we are live at the we are live at the nasdaq as stocks hit record highs today. the guys getting ready to kbif their best moves. >> gold mineers could be set to rally. >> double cheese and sausage. >> right here it is. >> maybe investors shouldn't go for seconds of the we'll explain why one fast food giant could be about to cool off. >> what do you get when you mix trading with romantic hits from the '70s? you're about to find out. "options action" start now. >> what will matter next week?

you, the consumer. all set to report earnings. what will they tell us about the american consumer. dan is upbeat on this sector. what? >> i'm upbeat on a component. think about the last couple of months there's been talk about what really lower gas at the pump has meant for the u.s. consumer. 70% of gdp is driven by the consumer. we've had mixed results from walmart and such and guide downs and one of the reasons why is because of the head wind from the strong dollar. there is a part of u.s. consumer or retail that actually doesn't have the effect of a strong dollar because they ge all of sales from the u.s. and consumers are benefitting from lower gas at the pump. kohl's had a massive breakout and kept on going and nordstroms, the stock reversed and closed at an all-time high. macy's is next week. it's a name to look at. they may have a different

opinion. >> not just that the consumer is strong but certain pockets are strong and it has nothing to do with gas prices. >> well, to the extent that gas prices have something to do with it, that's going to be lagging for sure. it takes time for people to accumulate and realize they have more money in their pocket. nordstrom's is not a name that first pops to mind. i think an extra $30 in a given week will get them filling their bags. kohl's, maybe, and macy's somebody in the middle. >> stocks at record highs. >> we know the rth exploded -- xrt is very deep. this particular subset, only three stocks in the s&p 500 so-called department store index. and this has been -- mace sis's down 10% from the record high and it's a good bet it catches

up with the group. >> i would add one more point. they had a lot of news. they made an acquisition and reiterated 2014 guidance and said q4 comps were good. it comes down to guidance. what nordstrom is telling you today, the stock could still advance and trades at 13 times expected gross of earnings percent. this one sets up as a good trade. >> today the stock was 63.25, i looked to march and bought the 65, 67.5 call spread. i sold one of the march 63.5 calls at 30 cents against it. when you think about the trade, i have a break even up at 65, 60 and i'm selling 67.5 call. it's been down at one point 10% from there. it sets up as a good earnings

trade and only risking 1.5 -- >> i think this is a decent play. the only thing i would point out, options going in are cheaper than they usually are. if it does rally, it's possible to break through the high we previously saw. i don't even mind simply buying that call -- granted it's a third of the price, it's very inexpensive given the stotime. >> precious metals got a little bit less precious. gold taking miners with it. could it present a golden opportunity? let's ask carter. >> i think it is an opportunity. let's go to the charts and figure this out together. the pick here of course is looking at the ago greg gat,

let's go through macro charts. this is a long term chart of the philadelphia gold and silver index. if you look at this period when stocks were cheap, this is the height of the market's 2000 bubble, when gold stocks expensive and s&p is plunging and we're at the bottom of the range compared to equities generally. so take a look at other charts. same long-term chart of the group. this is again, about 35, 40 stocks and we're just now right at the relative strength low versus the s&p and we start to bounce off the line if you look at that on a detailed chart. other things that are relevant. this is again, this important aggregate, this is exactly where qe3 started. and you get this dump in gold and s&p takes off over the last two years and so newmont, the

second best performing stock in the market. and by my work, anyway, this is all of the hall marks of a bearish -- it was up huge on good earnings. the presumption is, here it is relative to newmont and other miners that this spread that miners go the way of the biggest miner, the only one in the s&p. this is the gdx, it's an aggregate of many stocks and you have this gets people beared up and thrown back above and we're on the line. we ricochet, for a buyer of gdx. >> i often said i was not a gold bug and didn't like the miners, newmont's news was interesting because they talked about cost

lower than expected. that's the area where i expect them to say, guess what, turns out it was harder or more expensive. i was fairly impressed by that. the other thing that's interesting about the miners in general, the s&p is trading more historic and miners are not in the aggregate. if you look at the whole sector, you look at sectors trading at a slight discount to the market. if you're looking for something to play catch-up -- the news might be why it might. >> you have to think about this in terms of commodities, crude oil is stabilizing here not giving a lot to bulls who think there will be a sharp snap back. i think it goes lower. what happens to gold -- >> that's a really good example. >> if crude goes lower? it's one of the best things for gold miners, they take inputs from crude -- >> i understand that but the next leg down, isn't that a function of global economic activity and what does that mean

for miners. >> it's very simply an issue of how much storage you have and how much oil you have in storage. that's not the same dynamic that gold is going to have frankly. >> what's the trade, mike? >> options and gdx are relatively experience, i'm looking out to june at the 21, 26 call spread. a little over a quarter of the distance of the strikes and i'm trying to target that $26 price. >> what about the dollar, carter? >> that's part of it too. the dollar having surged, one of the biggest six-month moves on record, is it heading lower, higher, sure? it's overdone, yeah? >> doesn't the dollar just stay here and crude could stay here and not going to be a great scenario for gold miners either.

