live from the nasdaq market site as a record week for stocks comes to a close, carter, are you excited? i guess he is. our guys are getting set up behind me. here's what's coming up. ... >> forget the apple watch or iphone we have the reason why apple is about to break out. and it's a thing of beauty. >> unless you like hot -- >> i'm so hungry i could eat a sandwich from the gas station. >> might explain why dining stocks have been on fire. except one. which is about to break out. we'll give you the trade. and talk about shocking. >> i'm edward kimberly. >> maybe not that shocking. we'll tell you about the sector that could surprise investors with next weeks earnings. the action begins right now.

>> okay. this part you know, amazon, google, microsoft, all rising sharply on earnings and pushing the nasdaq to record closing highs. here is what you may not know which tech stock will be the next to soar on earnings. let's get in the money and find out and dan, this is a surprising prediction from you. >> well, i mean it's a stock i've been long for a long time twitter. a lot has to do with the fact it hasn't been because of their torrid growth in monthly active users or anything like that. they have been growing revenues well, did have a couple hiccups out of the gate after their ipo and i think investors were having a hard time figuring out how they will get to the critical mass that facebook did? a short order. to me i think you a setup that's kind of interesting in next week's earnings and you mentioned amazon, forget the other two, they're so big, google and microsoft, but netflix last week went up 18% after its report. amazon was up about 15% today. something that's very interesting about those two companies. they both are tremendously high valuation and they also are very

controversial stocks in the investment community. they both moved back towards the 52-week highs, they did better than expected and they just exploded. there was no overhead resistance. they kept on going as long as the market was open for all intents and purposes and i think twitter has the potential to have a similar move next week. >> this is a situation where, of course, you're just taking a look the at where the stock is trading on a multiple of earnings basis might seem like it's a nose bleed territory but consider the fact that the valuation of twitter is below what we often are hearing is reported for names like uber. this is a business that has taken no revenues in three years, now going to do about $2.4 billion this year, maybe $3.6 billion next year, but more importantly, many of us use this thing. and where a lot of us figuring eventually they will figure out how to monetize that. what you were showing me earlier with periscope, there's going to be potential. >> also the setup here meaning both amazon and netflix had a gap 13 weeks prior and they each gapped up again.

quarterly results. well, twitter has a gap back in february, you know, back last quarter, and so the presumption we'll get that again here. same setup. >> if the backdrop is the nasdaq record highs does that bode well for twitter or -- >> it bodes well. $33 million market cap, growing sales, if they could get the users and the engagement ticking here then it's going to be -- it's going to be a $40 billion market cap very, very quickly. but that's a big if because they're not growing that fast. facebook just showed us this week they improved their monthly active users like i don't know 15% or something like that on a $1.3 billion basis and twitter is having a hard time getting to high single digits on a $250 million base. >> as you may haves guessed dap has a twitter trade. since we have the chart master because it was a record day for stocks, what did you -- how does the nasdaq chart look? >> better than the s&p chart in the sense that the s&p is still kind of stuck at those highs from exactly two months ago. but speaking of the s&p, you know, if you look at the market

cap at twitter at 33 billion they're only about three stocks in our planet that aren't in the s&p, dish being one. some point that's going to happen too. >> another catalyst. >> so -- >> the trade. >> what's interesting, i've been long the stock and when you think about the event, the options market is pricing 11% move in either direction. the five quarters it's been public it's moved 16%. those are massive, massive potential moves here. for me i've been long it. since the high 30s. what i may look to do early next week, report tuesday after the close is look to make a defined risk play into the event because of the potential movement. here was the trade that i'm considering that maybe monday or tuesday prior to the results sell out of my stock, and buy this call spread. i'm going to look to may and i'm going to look at the 52, 60 call spread. when the stock was 51 today you could have paid $2 for that. your maximum potential gain is up to $6 between 54 and 60 okay. and 60 is interesting here. that would be about a 15% move. that would be the sort of move

that it's averaged okay and the average move between amazon and netflix when you think about the magnitude of a potential move and erasing $2 to the downside, 3, 4% over the next few weeks if you don't get it right. want to make one point, the chart to the upside, on the downside, 45 looks like a level, goes through 45 it's probably going to go lower over the near term if it has a reason to do so. i like the idea of risking a few percent to make 10%. we have this event. >> let's be clear like a stock replacement strategy, you own the stock for a long time. >> it is. >> and i want the potential for the exposure to the upside. let me tell you the move is expensive. you do not want to make out of the money long premium bets into events like this frequently. i have the gains to your point. >> well we've seen a few names really make moves. netflix was one of them, amazon i think is another name. we're taking a look at situations where sometimes it's worth paying up for a little bit of premium and think how much you're spending here, looking at

