we saw some pretty crazy moves, and no, mike, i'm not talking about your wild nights out. i'm talking about the stock market. we're live from the nasdaq. our guys are getting ready. while they're doing that, here's what's coming up. may the force be with you. >> it sure is, with disney. and you won't believe just how high traders see it going on earnings. plus, how fast can mcdonald's turn it around? ♪ big mac, a blt, fillet a fish, regular and larger sizes, or a chicken salad ♪ >> well, maybe not that fast, but management will detail its plans on monday and we'll tell you how to profit tonight. and could twitter's trouble signal bigger problems for tech? >> it's not. >> we'll tell you who could be next to fall. the action starts right now. ♪ live from the nasdaq market site, i'm melissa lee.

the question tonight is simple, if stocks are going to go higher, which sector is going to lead us? let's get in the money and find out. mike, what are you looking at? >> well, you know, i think we talked a lot about rates, and if you're worried about rates, then one place you definitely don't want to be is utilities. one place you probably do want to be is in financials. you don't want to be in mlps and reits. i think that's basically the way you have to look at this. and you know, we have stock valuations i think trading at or above their historical highs. so, if rates are going to be rising in general, that's probably not good for the whole market, so you really have to be fairly selective, i think. >> so, cautious overall the markets, but bullish certain sectors that would benefit from higher rates. this is all conventional wisdom, though. >> this is funny. it happened on a week, we saw the tlt, the barclays 20-year treasury bond index, up 4% this week. that's a massive move. we had the fed meeting on wednesday and i think you could have flipped a coin whether you thought it was a little more dovish than hawkish, one way or the other, but it seems the market is speaking. and when you talk about utilities, i think that's an interesting sector because we saw that breakout into the end of the year. it got expensive relative to the

s&p, relative to its historical value, but it came in early in the year and it really hasn't budged since, which i think is kind of interesting. investors have actually repositioned when they're looking at sectors. and it really speaks to the fact that, you know, at the end of the year, we on this desk did not like utilities. we thought because of the expense, because it was crowded, but they've moved out of this with the fear that rates are going to go higher. but i don't really know where it comes next on, you know, i know you guys have an idea on it, but i don't know what the next rotation is. >> carter i'm curious, what did you make of the action from a technical standpoint when you look at things like the biotech index, really rolling over? >> what it is is we have no leadership right now. the two things that have led, consumer discretion and health care, have come in quite a bit. and saying that energy's leading, that's a concept that we have a ricochetted off the bottom, but in order to be a leader, you have to be in a steady uptrend and continuing. so, the leaders have faltered and we've had a ricochet from the weak part. we have no leadership. so, it will take something like financials to get this thing going. >> you know, one of the things that -- i mean, we didn't have great economic data this week, right? and i don't anticipate a rate

increase in june. i don't think anybody does at this point. but pending home sales and existing home sales numbers actually looked okay. one of the concerns that we have talked about before was if you had gotten into a slightly rising rate environment, would there actually be origination? would there actually be demand for loans? because the net interest margin question doesn't really help you unless you have that. and i think that was the only good part that i actually saw in this that could actually, potentially help financials. >> yeah, and then i would just make one other point. one of the things that really stuck out like a sore thumb this week was just, you know, stories getting heat sold. like twitter is one of them, linkedin just today, yelp and wynn. there's a whole host of stocks that were down 20% in one day after results. and you know, what i find really troubling, when you think about twitter and you think about a linkedin, obviously, these are speculative stories and they're very expensive, but when you think back just three months ago, these companies gave guidance that sent their stocks up 20% in one day and then you're telling me that three months later, they don't have the visibility that they're guiding down and you're seeing that. so, we have this kind of shoot

