remember us? it's been awhile but we're back and here's a silver lining. at least the stock market is closed at this point. these guys will make sense of the markets. here's what's coming up while they're getting ready. ♪ everybody was kung fu fighting ♪ >> that sums up stocks there week. there's one dow stock signaling more pain to come. we'll tell you the name and teach you how to protect yourself. plus, down on apple? well, how would you like to make your money back for less than a buck? we'll show you how. and protect myself at all times. >> we have a way to do that for your whole portfolio. the action begins right now.

let's get to it on a day that saw a strong jobs report. one group of stocks hitting a new low, that would be retail. the etf that tracks retail hit a low today. is the consumer in bigger trouble than we think? let's find out right now? dan, what do you think? >> i don't think they're in any more trouble than we thought all along. the u.s. consumer has not been strong here. this week is a great example of a lot of fairy tales. bull market fairy tales have been pokesed. today is a great example to your point. the xrt was down 3% on a day we saw oil down and it should be great for retailers. we're not seeing it. i think a lot of it has to do with the unwind of goofy stories that have permeated the bull market for a year. >> a good jobs report would incorporate a little bit of wage growth. that's probably not that surprising. where we do have weakness in the job sector is in those areas

like the energy where a lot of the job growth in north america had come from recently. those are the ones not growing. those are the places seeing layoffs. you're trading off high paying jobs for lower paying ones and overall, that's not positive as far as the consumer is concerned. >> carter in. >> sort of speaks for itself, doesn't it? it's bad. it's getting worse. consumer as a sector is way ahead of the market since the data beginz. it's got a few names holding it up, costcos, home depots and am zonz will presumably come out to pressure. things like fossil or macy's and then you have high flyers high priced. >> do you believe there are individual stocks though in the retail sector worth anybody ling at this point? >> it's not fair to characterize it as a pierre lynch technique.

one thing i will say, when i go to costco, i still see full parking lots and carts. they're get i anning a more aggressive deal than they were with american express. i don't see a lot of trouble for costco but a name like walmart seems like grim death to me. target is right in that sort of tough spot between the two. it's a company i typically have liked, i don't think now is the time to be jumping to buy it. >> walmart, is this bad news for the economy? >> i heard you talking early today. tom made a good case. it's a cheap stock with a good dividend yield. down 30% almost year. we've gotten to the 15% rally off the late 2015 lows in walmart, the stock trades below a market multiple. with that yeed and you know, we know they have a massive buyback. the thing is, there's this massive shift going on in retail. we know they're going to spend a lot of money to compete with the

likes of amazon. i've got to say this. they've said it after they cut 216 guidance late last year. they're going to be going towards this omni channel thing. that's expensive. i suspect that we say full year cut again. i think the stock will give back recent gains. the stock fell out of bed at the end of the day. when the stock was 64.60, look out to february expiration, that's the day they report earnings in the morning. in february, you coukcould it'sn a few percent. when you think of the vol at this time we're seeing in sectors. it's outperformed this year. this is a really decent defined risk bet on a stock that i think has an event coming up. the last point, the technicals are horrible. if you get the move back to the

down trend from above 90 early last year, you sell a lower strike put and have a put spread. >> it does make a lot of sense to just buy a put outright here. walmart has a lot of net debt. you talk about trying to compete with what the new paradigm for retailing is which they don't carry the debt and don't have the position in the marketplace. some of that buyback could be pressured by that. if you're going to make a bearish bet, buying the put it the way to do it. >> you find something that's in an established down trend which you found and wait for a counter trend rally, 16 first off the low and fry to fade that strength. the most important thing here is what it says about the market. for money to be moving into walmart, no one's doing that because they think it's a great bet. this is a bad tape. i'm are upping a large piece of

capital here and i need to protect myself. >> that's right. do you want to pile into a stock with real problems because the market is weaking? if the market does basically reverse and actually show some strength, this isn't the place you want to be either. >> people this is 100% domestic stock. it came from overseas. they do have dollar exposure here. it's not as defensive if you were going to look domestically to utilities or u.s. tell cos. >> china was the primary driver in this week's market volatility. we have a look what to expect in the week ahead. >> after the most volatile week in chinese market history, invests are focusing on key got that could move markets even more. inflation tonight, producer prices dropping 6% last month, marking the 45th decline in prices. deflationary fears are rising as manufacturer activity continues to decline. consumer prices are expected

rise by 1.6 year over year. this weekend we'll get a look at chinese loan growth. any signs of life from long-ter corporate loans that has been weak would go indicate reflued consumer confidence in the economy. and lastly trade data on tuesday. invefrtz are expecting a decline in exports. >> thank au, seem ma. so the chart master is taking a look at a name that could suffer from more volunteer in china. carter, what are you watching? >> caterpillar, tied to china, tied to oil, tied to everything that's sort of bad. it looks like there's a final down leg to go. crude oil, caterpillar. crude-caterpillar. so we have obviously this huge mean reversion back to the ranging that crude oil has lived in its entire career, 10 to 40.