spending about 2 bucks on something that costs about 50. risks 4% of the current stock price. the question you need to ask yourself between now and expiration could the stock move that much or more. the answer is clearly yeah, it could easily. and that's all you're risking. if that move is against you you do a trade like this. >> a good bet momentum in this part of the market, dynamic names and every chance that what happened last quarter will happen again this quarter. >> move on here. it wasn't just tech stocks that were soaring this week, fast and casual diping stocks have been on fire, dominos, dunkin' and cheesecake factory up sharply on earnings that could spell good news for one restaurant stock reporting next week. carter has been taking a looks at one chart. >> i have charts an we're going to take a look here at the screen and so i wanted to look at buffalo wild wings. this is an interesting setup. but first let's look at the group s&p 500 restaurant stocks as an industry or subsector versus the s&p. we know a winner relative to the market. sort of on a short-term basis.

let me show you what's going on. since the '09 low, this is a lot of consumer discretionary outperformance relative to the market, restaurants in particular have dominated equities in general. so here is the setup. chart with no lines, chart with lines. so let's take it away. and what i want to focus on is the gap. this gap here, of a month or so ago is an earnings beat. this gap is an earnings beat. we've sold out off back to the thing res priced and the presumption we're going to bounce and make a new high. so closed at 180 and the presumption is 200. we like us on the long side. >> okay. hes like it. do you? >> this has been a great growth story. i will say when you look at the valuation trading about 30 times next 12 month earnings looks like it's barely fully priced. we've seen a lot of fully pricesed growth stories end up rallying even on disappointment because people are still hunting for growth. here's a question you ought to

ask yourself, thinking about where do i buy growth in casual dining, buffalo wild wings at $3.5 billion enterprise value or go out and try shake shack which has less than $200 million in revenues -- >> where dan is. >> by the way. >> this is one of those situations where, you know, we're looking for opportunities to make bullish bets where obviously the market has indicated they have a taste for it pardon the pun so a situation where using options to make a bullish bet makes sense. all i'm looking at is the june 180, 200 call spread send about 6.15 dollars for that which represents over 3% of the stock price. and obviously if the market decides they don't like the earnings not risking a great deal to the downside. >> i would be worried about avian flu being sort of a wrinkle. carter is laughing but minnesota declared a state of emergency, meaning chicken costs -- >> sometimes the things you're eating -- >> chicken costs have been a huge impact for a name like

buffalo wild wings. >> i'm not terribly concerned about that. one of the things when yum had the same kind of earns concerns in china, that was a different situation, just on a percentage of sales basis, the other issue is, we had -- it's not a scare that i think is affecting a lot of casual diners. not going in there. it might raise costs input costs a little bit, but they're going to overcome that because they can talk it down for the quarter. this is a one-time xroerd event and we will not include. >> he said shake shack that's the name you're in. >> i know. i was telling you. i actually bought shake shack a couple months ago when in the lows 40s and now all of a sudden the mid 60s and when you talk about the potential for growth we're in a market here where people are looking for that sort of thing but now the stock is up 50%. when you look at buffalo wild wings they have ten times the amount of sales, priced much better. they're growing sales and earnings 20% or expected to this year. trading at 30 times. that seems reasonable. the other one shake shack that's speculative, a good

old-fashioned short squeeze. i actually think -- >> are you taking profits or buying -- sounds like you like buffalo. >> shake up 9% on no news. you keep raising your stop that's what you do. you kind of try to live by it. i think the setup into buffaloes the way these stocks have traded if you think about the way yum traded this week, cheesecake, the list went on and on and these restaurant stocks if they put up a beat raise it's a new high. >> if you wanted it to start selling shake shack, nobody wants to sell this thing because there are no other sellers. >> this stock went public in january and that's part of it too right. there's this supply demand situation going on. >> no way to short the stock unless you're actually -- >> very high short interest. >> bet this. they will be pricey when they are listed. >> right. >> got a question out there, send a tweet to us @options action if it's civil, we'll answer it later in the show. for everything "options action" there's only one place to go.

