Trade Options on the US Economic Recovery

As the recession continues to lift in the USA is it time to trade options on the US economic recovery? Traders may choose to engage in foreign currency options trading , trading options on US stocks, or options trading of commodities. In each case a slow but sure US economic recovery will likely set trends. However, the specifics for those choosing to trade options on the US economic recovery will differ from Forex, to commodities, to stocks. The United States Department of Labor Statistics released its most recent report on January 6, 2012. The US unemployment rate fell and non-agricultural employment rose by two hundred thousand. According to the report, “Job gains occurred in transportation and warehousing, retail trade, manufacturing, health care, and mining.” Here are the US unemployment figures for the last year. January to November figures are revised and are final numbers while the December figure is just announced and subject to revision next month.

US Unemployment From January To December Of 2011
Month	Unemployment Rate	Change from Previous Month
January	9.1
February	9.0	-.1
March	8.9	-.1
April	9.0	.1
May	9.0	0
June	9.1	.1
July	9.1	0
August	9.1	0
September	9.1	0
October	9.0	-.1
November	8.6	-.4
December	8.5	-.1

Useful Specifics

• Nonfarm payroll rose by 200,000
• The most job gains occurred in transportation, warehousing, retail, manufacturing, health care, and mining.
• Total unemployment stands at 13.1 million
• The unemployment breakdown by major groups is as follows:
  • Adult men: 8%
  • Adult women: 7.9%
  • Teenagers: 23.1%
  • Whites: 7.5%
  • Blacks: 15.8%
  • Hispanics: 11%
  • Asians: 6.8%
• Long term unemployed (>27 weeks): 5.6 million, 42.5 % of total unemployment
• The number of part time workers whose hours have been cut or who are working part time as they are unable to find full time work declined by 371,000 to 8.1 million in December.
• Two and a half million people have worked in the last twelve months or looked for work during that time but have not looked for work in the last four weeks.

So, in what sector do you trade options on the US economic recovery? If you are interested in Forex options trading you need to compare the US economic figures with those of Europe, Great Britain, Japan, or whatever nation whose currency you choose to trade. As Europe sinks deeper into its debt dilemma there could be a steady rise in the dollar versus the Euro. If this turns out to be the case traders could profit by scalping profits on the falling EUR/USD ratio as the dollar climbs and the Euro falls.

Are US stocks the best way to trade options on the US economic recovery? Many thought so last year but the rally fizzled out mid-year. Of course one of the reasons that traders buy options is that they can limit their risk. Even if an options trader expected US stocks to continue to rise, or fall, and was mistaken his losses were limited to the price of the options contracts he purchased. For those who read the markets correctly the leverage offered by purchasing options provided greater return on investment that traders would have earned if they had simply bought and sold or sold and bought stocks. In the case of those who wish to trade options on the US economic recovery with commodities options, traders need to consider what a recovery economy does to various commodities. For example, oil prices rise with a recovery economy while those trading gold options may well see bullion fall.

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