Derivatives Traders Betting on Glum Jobs Report

October 4, 2002 ( - Investors appear to be more pessimistic than economists, based on the debut of a new economic indicator derivatives product.

Traders buying options in a the new derivatives on economic indicators are apparently betting on today’s unemployment report reflecting a fall of 18,000 jobs, compared with economist forecasts for an increase of 5,000, according to a Reuters report.

Mark Johnson, global head of foreign exchange risk at Deutsche, told Reuters that the 18,000 figure was an improvement from the reading earlier in the week.   “It moderated to minus 18,000 by late yesterday afternoon, partly due to the less negative ISM (manufacturing survey),” he said, according to the report.

Deutsche Bank and Goldman Sachs launched the new product this week (see  “Economic Derivatives” Offer a New Option ).   The product will gradually be extended to cover other closely-watched economic indicators.

Monitoring the new derivatives (ECIOPT1) will show how expectations of an indicator change as the release time nears.