>> anything could happen. when i first started the business. the one thing we couldn't put in is could. anything could happen. >> this is a trade until june. >> what is really nice about the trade. it's a quarter of the distance of the width and you define a range where the etf had broken down six or seven months ago and that would be the level it goes to. in my mind you're risking one to make one. if you look on the down side where the support is it's somewhere in the high teens. >> if i read between the lines, you think they are nuts. >> well, no, listen -- >> i don't know why gold goes up or down and i think the gld looks horrific at 115, it probably breaks that big support and you it will me where gdx will be. >> the biggest reason gdx or gold has gone up or down has been the dollar. i think if the dollar maintains its current situation, especially with a little bit of strong news from the miners at lower cost, it does give an

opportunity to be propelled to the upside. >> we have a question out there, send us a tweet. check out the website, optionsaction.cnbc.com. sign up for our newsletter. here's what's coming up next. >> one call does it all. >> our traders are calling for domino's disappointment. why it may be wise to avoid fast food. >> plus mike like you've never seen him before when options action returns.

friedw about how about fried noodles, shares of noodles and company plunging today. they are not the only ones, panera and chipotle dropping sharply. are we starting to see a bad trend developing? >> last night we had the ceo of red robin on fast money. he wasn't ready to say that lower gas at the pump is something they are seeing just yet. he's starting to see a little data, i thought that was kind of squishy. to me, that stock is near a 52 week high. i think the ones they listed up there, when sale growth starts to decelerate, then you see the declines you saw in those sorts of names. that's why domino's pizza, the stock had a massive run, taco bell is having some problems and

pizza hut, sales only grew 1%. when i look at domino's reporting next week, the stock is priced to perfection here. the chart is getting a little toppy. i know that's your range here but to me it wouldn't take a whole lot to get it down. >> those names, while they all perform poorly after earnings, that's what they did the prior quarter. those have been losers. but thinks like buffalo wild wings and sonic and jack in the box, more restaurant have beat and gapped up than those that have gapped down. is domino's itself too steep, it's expensive, but the last quarter october 14th, a stock surged on massive volume often when you get one beat like that you get a second beat. i would be careful. >> it is expensive but not overwhelmingly so. one of the things we can remember about domino's, this was really a company that was in a lot of turmoil, kind of lost its way. they examined what the problems

were and honest about them and changed the quality of their food. they did a lot of things to turn that story around. when you look at them, some of the other names, panera, you can't say that and noodles and company hasn't done anything major to pivot their strategy. domino's has. >> it could mean they are coming up against difficult comparisons. they got the benefit over the last year and a half. they are trading at 30 times expected earnings that are decelerating to high teens on sales growth of 5, 6%. it is priced for perfection, one other point, panera did gap down after their earnings from all time highs a couple of weeks ago. it can happen. >> you usually have weakness foreshadows weakness, they've been sick all along. going after a strong animal with domino's, the burden of proof is on the bear. >> if they do execute, you can't say it's necessarily priced for perfection right now? >> gro think they can

demonstrate the growth that justifies a 30 multiple. at some point all comes to an end -- >> which could be the same case before the prior earnings report in which they did beat -- >> the stock was lower. the stock is up 45% in seven months. what is it discounting. this is the sort of thing, i like to look to defined risk setups and would merely look at a $10 wide and look to play no more than a quarter of the spread. >> coming up next, a man and his options, we're looking at the sentimental side of mike coe when "options action" returns.

♪ careless ♪ careless whispers of a good friends ♪ >> we're all about love and passion and that's why we're presenting you with this once in a lifetime offer. take a look. ♪ you're the meaning of my life ♪ >> imagine having all of mike's greatest strategies in one collection. >> the nice thing is if you use options, you can get a little

bit of leverage and that's what we're going to do here. when the markets come up, it is a great time to buy puts. >> timeless wisdom by the man some call the yoda of options. >> this put spread has fairly nice numbers to it, you're buying it for a little over a quarter, this is behind the strikes. >> a once in a lifetime collection, options action presents khouw's classics, six strategies that will have you risking less and making more. such hits as, the the covered call -- >> that is toe do a covered call, if you hold the stock look to sell a call against it. >> and even the one by two put spread. >> you're going to buy one of the 60s and sell two of the 50s and targeting the 50 strike. this is a little bit of threading the needle trade. ♪ >> but wait, there's more, order

