money, and it is this. people first, then money, then things. now, you stay safe. now, you stay safe. bye-bye. this is ""options action."" tonight, instead of retail stocks, we'll tell you which are on a tear? relack, we have a way to get long to tech giant ali baba, we'll tell you how. talk about strange. >> maybe not that strange, maybe bet that the commodities are

about to soar. >> i'm hungry. >> the "action" starts now. live from the nasdaq site, i'm melissa lee him retailers rising, retail stocks in an incredible 17-session winning streak. so will the holiday shopping season bring you more gains or are retailers on sale? it seems like investors have high hopes him it seems counterintuitive when you dispel the rumors type of thing. >> we will talk about the xrt, an etf, they have been the the latter. they've underperformed most of the year. there has been a lot of concern about the u.s. consumer when you think and it. we have seen it in housing stocks. all of a sudden you look at the xrt at one point the high broke out to new all time highs today. it was up from 16% from october 15ing. it's lacking in the s&p.

so i think when you look at those names, they just reported a lot of them have broken out to 52-week or all-time high, they are catch-up trades, what are they discounting? we have cyber monday. here's the thing, i think it will be the most promotional holiday season we have ever known, the retailers know the consumers is kind of tapped here, it may be great for sales, it won't be for profits. >> i haven't been that skeptical for u.s. consumers i have to say. we have people voluntarily leaving jobs in september. people only leave voluntarily within they have a better option. there is one other thing it suggests, that existing employers will have to raise salaries. that's the one thing that we really lacked as we seen this economic recovery is we were not seeing rising wages him that suggests there are rising wages, if consumers are feeling optimistic enough to leave their jobs, they will feel opt nivg

imistic to go shopping. >> no matter you think of apple as a stock, when you think about the big tick items they have from new ipads, it will be a huge, huge thing. i have to assume this company that has 40% margin, they will teel steel a ton of profits. i think apple, the product cycles, that is a dangerous situation. >> besides all of that, factor in the seasonality, basically, history shows the time to buy retailers for holiday is before black friday. it's not between black friday and christmas. >> one question you also have to ask yourself is how you think the mark is going to do between now and few years him if you believe the mark is going to be flat-to-higher, you can't be that skeptical about this sector. full stop. the way the market's behaving

right now, marks are cheap, it's ample time to move ahead. i would to the be a huge seller. >> i am incompetenting a little bit of both of what you said. i want to look at the xrt. like i said, i think they are discounting a lot of fuse here, the news flow is incellally worse as we get into q1. i think we will have a disappointing first half of 2015. within i was looking at the xrt when the etf was 92, 93, i can buy the december march put calendar, i'm send selling a put at 70 cents, combining a march put at 230. i believe once we get through this holiday period, i believe we can see sideways to up action ore the next through weeks. i think after that it gets worse. so really the calendar makes sense. i'm financing the longer data puts. if i get through the separation and the etf is about 90, then i

can look for other ways to finance these large puttings. they're risking 170. on a percentage basis, that's not horrible, except if i get a blowout to the up150id or a crash to the downside, i don't think it will happen. i think we can inch higher here. i'm not playing for a much greater move of 2%. >> there are great moves you might be doing a calendar like this, one is you might believe the equity is flat-to-higher, we have holidays coming up. stocks aren't volatile when they aren't trading at all some being short, the near data put when we know we have half days and no days of trading next week, i think actually there is a good time to be different. >> that's actually the main point. if you think about really monday and christmas and few year, will you have a lot of steal price option, the stocks you own will decay. it will feel horrible. the "options action" will decay. this is the sort of strategy you

want to employ in slow trading days. >> let's go from hot to not. one dow component is badly lagging the market. the carts say they could play matchup. carter braxton worth, tell us what you will see. >> as you say a big lager on the year, 15 basis points per spread, let's figure it out together. so here we have three individual entity, the s&p, of course, a subset of that, of course, is the entire industrial sector, a subset of that is the aerospace and defense groups, honeywell, so forth. we see clearly the s&p outperformed this sector. the sellingor outperforming the sub industry group. here's the opportunity by my work. this is the s&p 500. aerodefense. honeywell, but this kind of tension is not resolved with a breakout. we are at the top of the range, as often seerngs we will break

