money, then things. now, you stay safe. bye-bye. this is "optionings action" investors are looking for a high-tech earnings him who got in bed with bed, bath and beyond. >> are you kidding, really? >> not you, george. we will tell you which activists some trade irs say it could be. it's on the chart of a major melt june. what is it and how can you

profit? we'll reveal the action starts now. >> it does, indeed, live from the nasdaq market. i'm in for melissa lee. these are the traders in time's square. on a rocky week for market, a new concern is propping up, that being companies from wal-mart and rent-a-cent. how big of a problem does this pose for the rally. let's get in the money and find out. lumber liquidators, tractor supply, container store, wal-mart. what's the problem here senior. >> this has been going on for over a year. we had a lot of situations? consumer and retail a. lot of investors have them at one off. you talked about you you threw out all those names, it's the

good the bad, the uglilet we had costco at june sales slightly better than expected. that was the good the bad, we had family dollar missing and guiding down. then we have the ugly. the ugly was really ugly. container store twoun down 26% on the week. so at a certain point, they're less than one off situations. you have to think of them as a trend. >> you have to think about them. when the ceo says we're in a retail funk on the same day that wal part guy goes out saying we're not seeing a lot of things materialize here. >> there is an overarching theme, what has been good so far? and things like auto sales have been good, that's sported by low interest sales, home sales, you know, although the values have gone up, the number of home sales is not that great.

what you are talking about is a situation where asset price versus gone up, wages have not. that indicates the consumer is suffering. >> people are buying cars, number one, there is a lot of pent up demand. wed a icredible interest rates which made them more affordable 6 you see interest rates take up, i think this is the tip of the iceberg. >> i'd say request car kaels, that's an outlier, these companies were missing sales right up until earlier this yearful they put a string of sales together. that goes back to the weather. didn't we hear about this in december and people weren't going through the lots. i see pent up demand for large purchases. let's talk about it, guy, look at the blowup, coach, whole foods, lulu, these are stocks trading at multi-year low, they've got everyone destroyed,

so to me i don't think they're one off situations. i think we will look back at the end of this cycle and say it was a the end of the coal mine. >> i think one of the most important principles in the markets is mean inversion, let's look at two carts and put it into context. this is the xrt, which is very much a consumer discretionary item versus the sector in thestst. from the high in '3506 and '307. we have the '34r50u7b9ge and the rove. here is the market. we know the sector, consumer discretion outperformed the market by a double. these very discretionary names have outperform the sector. so it's now a question of do we have mean inversion. here's the s&p and one of its parts. ten parts, comprise the whole. this is consumer discretion, no

sector. it outperformed the market for more than five years in a row going back to the 1980s and consumer discretion last year completed a record sixth year of outperforms. so this honored performance we believe is the beginning of a mean trade. which is to say we are likely to have some convergence between the outperformance and the market. >> you talk about discretionary spending. especially on more premium-type brands, i guess you could throw starbucks in that line. i would very much throw it in. i will say this, this is a colt stock, a consumers place a lot of loyalty in the broond. at some point to me the stock when you think about it is placed at a perfection. this is a $60 billion cap. >> it did peel off? remember when it had that, starbucks was right in there. >> it's an expensive large cap

stock. so to me this is one of the last men spend standing. one of the premium brand trading at premium multiple. on july 24th, to me, the stock is priced at a confectionery. this is trade i will talk act next week. i priced it upped the. i want to make a fear term bearish bet. i think if there is any hiccups this stock replaces a good trace of this move. it could have bought the august 77 half put spread for $13.25 up how i make money is 76 and a quarter l. tan 72.50. so to me i'm risking a quarter of the width of the spread to make three times the money here rand i think the stock is at a very important technical level. it got rejected at 80. that was a level that broke down from late last year. to me, this is a sort of trade i

want to do. >> i like the options trade structure. i definitely feel you on the overvaluation of starbucks. the one thing i want to point out is we use whole foods as an example. they have premium products at whole foods has typically been able to help a large margin for. there isn't much of an alternative for starbucks. people line up. >> they will start drinking maxwell house. >> dun dan donuts, it's rolled over. that was a premium. stock trailed at a premium into its peers in the market. some of this stuff, it's obviously. i'm telling you, stats can stay. sooner or later this becomes a trend. >> we did have a little at panera that can lead over to starbucks. people that make starbucks, they