first, ask questions later on high valuation stuff, and that's not particularly -- obviously, to state the fact, it's not bullish action whatsoever. and then you backdrop that with a lack of leadership, and to me, it just doesn't feel that great right now. >> right. so, in terms of this backdrop of a rising rate environment, you mentioned financials, you mentioned financials, you have a great chart on financials. >> let's go look at the chart. so, we're going to look at the xlf and try to figure this out. we think this is going to go higher because we think rates will tick up. s&p, as mentioned by the spy versus one of the sectors, xlf. we know the last two or three years, a laggard. well, take a look. since the top of the prior bull market, i mean, financials are still down. haven't recouped. and of course, the market up considerably. so, here is the xlf. looks like nothing, but what if you do this? that's what i see. here's no lines. here's lines. we've worked ourselves into a wedge, and usually you get a

resolution down or up. you've got to pick your direction. well, what we're thinking here is this is going to be up based on the way certain banks, goldman sachs, jpmorgan, other stocks are acting, and we think that the rates are telling us that. another way to look at it longer term, here's the final way to look at it. so, if you want to call this a big, rounding bottom, call it whatever you want, but we're at a major inflection point and our bet is that xlf is a good place to be. we're long. >> mike? >> take a look at where the vix closed today, under $13. options are very cheap. they're quite cheap on indexes and they're very cheap in this case on the financials. so, actually, the simplest way to make a bullish bet without risking a whole lot of money is to look out to the july 25 calls, because those will only cost you 25 cents. so, essentially, you're risking 1% of the current value of the underlying to make a bullish bet until july expiration. to me, especially if you're going into a wedge pattern, as carter out lined, and it's going to break one way or the other, this seems like the only way you could potentially play it. >> here's an index or an etf that actually doesn't move when you look back to once it

recovered off the lows in october, it's literally been trading between $23 and $25. and here we are at $24.25. and so, yeah, you can spend a quarter and buy that breakout on the xlf. the vol is cheap. but let me tell you, ask anybody who's owned premium in the xlf in the last six months. it's actually been a pretty difficult trade. so, what i would consider here is maybe look at one of the laggards. look at like a bank of america where you could actually find equally sort of dollar-cheap, upside calls, and play for the breakout. because you're going to get much more torque on a breakout in the single stock than you would on an etf like this. but if you like littering your portfolio with some dollar-cheap options here and there, this one's pretty cheap and the technicals do support that. >> sometimes buying laggards is a very good take. you have a group that's working and you find a laggard. sometimes it's a laggard for a reason. it's idiosyncratic and i think that's the case. i would favor a stronger stock. >> choosing the etf with the big bulge bracket business, you're taking a bet that everything

else will improve because they're not completely levered to -- >> that's a great point, because actually, take a look at some of the reports that we have seen from a lot of the banks, like jpmorgan, like morgan stanley. a lot of those numbers came out a lot better than we expected. their businesses are actually looking better than we might have thought. there's another thing i would mention, and that is that, you know, just internally, for those of us that are in finance, one of the things i've observed is that we've got the banks potentially still have the ability to make some money in their trading businesses. we thought that was all going away, thanks to volcker, dodd/frank, but it actually looks like they're putting things on the books still. >> big banks, northern trust, bank of new york. we got berkshire just after the close, looks good. we like it. think it's going to work. mcdonald's expected to announce turnaround plans on monday and investors are hoping the new ceo, stephen easterbrook, can breathe new life into the fast-food chain. dan? >> this caught my eye earlier in the week. options action is predicting a 4% move either way for

mcdonald's, which is interesting considering the fact that, yeah, there is an event on monday. it's been well telegraphed. you have a new ceo. i think for anybody to assume the new ceo's going to lay an egg on this call, i think they'll basically put out there what they need to put out there to make investors feel decent that they have a plan. mcdonald's sales have declined 8% year over year. that's massive when you think about it. they have new blood in here, they have this event, they have an opportunity to kind of get investors comfortable. then on friday there's another event and i think that's why this move is considered so high. they're going to announce their april sales and sales have obviously been declining and they haven't been very good. but again, i think both of these events should be in the stock. i think that 4% implied move seems really high for a dow component like this. so, you know to me, i think it sets up as an opportunity. >> you know, mcdonald's options rights now are about as expensive as they have been since we had the big vol spike in 2011. this is typically a stock where the options are really cheap, but they have really moved up. as you were saying, that implied move. we're talking about options premiums that are probably