out. what is causing it? we think it's the biggest chart. what i see with my eye is a well defined criminal bottom. we closed here at 132. we think we make it back to the high in january 145. put it into perspective, here is a longer term chart. sheer our triple bottom. we think again we will make a run for the january high up 10% and again that would only put it back to where it was. the market is even higher. we think it's a real good bet relative to the subpoena 'and a real good bet, absolute. >> what is the 10% rise from here? sample for one thing, it is trading at a 15% discount to its historical multiples, the other thing is, boeing is a great company and they have great secular tail wind. we are talking aerospace company. tail wind. the reason is because 5,000

single aisle acre for asia over the course of the next seven years. that plus a completely full order book tells you i think you need to know about boeing. there are a lot of places in the market that has a decent company with a long horizon of potentially great sales for less than the mark multiples. it is trading 15-and-a-half times the next month earnings. >> it's a simple trade. it looks on the surface at least a little expensive. >> i think the reason this trade looks expensive, i'm looking at the may 31 calls. can you buy those for about 5 and a quarter. they look expensive no. one because the stock, itself, is about $30. >> that will push up the "options action" prices anyway. the other reason is i'm going out to may him that's a half a year. the reason i want to do that is actually i don't think these things will decay that much sort of to dan's point. if anything is going to happen, it is going to happen in january. there is a lot of things can you

do with a trade like this depending on what happens with the stock. if it ramallys, we can spread out of it and sell higher strike calls. lock in what we have already spent usually and continue to play for the upside. on the owner other hand, if it declines back to 10 10, we can fund our upside call purchase by funding some puts. i don't think options are all that expensive right now. >> like you said, it's trading at a discount to historical. here's a company that is trading about a market multiple, it's been a lager. i'm looking at a company six years into a massive bull market that can't get out of its own way, so to me i don't like looking out to may and having that sort of chunky premium. if i was going to play this with the stock 2.5% down on the year, i'd look much shorter data and look do a spread and take advantage of so many things we are talking about. over the next few weeks, you are

going to have decay. i know those are may "options action," i would look to february call spreads targeting on the upper end his level. >> so i want to go back to carter, if we are concerned about the trade such as dan is concerned, obviously, are there certain support levels that boeing needs to preserve if order for the trade to remain intact? >> to hold the current level and droop bit would be fiempblt boeing is a massive operation. after a great ascent, this is a normal consolidation. this is what home depot did before it broke out. this is what wal-mart did before it broke out. you re-assert yourself again. >> going long dated on the options is not a bad play if you also have a long view on the stock, which i have. actually to carter's credit, he called it well at a bullet play at 80 bucks, now it's 135 bucks. i'm inclined to go with him and say i'm willing to go out to may

to make my bullish bet. >> you have a play out there, send it to "options action." we have the hottest news videos throughout the week and exclusive trades. check it out. here's what's coming up next. yep, that pretty much sums up commodities this year. we will tell you why savvy traders are playing the florists in. how much would you pay for ali baba shares? >> 60,000. >> how about $10? we'll show you how no to do tha when we come back.

>> auto shares up 63% from their ipo price and tear resident voice of skepticism dez dan, what are you looking at, dan? >> skepticism, i'm laying it out. this has been a one way freight train. ali baba has traded particularly well of late since they reported that first quarter of earnings as a publicly traded company. i think it's really important to note, lockup, there will be a lot of overhang coming, a short one coming next month. a few million shares which isn't pretty, it's not substantial, when you think about it. they did an ipo of 68 million

shares, they will unlock 420 million shares, that's much greater when you think about the ipo they did. this is not skepticism. this is cold hard fact. right now i believe stock is trading very well. there is a huge mutual fund complexes that will own this stock for years to come. there is a supply/demand issue here. that is coming to a theater near you in the new year, september 20th, there will be 1.6 billion shares. i think there is a potential in 2015 for a sediment shift. this is that move we are talking about it had a nice consolidation after the ipo. this was the earnings period here. people liked what they saw. they had this move in a single day they did 9.5 billion in gross merchandise sales here the price of "options action" of ali

baba have come down in the last weeks here. this is a billion dollar mark cap company with applied volatility about 40%. that's pretty expensive when you think about it. i think you will consider long plays here. it makes sense despite high vol till t. potential for sediment shifts with that overhang. if you have gains in this stock, the thing is working, i get it, you don't want to sell, you may want to car stock replacement strategy, or if you are bullish, you look at the call spreads, today within i looked at the stock of 111, remember you can look out to palm beach. this exploration will capture that first lockup of 430 million shares, your max loss there, when you think about it, you have protection all the way to

