:

Now, I could be reading the chart wrong, or perhaps QQQ isn't affected by the jobs report as much as I thought it would be, but even checking the price of QQQ's one week options, which expire tomorrow, there is a lot of intrinsic value, implying that there is actually a lot of IV built into the price.

And when I check an equity that should be affected by the job report, like BAC, there seems to be very little intrinsic value for the one week options, implying that there is little IV for these.

What do you guys think? And how are you guys handling tomorrow's Job Report?

Can't help you with the jobs report, but you are confusing intrinsic value with time value.

Intrinsic is a "constant" value = stock price - strike price (calls) or strike price - stock price (puts). IV has no effect on an option's intrinsic value.

IV is represented in the time value of an option.

 

[iceman1]

Quote from Nater:

I have a couple of questions about how the upcoming jobs report (and other major economic news) affects the markets and how options can be used with it.

Now, the first thing is volatility. From what I read, and what common sense also verifies, is that implied volatility for various equities and ETFs that could be affected by the economic news should be vary high. Of course, if this is the case, I would want to be selling options and using strategies that utilize a high volatility. But when I use the Quotes, Volatility and Calculator tool on ISE, it shows that QQQ's IV is fairly low. It has been steady decreasing since May. Now, I could be reading the chart wrong, or perhaps QQQ isn't affected by the jobs report as much as I thought it would be, but even checking the price of QQQ's one week options, which expire tomorrow, there is a lot of intrinsic value, implying that there is actually a lot of IV built into the price.

And when I check an equity that should be affected by the job report, like BAC, there seems to be very little intrinsic value for the one week options, implying that there is little IV for these.

What do you guys think? And how are you guys handling tomorrow's Job Report?

You have to finish 6th grade first before you should even look at trading options.

I cannot believe some of the questions on ET lately. Do you have any idea what you are trying to say?
I sure don't !

 

[Nater]

Quote from iceman1:

You have to finish 6th grade first before you should even look at trading options.

I cannot believe some of the questions on ET lately. Do you have any idea what you are trying to say?
I sure don't !

Here's the thing. I don't trade options. I'm currently learning to trade options, hence the need to ask questions. And usually I would look to Google or books before I come to a forum, but the question I am asking involves very hard to define details as well as the need for discussion.

Strangler responded appropriately to my question. I did misuse the term intrinsic, and it has been bugging me all day. How he corrected my mistake, however, was very constructive and helpful. But I really don't think my question was bad enough to have some stranger on the internet insult my intelligence. The rest of the people on this forum seem respectful and are usually willing to help and teach people like me. I didn't think there were any trolls on the board.

Just in case my question was actually worded so bad that it looked as if I was still in middle school, I basically asked how economic news, like the upcoming Jobs Report, affects options prices.