now and you'll get fundamental indicators like ebita and everyone's favorite, historical valuation analysis. >> a 15% discount to the enterprise value basis, price to earnings basis. ♪ ♪ snet. >> pick up the phone and call today, 1-800-risk less. shipping and handling charges may apply. >> now that we've seen how sentimental you get about options, offer us a classic strategy, selling puts. >> you describe them as mind numbingly complex but this is a easy one. let's go take a look at one of the easier strategies that a lot of options traders can employ. what we're looking at is selling puts, one of the things you'll want to look at, do i want to buy the underlying stock?

do i think the valuation will be atrackive. expiration. when i'm choosing expiration near dated options will decay more rapidly. typically i'll look 30 to 90 days would be the sweet spot. i'm looking for an annualized rate of return, looking for maybe 12% for annualized rate of return or better. let's look at the trade here that i think meets these criteria and i'm looking at a stock that is trading close to all time highs here but fundamentally one of the better stocks around, 20% annual year on year top line revenue growth. just getting approval for expanded use both in the u.s. and europe and that's the biggest revenue source. you can look out to april and sell the 1.15 strike puts for $2.60. you will notice that you're going to be collecting a little over 1% a month to do that.

if you are forced to buy the stock and the stock declines down to the 1.15 stock price, you'll be obligated to buy the price. the effective purchase price is going to be $1.12.40, a 10% discount to the share price. if it stays here we'll get paid and if it goes up, we'll get paid and if it declines a significant discount to where it's trading. >> do you think mike could be an owner? >> i was thinking about the sounds track, did this product come with the soundtrack? celgene is a good story techically and lagged by a touch here, we think it has the prospects of hitting levels that he's talking about. >> of course it does, it was trading there friday at 114. about selling puts, it's one way to think about it as -- i think about it differently. if you own celgene, i would

almost think of selling puts as a year and a half as strategy. if you're prepared to buy more later. the stock has been from the lower left to the upper right for the last year and you keep on riding, maybe you sell one month outputs. because if you're not full on your stock position, great way to add yield. >> another way to play it, given where premiums are is to sell covered calls against it. you could even, this is going to be in the subsequent edition, sell both puts and calls against the long position, buy more at lower levels and called out of your stock at higher levels and in the meantime collect maybe 4 or 5%. >> what kind of music would go with that one? >> dance the night away. >> coming up next, we're taking your tweets. stay tuned.

♪ ♪ >> we love getting tweets, let's answer a few. peter asks, how about selling puts on oil through uso? >> so the etf supposed to track wti here, this is one where there's an interesting setup as far as options prices, it can only go to zero and calls are more expensive than puts. it's a scenario where at the moment it's not idea but probably better than buying uso which has been volatile. i would set puts and use proceeds to buy call spreads and actually have exposure to the upside. >> what do you say? >> right now options premiums are relatively elevated. oil has been volatile. i wouldn't be reaching out and buying it but you can get long exposure and if you do end up having uso put to you, it will be lower levels.

>> consensus was we were going to 40 and -- >> 30 even. >> that's why it stopped and started pushing back towards 52. if one can put enough time on the trade, i think selling puts makes a lot of sense. >> ww granmy asks, please follow up with carter worth regarding the numerous calls of retest of 1820 on the s&p. >> september 19th, in october we plunged. that's a foreshadowing of what's going to look like, which is worse. the further this goes without that kind of drawdown the worse it will be. not only visit 1820 but go below that. only a 12% decline. that used to happen all the time in normal markets. once the fed is done -- >> meaning like june time frame? >> once the student can't go to extra help anymore, we'll see how bad a student he really is. >> sticking with the bear call. the final call, carter?

>> well, at this point, we think you sure contrarian and buy bull miners and gold. >> sell puts in celgene. >> our time is expired. thanks for watching. "mad money" starts right now. nd applause ] >> announcer: the following is a paid advertisement for the revolutionary 21 day fix, brought to you by beachbody. >> thank you! [ laughs ] hello there. i'm tom bergeron, and this show is about transforming how you look and feel, starting right now. >> announcer: are you struggling right now to lose weight? >> i've struggled with my weight my entire life. >> i really want to... lose this. >> i didn't want to walk down the aisle weighing 220 pounds. i need to do something, and it needs to happen right now. >> announcer: now there's a breakthrough new way to lose those pounds and inches, and it happens in just 21 days.