safely 50% or 60% higher than three months ago. so, options market's obviously expecting a lot more out of this. >> you know, if i were the guy charged with this, fix the burger. you're changing the menu, we tried salad, tried a wrap. fix the burger, you'll be all set. make it a better burger. that's their business. >> it's actually bigger than that. they're losing the pr game and there's massive competition -- >> people don't like the food. they've got to fix the burger. >> what's your trade? >> here's the thing, this is a wildly held stock and i know a lot of people -- listen, let me tell you something, today, traders were positioning for big movement. nine of the top most active option strikes today were all calls, calls made up, i don't know, two-thirds of the volume here today. so me, i think you have an opportuni opportunity, it's a widely held stock here. if you own it, i think you can own some yield. look out to may 8th expiration and you can actually sell a strangle. what we're looking for is to add yield to your long stock position. may 8th weekly 100 calls, you can sell them for about $1.10. and to the down side, you'd look at the may 8th weekly 95 puts.

you can sell those for about 90 cents. that's $2. if you have the stock between 95 and 100, you would take in that $2 in premium. when you think about that, that's a pretty decent added yield, or think about it if the stock have wr to go lower, it'd buffer to the down side. your worst-case scenario, and it's a pretty decent case, is the stock is above $100, your stock gets called away, but you've sold it at $102, up 4.25%, and that's the way you should be using options against long stock. >> we have not talked about these structures very often and they rarely set up that well, but this is a stock that's not going to give us a linkedin type of a performance. so, this is a situation where options premiums are rich. you have the opportunity to collect some of that premium and there are not that many places to get yield right now, so you should definitely look at it. i think this trade makes a lot of sense. >> what's the chart look like? >> okay, we've had a pat yerp of accumulation, several days of two or three-fold increase in volume and they close on the high. i think it goes up on this news. >> it's interesting, because this comes on a day -- or this trade comes on a day where we're

hearing that activists are going into yum! and yum! is also in the midst of some sort of turnaround. >> and i think the yum! thing is that sales have been so bad in china. we know a little more than half their sales come from china. that's where a lot of their growth is coming from. i think it's just a different story. i think the mcdonald's turnaround is going to take months, if not quarters, to implement. to me, if you think about what options are pricing, this is when on a very short-term basis, i agree with carter, that consolidation in and around $97 looks fantastic. i would just be very surprised if you get a break below $93 or above $102 in the next five trading days, and that's really the danger zone and the opportunity zone. >> that turnaround's going to take a lot longer than that, and that's probably one of the reasons why selling some premium's going to make sense, because you're not going to see a huge move. this is a huge ship that needs to turn around. got a question? send us a tweet @optionsaction. if it's nice, we might read it later on in the show. for everything "options action," check out optionsaction.cnbc.com for the hottest news, videos throughout the week and exclusive trades. it's like you died and went to options heaven! what's better than that? check it out.

here's what's coming up next. i've got no plans tomorrow night. >> good. you can go out and see "the avengers." like everyone else in the world. we'll tell you what it could mean for disney shares. plus, twitter tanking. but could it make for an incredible trading opportunity now? we'll break it down when "options action" returns. . here at td ameritrade, they work 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.

ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. this is a live look at the weigh-in for the mayweather/pacquiao fight, which is happening tomorrow. it is being billed as potentially the fight of the century. there you have it. anybody watching this thing tomorrow? dan? >> sure.

