After noting that “most experts” see the number of jobs beginning to increase, the article goes on to summarize the bigger story:

But even as the report eased worries that the economy might tip back into decline, it did little to dislodge the widespread notion that the recession had given way to a tepid and tentative expansion, one unlikely to significantly cut the ranks of the jobless.

…“It’s almost two separate Americas,” [Lakshman Achuthan, managing director of the Economic Cycle Research Institute] said, meaning that much of the work force is already seeing the return of work opportunities, while those mired in long-term joblessness are facing the worst prospects since the Great Depression. “They have been left behind, and their problems are not solved by recovery.”

That other America includes the underemployed and “persons marginally attached to the labor force”—i.e., those who want to work but have given up looking for employment within the past 12 months. These people are included in the Bureau of Labor Statistics’ U-6 unemployment measure, which actually rose, from an already astounding 16.5% in January to 16.8% in February.

And what about people who want jobs but have been discouraged from looking for more than 12 months? The Department of Labor stopped counting them in 1994, but economist John Williams’ Shadow Government Statistics estimates that when these “long-term discouraged workers” are included, not only did unemployment increase in February, but it currently stands at the shocking level of more than 21%.

So what about the future? The Times article later elaborates on its statement that experts expect jobs to increase:

…the report did little to resolve contrasting views of the basic dynamics at play, with economists in roughly two camps. Some say a now-tepid economic recovery will eventually become vigorous; others envision a long slog through relatively anemic growth. Optimists point to modest expansion on the factory floor and continued increases among temporary workers (whose ranks rose by 48,000 in February) as a sign that commerce has reawakened.

…But others point to uncertainties gnawing at businesses and households as portents of subdued growth. After years of borrowing against home equity to finance buying sprees, many households are tapped out.

Yes, temporary hiring is often a precursor to jobs growth, but it’s also a sign that businesses want to be able to pare back quickly if the economy fails to pick up. And for now, at the risk of sounding too pessimistic, I have trouble believing that temp wages are going to give workers enough to start spending more, after paying their mortgages, home-equity loans, credit-card minimums, and car loans (which, the Times article also notes, were the primary driver behind January’s rise in consumer credit reported Friday).

I dare you to Google “options trading” and then spend the next five hours combing through the results. When it comes to options trading, the signal-to-noise ratio online is so low it can be difficult to find new or useful information. That’s one of the reasons we started Expiring Monthly: The Option Traders Journal – to provide a venue for traders to find smart, fresh ideas.

The first issue will be published on Monday, March 22nd. If you hurry, you can still sign up at the pre-launch promotional rate of $79 – that’s 20% off the normal rate – but the promotion won’t be available after the weekend.

Subscribe here, or to learn more, visit http://www.expiringmonthly.com/.

• Dissertation research
• Managing accounts at Clinamen Financial Group
• The Condor Options newsletter
• Contributing editorship at Expiring Monthly
• Strategy research for private clients

Feel free to contact me about any of the above (well, not the dissertation, unless you really care about academic philosophy), and with any luck I’ll have some more free time soon.

Volatility Tracker for the week of February 8, 2010

Except for a brief interlude in mid-November, equity index options haven’t been this fairly valued in about a year, meaning that realized volatility has more closely matched the volatility implied by options prices. [5,6]

The February VIX futures contract closed above the March price on Friday -something that hasn’t happened on a weekly basis in quite some time. [7] It’s important not to read too much into this, since the front month contract isn’t that far from expiration, and will therefore track the spot VIX more closely. Notable, however, is the fact that the whole term structure increased by about 70 cents last week, even out to September.

I mentioned last week that “it may be worth considering some long gamma exposure to gold at these levels.” An at-the-money February GLD straddle purchased at the close on Monday gained 21% on capital risked, not so much from the modest 1% price move as from the increase in implied volatility. A similar trade in oil would also have been profitable. [11,15] It’s probably wise to trim such positions or exit them entirely here, as any immediate moves are less likely now to offset negative theta.

We’re announcing the publication of a new online-only monthly magazine called Expiring Monthly: The Option Traders Journal. It’ll be published on the Monday following each options expiration (clever, right?) and the first issue is scheduled for Monday, March 22.

The contributing editors are among the top options bloggers around, and I’m very happy to be among them. The editors are:

• Bill Luby (VIX and More)
• Adam Warner (Daily Options Report)
• Mark Sebastian (Option 911)
• Mark D Wolfinger (Options for Rookies)
• Jared Woodard (Condor Options)