we haves the hottest option news, videos from throughout the week and exclusive trade. check it out. here's what's coming up next. >> most beautiful thing i've ever seen. >> that's what people are saying about the apple watch. but there's something even prettier and we'll tell you why it could mean money in your pocket. oil stocks are on fire. ♪ and they could get hotter next week. we'll tell you why when "options action" returns. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

tsplit second stats. it's so close to the options floor. you'll bust your brain-box. all on thinkorswim. from td ameritrade welcome back to "options action." i'm josh lipton. apple fans were out in force today trying on the new watch. in fact, none other than patriots qb tom braid owe. he was at the apple store in nyc

test driving the wearable. if brady does buy the watch, he will have some 3,000 apps to choose from and it's those apps that will play a big role in determining whether this watch is a hit or not. which app will prove the most popular with consumers, with a new device that is impossible to predict, but analysts say apps that are already address immediate consumer needs like uber or yelp are poised for success. that is what hotel tonight is banking on. now this app allows you to book a hotel room at the very last minute, flying into san francisco, and you don't have a reservation, no worries, ceo sam shank tells us the hope is, to make the booking process even faster. >> it definitely is responding to what our users want, new ways to book on hotel tonight, ways to reduck duce friction around the booking, talking about getting out of the app and on with your night and you don't have to pull your phone out in terms of getting out of the watch and on with your night to

booking a hotel room. it i going to appeal to new customers, new use cases and bring people that are looking for ultimate convenience. >> of course, when apple does report earnings on monday after the bell the focus won't be on the watch but on the engine that still drives this tech giant, ifoens. the street thinks apple shipped 55 million in q2 and analysts want to see eps of 215 on sales of $55.9 billion. that would represent growth of 23% on the top line. guys, back to you. >> all right. thank you, josh lipton. apple shares are sitting near all-time highs ahead of monday's report after the bell and carter, you say the charts look better than the watch, why? >> okay. so here's the chart. it's what not to like. north by northeast. look draw the trend line, take the trend line away. good stuff. seems to bounce. off the trend line, that's the point of trend lines. yeah. no trend line, trend line all good. i want to talk about these three

bounces. take the trend line away and check this out. a 27% move, 33 days, right there. a 26% move, in 28 days, right there. a 27% move in 25 days. that's awfully se metrycle. put the line back in. these kick off from earnings these kick off from earnings. this time we have it come down, in many ways that's more constructive. wasn't even weakness. the presumption we're going to kick off with earnings and head to new highs, big stock, a sector to itself, bigger than utilities and we like it long sfo that's darn convincing chart. >> what's really interesting to me when i hear people talking about how fully valued apple shares are here when you consider that this stock is trading less than 16 times next 12 month earnings. strip the cash out it's like 12 times and adding a lot of cash to its balance sheet each and every quarter. not as if this company is

expensive relative to the market. even though the growth is looking to be more modest we're looking at 9% growth. from my perspective it's hard to figure out why you would be looking to sell shares at this point. >> one thing is that the world, universally agrees it's going to a trillion dollars in market cap. i've never seen -- >> consensus -- >> yeah. >> you don't like that -- >> i think the sentiment as we've seen on many occasions over the last few years is pretty frothy and talk about the earnings event on monday after the close. the options market is implying about a 5.5% move, that's $7. in twitter which is a $51 stock the options market implying a $5 move. $7, the stock moved 6 bucks this week alone nd you have the earnings event, so to me i think options look very cheap if you're looking to consider it's not a situation where i think you want to be selling options against your underlying stock position but maybe adding leverage or -- >> a 5 to 7% move might not sound like much. $40 billion worth of valuation

one way or the other. i mean this is kind of a pretty wide gap when you think about how big. >> $40 billion in either direction, expected to have $225 billion in sales this year alone. >> the market cap, it's as a relationship to the s&p. it's 4% of the s&p. we've had several times in this country, u.s. steel did it, more than 5%, general motors, exxon, stocks can get up to 5, a little more percent of the whole, we're at 4. >> we're on "options action." you don't need to sit there and figure out if they will buy the stock. buy an options trade and look at the june 130, 145 call spread, spend $4.30 for that and that will give you good exposure to the upside for that 5 to 7% move and if it does happen to fall off you are risking less than 4% of the current stock price. >> i think listen, 4% not cheap, you know what i mean, but the way to play it here. when you look at the chart a move back to that upstrend like you just said, that would be kind of healthy. you would be a buyer, backing up

the truck there. >> that would be even better in principle -- >> like a launch pad. i think options are cheap enough to make directional bets into the event. a hard one to shoot against right now. >> for some reason apple doesn't deliver on every metric on monday, presumably it will go back to the trend. right? >> trend line is that they hold more often than not. even if it's a disappointment that would be your reference point. >> coming up next, energy stocks have been one of the hottest tra trades this month. will next week's earnings ruin the rally. we'll discuss that when "options action" returns. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart,

plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

tsplit second stats. it's so close to the options floor. you'll bust your brain-box. all on thinkorswim. from td ameritrade and we're back. ask and you shall receive. this week one of the "options action" faithful wrote to us on twitter and john said mike do you and carter still have faith that bp can get to 36? why the quick rise?