100 bucks, pay-per-view, welcome back it in, all day long. >> i think you're lying. are you watching it? >> absolutely not. >> okay! let's move on here! it could be a magical weekend for disney, according to industry estimates. the highly anticipated "avengers" sequel is set to have the biggest opening weekend of all time. cnbc's julia boorstin is in l.a. with what it could mean for disney. julia. >> reporter: that's right, melissa. marvel's "the avengers: age of ultron" is on its way to a record-breaking weekend. thursday night previews brought in $27.6 million to the north american box office, far surpassing the opening night from the first "avengers" film, putting it on track to beat that film's $207 million opening weekend, which would give it the biggest opening weekend of all time. that all pushes its worldwide total so far to over $315 million on a record-breaking opening overseas, including in mexico, where the film scored the biggest opening of all time. now, ahead of disney's quarterly report next week, revenue's expected to grow 5% on basically

a flat earnings. disney shares are trading around an all-time high, up more than 35% over the past year. now, marvel has been a big win for disney. analyst jeffrey logson predicts that "the avengers" will bring disney $500 million in earnings before interest and taxes within just two years. now, this is all yet another validation of disney's $4 billion acquisition of marvel back in 2009. melissa? >> all right, julia boorstin, thanks so much. carter is taking a look at some blockbuster charts. julia mentioned it's close to an all-time high at this point, carter. >> it sure is. i want to start backwards, the long-term chart. disney clearly in a range, and exactly two years ago we took out our dotcom high. so, 15 to 45. but here, optically, you can see even in the 1990 to 2000 move, we had no -- look at this, a lot of debate. now it's literally been perfect. so, either that's the risk here or it's because disney literally is one of those rare moments where it's operating perfectly.

that's our bet. so, here's the chart on the last two years, meaning this period that i've just highlighted, here it is. and here are the lines. we think we're going to the top of the trend. so, another 5%, 6%. and here's the setup right now. this was our last quarter, big beat, big gap up. you can draw the lines this way. a setup. we think it's going to gap again. a better bet than betting that it will miss. >> all right, so carter likes it on a technical basis. fundamentally, there are a lot of catalysts, "star wars" and all of the merchandise sales surrou surrounding that. >> julia mentioned this is going to be the biggest opening weekend, until december 18th when "star wars" comes out. here's the thing, and i think we saw this with apple earlier in the week. the book case is pretty well known at this point. given the gap and the fact that the stock is at all-time highs, the stock is incorporating a lot of this good news. so you know, i'd be less inclined to see a gaap like last quarter. i think that was a bit unexpected. this quarter now, i think the sentiment is even that much higher. >> you know, it's interesting,

of course. this is really when we think about what their business is, we really should be talking about cable and we should be talking about things like that, because in fact, their media revenues on that side are about three times what they get from the studio business. it's about $21 billion versus $7 billion a year in revenues. so when i look at this, one thing i would observe -- 24 times trailing earnings? this is a high going into next week's results. so, we haven't seen it in quite a while. that gets me a little nervous, but they have some great things coming down the pike. and if anybody can monetize the lucas acquisition, and i think they are the ones that are going to do it. i mean, they've got 16% net income on margins right now, and these are staggering numbers for this industry. >> so, basically, you're with carter in terms of being bullish. >> i am, but i wouldn't step out and buy the stock for the reasons that i just highlighted. i just think that's a little too risky. one other point i would make, is that going into this number, options markets are expecting a bigger move, about 30% bigger than we've actually seen. >> oh, wow. >> historically over the past eight quarters. so, i think the way to do this is to look at a spread, specifically, i'm looking at the

june $110-$120 call spreads. sell the $120s against it for 65 cents. that could potentially be worth 10 bucks. i'm looking at a shorter dated spread. i often go out further in time, but when you're using a call or put spread, you want shorter data. june is as far out as i'd go. >> it's interesting, when dan was walking through, while you didn't like disney at this point, you referenced apple. did the charts look similar? >> no. i mean, in the sense that there's been no debate, disney has been doing this for about three years. think about it, just a year and a half ago, apple suffered a 40% decline. >> right. >> this is in one of those rare moments, it seems to me, that it's near perfect. and while perfection cannot last, it does exist from time to time. >> yeah. listen, you know, it's not that i don't like disney. if you make a living off buying stocks, you know, up 17% on the year at all-time highs into potentially volatile events, have a ball, you know? you're better than i am at it. but i like the way mike's going

to play it. i think that makes sense to define your risk. >> apple, consumer products company. disney, other than the merchandising stuff that they do versus the films, that's not really what it is. you don't have a risk of everybody suddenly turning off espn because something else better comes along. they have a much more stable source of revenues. up next, twitter shares fell hard this week. we'll tell you why now could be the perfect time to buy after this. is. here at td ameritrade, they work 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.

