Alan's Alert 7-7-2021

 

JOLTs (Job Openings and Labor Turnover Survey) data came out of the BLS (Bureau of Labor Statistics) today and we have a new record.  

Total nonfarm job openings have hit another record high.  At this pace, help wanted signs are going to be the next shortage.  The number of job openings in the US rose to 9.209 million.  Job openings increased in a number of industries with the largest gains recorded in services, followed by education and educational services.  Employers have been opening their businesses and searching for help but help is hard to find.  In fact, total nonfarm hires were down by 85,000 over the previous month.

In addition to the record high in job openings, we also have a new record in layoffs and discharges which have never been lower.  The labor market remains in a disconnect.  With many potential workers still getting emergency unemployment through the federal government, wages need to come up for them to be motivated to find work.  I find this to be another arrow in the ‘inflation is perpetual’ quiver.  As a reminder, here is a rundown where states have ended the pandemic related unemployment;

Something to keep in mind, this JOLTs data is from May.  None of the data related to the above states ending the emergency benefits have been reflected in this most recent report.

Alan’s Options Primer 

I had some interest in options trading and how it works.  I thought I’d put together a series and see how it goes.  I’m planning on breaking up this topic into 3 posts.  Today is post 1 of 3. 

 

I have only two rules when it comes to trading options.  They are hard to follow but there is only two of them.  My first rule of trading options, do not trade options.  My second rule of trading options, DO NOT TRADE OPTIONS.

 

Options are highly volatile derivatives based on the underlying stock that the option contract represents.  You might not understand what this means yet but understand this, you can lose money very quickly with options.  Never buy options with money that you aren’t prepared to lose.

 

Now that we’ve gotten that out of the way, I would recommend viewing this video by Robert Shiller.  It is part of his recorded lectures on Financial Markets (ECON 252) at Yale.  He gives a great overview, history, and breakdown of option pricing formulas.

 

Another good resource is Option Alpha.  Their Beginner Course series on options is well put together.  As a disclaimer, I have not watched this entire series.  I’ve watched many of their videos and they do a great job explaining the ins-and-outs of options trading.

 

With these videos as a base, I’ll start to give my perspective and overview tomorrow.