(train wheels on tracks) it had no mouth, but it spoke to me. it said, "rocky mountaineer: all aboard amazing". we're live at the nasdaq market site. guys getting ready behind me. and while they're doing that, look at what is coming up in the big show. >> i'm going to let you in on a little secret. >> one of the stocks is set for a major move next week on earnings. and we'll tell you how to profit. plus -- how would you like to protect your shares of apple for free? it is not only possible, it's the easiest trade out there. and we'll show you how to do it. and -- >> it is so unfair. now i'm getting emotional. i'm a little verclemped.

>> that is the talk around starbucks. and we'll tell you why it could get worse. the action begins right now. let's get right to it. all about earnings next week. particularly from the so-called fang stocks, the f. and a., facebook and amazon reporting and netflix this week and the stock is lower since. so what can we expect? >> it is interesting. we had a very volatile week and a lot of things going on. early in the week netflix started off with the earnings. it was an eye-popping number internationally and people were disappointed with the north american subz. but the point of the matter is the stock gapped up, about $10 from a 107 close. by the next morning it was trading below 100. so me that was an interesting sentiment shift. what goes on in the after market is traders banging stocks around. and what happens on the opening is people repositioning stuff. the fact that netflix closed down a few percent and closed just above $100 and could never

get going after the report tells you there was a sentiment bubble, in the high-growth, high-valuation stocks and they could be for sale if they don't put up impressive numbers. >> in the second half of the week, when you consider how the market recovered after the intra week lows and this one never got going. when you consider these are the types of names that were leading the market higher when we were going higher, over all, i think what wee see here might be evidence of what we'll see in the market more broadly. because people will start getting concerned about the high-flying names again. >> and netflix has really dragged. if you look at it compared to facebook, compared to amazon, this is the one that has not participated if rolling for a six-month basis. >> before the earnings. the only good day that could remember is when the hastings ceo was on stage in vegas at ces and the stock was popping, x that. >> and that is foreshadowed by previous poor relative strength

and that is the case here. this is dragging for a while and it was down today. >> facebook. amazon? >> about facebook, this is a massive implied move. this is a $280 billion market cap. the options market is implying a 7% one-day move the next day. they report on wednesday after the close. on average over the last four quarters it has only moved 3%. this is not myspace. it will be around and more valuable in -- >> myspace is around somewhere. >> it is somewhere. but you get the point. to me, i think that there has been a lot of people hiding out in facebook because of the growth. but to me the stock is kind of priced for perfection here. i know that you could talk about the fact that it is trading at a p.e. to growth of one on the adjusted earnings estimates but i'm not so certain in this market environment that it will be picky about valuation and that facebook stock will continue to work before it gets washed out. >> what is your thought on amazon before we get dan's trade. >> the interesting thing about

amazon is that maybe finally they will start generating earnings. they haven't needed to for the longest time. but people are starting to see their cloud service, aws is a meaningful portion of the business and meaningful to the market place. and the fact is for a long time the people thought that the story would come out of it and that tide i think it turning. but the multiple scares me to a degree. i couldn't see getting long here. >> it is a valuation story. >> if it is, you could never buy it. if you are picky about valuation, don't look there. >> it has a not selloff or a meaningful giveback from 700 to 550. if hi to pick a high flier to stay with, i like this one. >> let's talk about facebook here. today was a really nice rally. the stock was up 3%. it broke down 105 early in the year. i think we'll get a follow through of the market prior to the facebook results. i think you see the stock north of $100 before they report.

bup i think you could take advantage of the high implied volatility prices to put on protection if you are long or make an outright bearish bet, facebook playing for a take-back to probably the mid-80s here. so today i want to use say trade structure called a butterfly. and i want to use a put butterfly and a february expiration. when today the stock was around 98. you could buy the 95, 85, for 1.70 and one of the feds for $3.40 and selling two of the 385 puts at $1 each and buying the 75 puts for 30 cents. here is the way you make money on the trade. 75 is the strike that you own. between 93.30 and 76.70 you could make up to 8.30. your max gain is at the midpoint of the butterfly. the max risk is 1 pot 07 and that is the underlying stock