don't make the move over. >> is that what it is, blue shirt, blue blazer? >> and a couple starbucks. as earnings season heats up, next week's tech earnings could determine the mark's next more. domenic hq there are big and important companies that get into earnings season. >> there are. even though i got my blue shirt here, i will talk, some heavy hitters are coming up next week, on the chip side intel is huge so what are the analysts expecting out of these big tech heavy weights? on the earnings side, tech companies are expected to report earnings from the prior period from the prior year. that's according to analysts. that's considerably higher than the increase expected for the s&p for the whole. it looks better when you talk about the revenue side, they are

looking for a bump if sales, that's double the revenue boost for the entire s&p 3500 as a whole. where is the growth coming from? it's all ability those chips. on the whole, analysts expect to see year over year earnings growth like the intels of the world. semi conductor's techs very much in focus. >> all right. could wall street be getting too optimistic ahead of earnings? let's check in with chart masters witness again. cbw. >> let's have a look. here's is smh. water important here, of course, is this outperformance of this part of the whole. semis are a part of all technology. you are talking about from july 12 to july 14, a two-year run that is basically 80% and almost double that of all information technology s&p. so a lot of outperformance and so much outperformance, in fact,

now, let's look at is the smh that we are above and this is the point of trend. they're not my trends, that's all right. take a look at this, this is well defined. there is no way around it. you are at the top of a can el. we are discounting a great deal of those good earnings. another way to do it is to do a moving average. this smoothing mechanism it bounces to the penney, to the penney, it checks back, checks back. you are due for a check back. if you got food groukts in this, take some off. >> you will make a bearish bet, very much in the same way that dan did with starbucks. >> that's exactly right. i think there are times even though the fact is opts prices are not that high. it makes sense to do a spread. i am specifically looking at the to have 4945 put spread in the sma.

that one quick point i would be sure to use a limit order on this. i will look to put a dollar on that spread with i is 25% of a difference between those two strikes. you can get to the $13.49. that is where you get that $13 debit. a large part of the appreciation has been coming more from the increasing multiples. a lot of the stocks have been trading at a huge discount. obviously, the market pulls back, these are lower beta fames like the intels of the world. right here, they are looking a bit expensive. >> this is a good way to play it. intel is reporting it next week. the stock is up 20% of the here. isf sma 20% of the weight is intel. this is one way to diversify to make a bearish bet. i like it here, to me. >> you like intel or the bearish

bet. >> in i like the bearish bet. >> dan pointed out there was a hublg sma. they did a similar trade. it gets a little older, august, which we're not going to do here, we want to give oufrss a little more to play it. it traded 20,000 ton. that's obviously a substantial. >> you see techs in the struggle? intel right now, earnings in growth, earnings in sale are expected to grow the low single digits at best. there is no growth. you are paying a multiple for it. if we get a downturn in the cycle, these stocks go north. >> us a tweet. check out our website options action.cnbc.com. we have exclusive interviews and trades, check it out. here's what's coming out. check it out next.

. flip out. >> some investors are expecting a big melt down from one high growth name. we'll tell you what it is when "options action" returns. [bell rings] ♪ time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade.

. here's a question for you, is a big activist getting in bed with bed, bath and beyond, they may have taken an interest in that retailer sent interest up more than 23% and sent off a flurry. cule average is four times its average daily volume. where do these traders see the stock going? make breaks it down for us, what do you think? >> let's take a look at this, where we were seeing a whole lot of activity is right here at the money, 59, 60. 61s. all of these near dated calls are the ones that were trading, including the ones that expire today, next week and in august. so these guys are all obviously expecting a short term bump to the upside. we can take a look at ought distressed retail fames where activists have taken a look to see what happened. pet smart announced they were taking a look at the stake. a quick short pop there. take a look at family dollar.

same thing, as soon as the announcement came up, the stocks did that. take a look at this, traded down afterwards, let's look at maybe one of the post-well phone cases, j.c. penney and bill ackman, when he got involved, stocks shot up, went sideways. he finally bailed out after it went down here, i think the important thing to remember is that all of these nails have some real distressing story behind them. the street hates this name, revenue is florida eps growth is coming because they're doing more buy backs than in capex. what you are looking for is a short-term pop. look out below in case i get this one because they're making sure bullish option. >> they will gain to figure out who the activist could be, the retailer under some distress. >> forget about bed bath the truth is this is the quickest way for you to lose money for

these short dated calls theing supply of option gets so jacked. here's the thing, whole foods and lulu after they blew up, okay the same sort of thing, the stocks started to rally, it was corporate. who knows what it was, restructuring copy recently, too, all were backed down towards the lows here him i will make one other point, family dollar has almost filled in that entire gap, it's all the way back down here. >> you know what else, the vine was not here. 36 million shares, but in the stock, fidelity trading and wellington and big players, no volume today. they've plunged a week or so it was 19 million. there was no endorsement here. >> the point you have to make is people can't help themselves him when they think a big name is ahead of it. you don't want to buy after it. really, this is the only way to do it. to dan's point, the probability is very low.