does cat have to get down to 40? no, but closed today at 63, and we're thinking at least closer to tats long-term trend line. so take a look at the comparative chart. crude oil, crude oil. cat. crat. we're going to play for some more of this. we're going to play for cat coming back down in towards the range. here's the daily setup. here's my ics started with a head and shoulders top, a neckline. it broke hard. here's the trend line. we put our head and shoulders top back in. the neckline. now we're hovering ominously having failed at this trend at these prior lows. here's the absolute chart. right here, we close within pennies of the prior low. we have a snoois nice established setup. we're going to play for one

more. >> so mike, you share this bearish view. >> look, the full year 2016 expectation for the street right now is about $2 billion in net income. we haven't seen that since 2004. when we did see it which wasn't in a declining tape for caterpillar, the company was valued 15% less than right now. after it's fallen so much, isn't it cheap? it's not cheap yet. so i think right now, the way you want to play this, i'm targeting the 15% decline is to look at the march 16 put spread. you can buy it for $2.60. you're spending 1.$35, are small% and of the current stock bet targeting $55 by march expiration. that happens to be incidentally right about where this company was valued the last time they did $2 billion in annual net income. >> you're using historical figures.

the company three years ago had $65 billion in sales. next year expected to have $43 billion in sales. that's an astounding decline. in 2010, the stock touchdown 50. you could be a bit more aggressive on the pud spread and look at the 65, 50. the only caveat, maybe you get an uptick early next week and widen that put spread. >> that's a fair point. i think you'll have an opportunity to press this bet as time goes on. people sit there and keeping the stock is cheap when it isn't. we were in one of the moefd incredible booms in commodities. we haven't talked about the backlog. that's what helped support this. the heavy equipment they sell, repowering the energy space, how many generators are people buying for drilling? zero is what you get in that business. it could get a lot worse before it gets better for them.

>> it's a lot of bate here. this is the kind of thing people abandon. it can -- >> lastly, they have more debt than their queebt market cap. they've been managing with massive buybacks for the last few years. that's going to go away. >> they rely heavily on financing their equipment. >> got a question? send us a tweet. check out our website "options action".cnbc.c action".cnbc.com. here's what's coming up next. ♪ i did it my way ♪ >> he apple shares are imploding. we have a way to get your money back at almost no cust. plus -- >> it's a good type for the great taste of mcdonald's. >> it may not be a good time to buy the stock. we'll tell you why when "options action"s" returns . . re you working on? let me show you. okay.

our thinkorswim trading platform aggregates all the options data you need in one place and 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. td ameritrade.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns.

like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: 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. td ameritrade. welcome back to "options action." apple shares fell more than 7% this week over concerns on the iphone 6 sales and china. the stock is now down 27% shedding a whopping $110 billion in market cap. for context, that that $110 billion is more than the total market cap of s&p 500 xpz for those of you who lost money in apple, we have a simple strategy to make it back. mike, what is it?

>> one of the first things you try to do to recover some of the money you lost, look at doing this at little or no cost. we're not going to talk about doubling down by committing more capital to the trade. the next thing is, this is a way to try to do this in the short term. i like to look out four months or less. final thing is, on this spread we're going to do, i'm looking to choose an upper strike below where the stock's previous highs were. taking a look, i'm taking a look out to march and i'm going to buy one of the 97 1/2 calls and then i'm going to sell two each of these 105 calls. i'm going to collect $5 for the two i so would and spend $5.50 that i bought. my net debit is only 50 cents. the idea is i'm going to capture all the gains from 97.5 up to $105 and also capture those xwans on my stock. seemingly in this range, i'm

going to double the amount of money i would have made. above this level, i'm going to get called out of my stock and only going to cap my gains on the call spread. but the idea is if the stock doesn't get to its prior highs i still managed to double the gains in this short distance. >> dan, what do you think of the trade? >> i love the trade. i know you guys cannot consider the idea of taking some profits or reducing the size after your apple trade. the stock is down 27% since last spring. the all-time highs. get creative to add leverage to your position without adding any risk or premium. this is a really smart trade in my opinion. >> what do you think of the levels in mike's trade? >> they're good levels. you're down to the prior peak of three years ago. whereas a cat has not bombed out yet, here's the difference. if a stock has been going down for three years, it can be keep going down. if a stock quickly rolls over,

