Tomorrow we get the first look at how the economy fared in January. This insight comes with the release of the January Non-Farm Payrolls number. I went searching for a trade or two executed late Thursday that may indicate a bullish or bearish market outlook in front of the number.
I didn’t have to look too much to find an interesting trade.. Just before the SPX option market closed at 3:15 pm Chicago time there was a buyer of about 500 SPX Feb 26th 1920 Puts at 41.70. Note the payoff diagram below that shows a break-even level a little less than 2% lower than Thursday’s close. In addition, I decided to highlight the S&P 500 closing low of 1859.33 for this year as well. My thinking is that the trader behind this trade is speculating on new lows for the S&P 500 between now and February 26th or they are hedging a portfolio just in case. Either way the employment number should give a hint as to the potential outcome for this trade.