NFP Preview: 'Good News Is Bad News' May Not Work This Time

investing.com:

Yesterday was a very boring day in my view. The job report comes today, and it feels like everything I read is about November being a strong job report because of the autoworkers and screenwriters coming back to work.

I never even noticed they were gone when looking at the stats over the past few months.

Expectations are for nonfarm payrolls to rise by 183,000 in November from 150,000 in October. The unemployment rate is seen staying flat at 3.9%, while wage growth ticks lower to 4.0% from 4.1%.

The equity market doesn’t seem very concerned with a VIX around 13, but the IV for today’s expiration is around 17%, and it is then expected to drop to around 10.5% on Monday.

So, implied volatility for today is higher, but even at 17, it doesn’t seem overly high.

At least from the standpoint of the options market, it looks like the S&P 500 105% options are trading with tighter implied volatility to the 95% moneyness options for today’s print, and then the spread normalizes starting next week.

There appears to be a desire to own calls into today’s report.

But there appears to be a lot more call gamma on the board than put gamma, and the 4,600 level appears to be a wall, which may act to hold the index in place through Opex next Friday because that 4,600 level has a lot of gamma built up around it.

So while it appears that traders are betting on the higher index, at least based on the options positioning for today and heading into next week, there is nowhere to go.

It could change if the payroll report somehow stuns the market higher, but I’m not sure what a stunning report would look like. Maybe just 150k jobs were created or something.

Anything higher than the estimates would probably push rates higher, and anything less than