that's where you get throwbacks. a lot of the selling i would think has come into the name. i'd be inclined to be looking on the long side here. >> really? >> this is also a situation where i mean, they live product psych to product cycle. but it is not the same situation as cat where their whole business is in secular decline. from my perspective, we're looking at a company that is quite cheaply valued even if they can just maintain the business they've been doing. this is a much safer stock to stay long. >> within this trade, if the stock hits 105, what would you do? would you let it be called away? >> the first thing, i would say you can keep this structure on for some period of time. let march roll up. when it runs up to that 105 strike, those calls you're short will be decaying away. that's working in your benefit like being long. when expiration approaches,

that's when i i would look to -- >> she asked a really good question. in some ways you're not paying for the structure. why not have the potential for appreciation for the stock and then have that added juice because to your point, time is in your favor if you can actually get a sustainable move to the upside. >> to that point, one place you might consider is taking off one portion of the trade and leaving the buy right on. long 97 1/2, it's going to be in the money at 105. take some profits or adjust it. the. >> i want to know what carter thinks. >> if it gets to 105, then what? >> that's the presuchtive rally one would hope for. if you're lucky to get it here at 97 and you do see 105, i would take that off. >> you would? >> you're going for a nice 10 percenter here and move from there. >> up next, stocks got off to the worst start for a year ever this week. fear not because one of our

traders has a way to protect yourself from further losses. we'll tell you how right after the break. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and 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. td ameritrade.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns.

like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: 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. td ameritrade. welcome back to "options action." time for the upside call where

we look back on some of our winning raids. last week we thought mcdonald's looked a little overdone. take a listen. >> i think you're going to break this trend and get back into the lows and or even fill the gap. too much of a good thing to take profits. >> i would say the call spread. you can collect about $1.50. this stock is trading at 15-year highs and in the 90th percentile with respect to the price of options. >> shares since hit an all-time high and pulled back. does it show more downside ahead? >> for sure. in principle something that's steep and extended at some point attracts sellers meaning those who want to take profits who believe it's overdone. this stock has held up very, very well. the bet is that that is not going to be sustained. that gap is at 105 and that's what we're playing for. >> if all you were thinking you were being a long stock, you would probably rather be long on

this one. if the stock simply stayed there, we were still going to make money and we still will. this is a trade working in our favor right now. stay with it. >> i took a cue from these guys. my comment on the show was i would be directional long premium. that's what i did. i'm playing for a move back to 110 that fills in the move from the gap after earnings. i like it down to 110. the usual strength is troubling. > also man the last month, dan made a bearish on the market. >> in february, you could buy the 200, 180 put spread for $4, you could sell one of the february 180 puts at $1.50. that cost you four. that is your match risk there. >> well, as you know, the dow and s&p posted their worst start in history this year. do you stick with the trade. >> you do. we don't do these frequently

once a quart and try to do them when you think the market's at an inflection point. 100 in the s&p seems like decent support to the downside. that could be a target. if you have something like this on, i you still with it. >> use 91800 as support, as well. >> that's the minimum. that's a fair price. that's a reasonable draw down about 15% after a six-year market. there's nothing wrong with this. >> why you wouldn't think about rolling at least a long strike. you can take some profits off the table and still have protection down another ten points. >> the price of options has become bid up. you get the bailed out if you want to roll down and out a little bit. i may look to do that on the next counter trend maybe move up 1 or 2%. >> up next, your tweets on the final call on the oomgs o options. i'm here at the td ameritrade trader offices.

steve, other than making me move stuff,o opt. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and 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. td ameritrade.

herthey work hard.ade, wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: 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. td ameritrade.

welcome back to options action". our first tweet comments on jng february 105 calls by mike. mike, what do you say? >> i guess the first thing we should say is thank goodness we simply bought calls. they're relatively cheap. this is looking pretty grim. i have to refer to my esseemed colleague. what happened. >> this is coming down with the market and ultimately what will happen to all stocks. that's why the market in principle has great risk. but well off from where we have -- we got a problem. just walk away. >> okay. next from andrew. it looks like iwm is nearing a dangerous break. are you guys looking for more downside? i would venture a guess and say no. >> it is. it's broken that down trend that

has been in place through 2009 no matter how you draw it there, carter. the fact of the matter is, it's approaching the 2014 low. there's not a whole heck of a lot of support below 100. this is a critical spot here. even if it holds, short rally in the russell 2,000. >> does weakness happen out of nowhere? before the 1929 crash, we were already down 12, 15%. it wasn't like that. we were already down. this weakness has been foreshadowed for years. two years, no progress in the iwm. >> our next tweet from thomas. how code is it there? mike has three shirts and a jacket on. tell him to lose the fleece. maybe the pocket square. >> it's a lot colder than it is in austin into time for the final call. carter? >> the final call is if you're considering buying, this is a good time to postpone. >> mike? >> spreads in caterpillar.

>> walmart, you can fade the counter trend rally. >> i'm melissa lee. thanks so much for watching. we'll see you back here on monday at five for "fast money." mad money with jim cramer starts right now. >> 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.