last month mike and carter got bearish on bp and since then the stock has rallied 14%, ouch. carter, what do you do now? >> we've been creamed in this. the problem here is a violent move not only in energy stocks but the commodity and so forth. at this point sort of confess here, walk away, close it out, however you want to call it. >> also got earnings next week. >> we do have that and obviously most of the value of this put has been eroded. i think there's some consolation, the reason that we actually go and trade options. this was not a stock where you wanted to sit there and try to press a short with the thing trading at 52-week lows. we risked 1.80, the stock up 7.5 bucks since that time and if you bought that put for 1.80, down about 1.55. i think it's unlikely whatever happens in earnings it's going to go through that level but risking little. my inclination take the money off and if we'll look for another position to make a bearish bet in this. >> oil in the related stocks it looks like a technical bounce to

me. i would be surprised if we don't see the commodity lower and the stocks lower because really when you think about what we've seen with supply and seen the easing, to me it doesn't really -- the fundamentals don't match with the moves. an oversold bounce could set up for an opportunity to short some of these. >> they aren't the only ones having a tough week. dan here thought we would see a pullback in consumer discretionary stocks. that trade has not worked out as well. the etf is up 3%. what do you do? >> this is an interesting one. we were talking about it, there's really some divergent action here in the names in the space. these guys warned me, why do you want to short disney, comcast. >> we all said that. >> but i was looking at other things like you know, look at t.j. maxx and kohl's, massive leaders rolling over. i did wait for the bounce. i got a bounce. the trade is not working out. i have to cut the losses on this one early next week. i want to make one other point disney is the largest holding in this today, one of the largest single stock option trades today was in disney when the stock was 109.58 at the all-time highs.

someone looked at the may 1st weekly, next expiration, bought 10,000 of the 111 calls paid 1.70, 1.7 million in premium the stock will go up next week above 112.70. >> i think that's the only sensible way to try to press the bullish side for disney, even though i really do like the stock. i mean when it's sitting here trading at highs like it is, the good news as far as i think when people try to forecast what they can do with the "star wars" movies and so on that is out right now. hard to figure out what they will say that will get everybody more fired up than they are. i would rather buy calls on the stock. >> that's why we're doing an options show. do it that way, yeah. >> how does the chart look on disney? >> i mean look this is an impervious kind of thing, unto itself and the chart is good. >> coming up next, it is our favorite part of the show, we are taking your tweets. stay tuned. here at td ameritrade, they work hard.

wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not, you may know it only covers about 80% of your part b medical expenses. it's up to you to pay the difference. so think about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they help cover some of what medicare doesn't pay

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let's take a tweet. what do you guys think about whole foods and unusual option activity on heavy volume? >> so there was buying of the may 50 next week expiration calls and they couldn't report until may 6th. they don't catch them. this is trying to play the short-term turnaround that the stock had. it got down to 15% from the recent highs. you think you to play it from the long side too that report and wouldn't be buying next week calls. >> go one week further out spend an extra dollar and catch the move and that's a better way to play trying to lk for the short-term trade. >> the last word from the options. what do you say? >> final call to buffalo wild wings with your ipad and think about your apple watch. >> carters has never been to a buffalo wild wings. >> i don't know, i would not buy an apple watch right now but i would buy the apple call spread in june. that will catch the earnings and i think it's a cheap way to play

it. >> dan. >> twitter is going to move one way or another here and if you think it has the potential to move like amazon or netflix you look at the may 52, 60 call spread. >> our time has expired. i'm melissa my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you fine it. "mad money" starts now. >> hey, i'm cramer. welcome to "mad money" welcome to crameria. i'm just trying to make a little money. my job is not just to entertain you but to educate and teach you. so call 1-800-743-cnbc. you've heard a ton about this earnings season. i say don't tell that to anyone that owns amazon, google,