100, which i think is an interesting near term support level but you have potential gains last week all the way to 150. that's about $100 billion in market cap. that would make this a $370 million mark cap. i think that's obviously incorporating a lot of good news here. i guess. i'm not skeptical. i think it makes sense to define your risk if you want to stay bullish on ali baba. >> we seen stocks trading badly. twitter is probably the most recent example of this carter, i'm wondering, in terms of the technician's playbook, there anything that can tell you whether or not? . >> there are good reference points, it's a level when the stock broke out in november. that's exactly the width of the range that preceded the breakout.

in principle, you re-visit that pivot point. so 110, we think that's where it's going. >> one of the things bob had going for it, also the trading at material discounts to names like face bong. now it isn't, with the astonishing rally, both of them are trading 40 times next month earnings. amazingly, if you compare it to amazon, everyone looks to amazon's earnings, you look at ebitda measure of free cash flow, amazon is 60% more ens expensive on that basis. they did do the announcement of the debt. that was a wise choice. still on a valuation basis, it's not that compelling to me relative to other comps in this space. >> coming up next, is the commodity crush over? one trader is betting big on a commodities option comeback. that's an option when commodities action returns.

well, china's proposed an announcement causing a boost in commodity stocks.

we see it run with the openings market as well. what do you see the bottom is in for oil and gold? >> we have seen a lot of activity in the commodity space. we saw three times the average daily call volume. that was the result of a substantial buy. 10,000 o.gn 30 calls. someone paid a dollar for those, that was making a bullish bet to the upside. i will say it has been awfully hard to catch the falling knight in energy. we have addressed this a couple of times on this desk. i actually completely understand, when you see people making bullish bets in the "options action" market, it can be the catalyst to send things lieer, every effort to try to catch this on the way down has failed many times over. so from my perspective, i think this is the best way to try to make the bullish bet.

i would go along with this. >> how do the carts go? >> you take advantage, strong gets stronger, suspect so bombed out like commodities, the key sheer not to take an idiosyncratic risk, but to do it inning a gre gat. there are shares of gsg. it's quite oversold. we play for bets. >> dan, what do you think? >> we talked about it earlier in the week, we saw so put to rick $5 billion in premium with a substantial more downside if the thing got nailed, playing for upside, up about 5 to 10%. to me, like they said trying to catch a falling knight as as economically sectored game, you define your rick and have a good sense of what you are paying, i think it makes sense. >> going out and buying something leak the junior gold miners or gdx is not the way to play it. every one of those stocks has

been a dog. free port macmaran, exposed to copper as well as gold. i think you get a little diversity. >> ideosin kratic. -- ideosin kratic. silly with no volatility. mike. >> you know, first of all, i think hedging right now makes a heck of a lot of sense, options aren't so brisk. do you think the market could be 2% higher, in which case outside break even. this is 21 of the few chances you will continue to press, up 13% essentially since the last expiration on this shoechl this is almost unprecedent. >> it wouldn't be your hedge wind? >> i think you have to think

about it as a probability stand point. >> that is also a very low probability bet. so i don't like buying those way out of the ones you think are dollar cheap. if you are worried about a 5 to 10% pull being, you see where most of your concentration, your portfolio is, if it is in the spy, large cap u.s. stuff, i would look to do near the money put spread. i decide i want to use a certain am of premium to get certain am of protection. >> at the.s, 1200s, 300s, 4s, out to january. >> let me ask carter, the sbs is up 10%. gain all back of 12. the market is extreme, impetuous. the risk reward is asymmetrical. the first thing is you harvest gains, take money off the table.

hold some cash. >> up next the final "options action" from the options pits, stay tuned. the traders

questions good luck. please call us.

last call, carter. >> a bit of boeing on the long side. >> baba call spreads to long stocker. >> mike. >> to those looking ahead, use the money in january. >> it looks like our time is expired. i'm melissa lee, thank you for watching, see you next week for more "options action." have a great weekend. . body beast, the fast, proven way to build muscle, shed fat, and sculpt your best body faster than you've ever thought possible, brought to you by beachbody. >> this is real, as real as it gets. we're gonna learn, we're gonna sweat, we're gonna have fun, and we're gonna see results. >> before body beast, i was just soft and chunky and -- and pudgy, and this is the "after" result. >> it's gonna be amazing. come on. you can do this! >> body beast has completely transformed my body. swimsuit season h