ahh... steve, other than making me move stuff, ces.

what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. time now for a little "called out." last week, dan made a play on twitter ahead of earnings. take a listen. >> for me, if've actually been long it since the high 30s. and what i may look to do -- this is early next week, they report tuesday after the close -- is look to make a defined risk play into the event because of the potential movement. so, here is 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 literally just going to look to may and i'm going to look at the $52-$60 call spread.

>> well, twitter did see some movement, but it came to the down side and in a big way. so, dan, what'd you do? >> yeah, this one hurt. you know, i did do the stock replacement trade, so i defined my risk. i bought the $52-$60 call spread in may and i was really worried about the potential for them to hit what i thought were pretty high expectations. that being said, i do believe in the long-term story, so i just really wanted to kind of define my risk. so, here i am. i'm actually back buying the stock down here. i started at $42, i'm still buying a bit here. and if the stock goes to $35 -- that's where i think it's going to settle out soon, i may consider a longer dated risk reversal, selling maybe a september $30 put to buy a september $40 call. >> dan is not the only one biting the bullet. last week, kough and carter thought wild wings could be the next to break out. >> we're going to bounce here and make a new high. >> i think using options to make a bullish call makes a lot of sense. i'm looking at the june

$180-$200 call spread. you could spend about $6.15 for that. >> well, shares fell 13% this week. so, carter, how does the chart look now? >> well, there's a pretty good rule of thumb for this kind of problem -- first loss, best loss, right? we were there for a reason, which is an event that would cause a pop up. in fact, it's the exact opposite, drop and walk away. >> mike? >> the premium's gone here. here's an embarrassing fact also. i talk about shake shack. that actually ended up on the week and this one got shellacked. so, i kind of lost twice over. we have to walk away. coming up next, i've got your tweets and "the final call." stay tuned. . here at td ameritrade, they work 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.

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all so you can find the right one. try zip recruiter for free today. ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. big week ahead for cnbc, kicking off on monday, "squawk box," exclusive interviews with warren buffett and bill gates. you won't want to miss it, so set your alarm. time for a tweet now. matt asks, "what are you guys looking at on your laptops?" [ laughter ]

carter, braxton worth. i'll bet it's not candy crush. >> i'm looking at your three laptops. i have them all here on a split screen. >> and yours is adorable. >> just my kids and my dog. >> mike. porn! no, i'm kidding. >> e-mail from my wife. [ laughter ] i'll be home soon. >> and i'm on twitter, so -- >> there you go. all right, time now for "the final call," which is the last word from the options pits. carter braxton worth. >> it's time to be overweight financials. buy some xlf. >> mike khouw. >> i think if you're going to look at xlf, taking a look at the market right here, we're not off these all-time highs, so i would actually suggest just buying some calls. they're relatively inexpensive xlf, july 25s. >> a redo on the twitter thing. i think if it hits $35, options trades will set up nicely. i think the risk-reward is interesting at that point. to me, it's a very scarce social media property, although it's being run poorly. and if you're long mcdonald's, look to add some yield, sell

some weekly calls against it. >> it's like a twofer final call. looks like our time has expired. thank you so much for watching. for more "options action," check out optionsaction.cnbc.com, also the daily segment inside of "fast." see you next week at 5:00 p.m. eastern time. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain you, but to educate and explain this to you. so, call me, 800-743-cnbc, or tweet me @jimcramer. sell in april and beat the people who sell in may? i know, it's not that catchy, but it does seem to be a bit of reality after the rally today. aside from a