you will be risking less. >> we did call bed, bath and beyond for a comment. they did not return our phone calls. by the way, a quick programing note. tune into cnbc wednesday all day long. we will be delivering live from alpha. i'm going to be sitting down for a live around exclusive intervow. we will talk about family dollar. we will talk about other potential activist targets as well. who know was he will say. we hope all of you will tune in. up next, which high growth stock will be the next to fall? we'll discuss when options action returns ♪ when the world moves, futures move first. learn futures from experienced pros

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[b♪ll rings] time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

. >> it's been a bad day for sales force. they didn't fall if you have to make dan's bearish trade work out. here's why. >> on "option action," sometimes ricking less to make more just isn't enough. sometimes we need to fix our trade. that's just the case with dan's trade on sales force. dan thought the stock was about

to slide. >> this is one of the worst charts i've ever seen. just going short, are you out of your frisking mind? good question. since sales force or any stock can technically keep rising forever, shorting the stock can mean infinite losses-to-define his risk, dan instead bot the august put for $50. to make money, he needs sales force shares to fall below that $50 level by more than the doctor 23 he spent or below august expiration. but it gets even better. because that put will gain value faster than the stock will lose value, meaning more money in dan's pocket and since the time of the trade, it's been a wild ride for sales force shares, initially falling. then rising, now falling sharonly. but not enough to make the trade a winner just yet. >> i hate when that happens.

>> and "options action" fans have only one question. how can dan fix his trade? so despite this week's decline, this trade is still not looking good? what do you do now, dan? >> the truth is i probably have a low probability of success even though the stock was not too far from when i future trade on. i have about a month here and so really what i'm going to try to do is get out for as little of a loss as possible. sometimes if a trade, identifying the fact that you are wrong and you are wrongly positioned is the best way to figure it out. if i get a move back towards my strike. i will still be down on the strike, but i will cut my losses. >> one of the things i will like to do is spread and go further out in time on a put spread. a lot of options are not expensive, in high flying names, they tend to be pricier. >> that desay also being offset.

>> you said that is one of the worst charts you have seen. do you concur that's the case? if you can, put it on arc terrible chart. >> it wasn't just sales force, zillow, linkedin plungeing as well. these high growth names, social stocks, twitter. >> this is one of those situations where there are a couple skeptics on this desk. we have expressed that time and time again the fact of the matter is these things can't stay at these valuations forever. the question is wlurnt prescribe to the idea, which i do, which they are likely to crack sometime stoon. i'm not saying next week. i have been looking out six months, that's what i would do here. >> it doesn't help there was all this mna chatter. off the bottom and the lows in may, yelp, there was takeover stuff. the open table.

that's kept things buoyed here. >> that will not matter, to mike's point the valuation these stocks are trading at six or seven times, crm is one that i believe a lot of investors think there is something secular going on, it is, they're going to come home to roost. i'm not sure it's this month or next month. >> pandora looks terrible, sales force. the burden of proof has 50ed. it's been a bullish market. now, trouble. >> up next, a quick break, a final call from the options desk. [bell rings] ♪ time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box.

all on thinkorswim, from td ameritrade.

[ bell ringing, applause ] five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. welcome back. the last word from the "options" pit. >> starbucks i'm leaning short. >> i like calendar put spreads in google actually. >> what are your expectations for earnings?

high or low next week. >> i think it's high. for more "options action" go to optionsactioncnbc.com. we'll see you next friday. have a great weekend. jim cramer is next. the "mad men" with "mad money." ♪ >> a better back and a better body. since 1981 that has been my passion. i created teeter hang ups so people could live healthier, more active lives. i know what it's like to have back pain. when i found inversion, it changed my life forever, and i believe it can change yours. i am proud to present the newest and best teeter hang ups. >> if we wanna live not only a long life, but an active, healthy,