risk. if you are using it for the range you have protection to the down side where you could have protection. i don't think it will be below $75. i think there is a good chance it is near 90. i think you wait and see how the week opened and see facebook extend the gains above 100 and look to do this trade as protection or a bearish bet. >> the valuation window from today is $40 billion wide. so that is awfully large. so that is a circumstance you want to look at trying to sell options to basically collect premium to finance the directional bet. but when you have a valuation as high as facebook, you want to make sure you are covered to the down side which is why you don't want to do a one by two put spread which is one of the reasons why i think butterfly makes sense. >> this goes into the amazon category. we are separating. disney used to be like this. apple used to be like this. it is not any longer. this is closer to amazon. if hi to be directional, i'm

betting up on this one. >> moving on to other big earnings movers. seema mody back at h.q. >> we're heading into the biggest week and traders are anticipating big moves in four dow stocks, starting with apple reporting on thursday. options traders are betting on a 6% move in either direction. next up, microsoft, implying a 7% move. mcdonald's which was a big winner 2015 could move as much as 5%. and then boeing which is implying a nearly 5% move higher or lower. so if all of those moves play out, we could see a more than $72 billion shift in market cap next week. so i guess we'll have to keep an eye on those four stocks. >> seema, thank you so much. carter, you are looking at the charts of microsoft. >> so we are going heads and tails. this is defensive and offensive. >> the stock that killed it today. >> and for a low beta stock. it was especially good. a couple of charts. and lets see where we can go.

what is important here, this is your absolute chart buxt what is important is the relative. the bottom panel here, lets draw the line so it is clear, this is relative to the s&p. so we know microsoft has dipped. but it is actually rising to the mark, making new relative 52-week highs. so outperforming even as it goes down on absolute basis. lets focus on the absolute chart. so the dip, what is so important, we know that break-outs occur from well defined starts and we have the gap and if you fall to the level from when you broke out. that is the whole point. this is a greet reaction. we think this will ricochet and it has started and it is right here and go on for more. long-term charts since the lows of the financial crisis, basically off that line quite nicely. not extended. and with a little luck, we'll make a run for the all-time

high. microsoft here on the long side. defensive and offensive name. >> carter, all right. mike, what is your take and your trade. >> from a fundamental standpoint i feel like the stock is fair on dead value. if you see the tech bubble we saw in '99 and 2000 and the poor valuations during the credit crisis, it trades around 20 times earnings. about $3 in eps over the coming 12 months. so you throw the multiple on that. where does it get you in. 52 to the 57.5 range. using his technical analysis, the way we play this, because the implied volatility is high, implying a move of 6.5% next week which is way more than it typically moves. so this is not a situation where you run out and buy an option. i'm looking out to april that will give us a decent amount of time. the 52.5 call spread pay 235 and

sell the 57..5 and that will cost you $1.65 and a little over 3% of the stock price and that is the way to make a bullish bet without taking a risk going into earnings. >> you like that or not? >> if you are playing bullish, that is a nice bounce off of 50. >> closed good. >> and that was the opportunity given there. and if you are going to make a bullish play into the earnings, i think mike's trade makes sense. i will say this. trading at 20 times earnings. you know what i'm saying. so on a forward basis, if they hit the estimates it is trading at a market multiple or below. and we talked about that, apple trading at nine times. why does this company deserve that multiple. and i'll make another point. the stock has had three 10% one-day moves in the last year after earnings. >> and that tells you investors are -- >> two times to the upside and one to thedown side. >> the moves are one of the

reasons why you want to use options. but also you can't compare this thing to apple. so this is not a consumer electronics company. this is basically a utility now. >> what did intel tell us about the health of the pc environment. they get half of the sales from overseas. what do we know about the dollar? these are stories that worked well in 2014 and 2015, less in 2016. >> xbox and gaming is a good stock. >> but if there is wisdom in price, and there is, we're taking the wisdom that netflix was acting poorly today. that means something is wrong. and guess what was acting well today. this one. you have to limit the down side because of the support and with a little luck that outside move is to the upside. >> if you want to press longs after the rally after the low this is week, you want to do it where you are risking a relatively small amount. so you could run out and buy stocks right here or you could buy microsoft or you could turn around and sell it. something i think would you be

foolish to do. >> pc's wasn't the weakest spot, it was the data center number that knocked through -- >> i'm not for microsoft either. but the point about facebook and microsoft, we are not saying monday morning to go out and short facebook or to buy microsoft. i think you have to let these things breathe a little bit. and for mike's trade, you have to see where the stock is trading. it is probably at $54 by the time they get to the earnings. >> but about the implied volatility, let's say this sells off sharply and one of the big earnings moves that you saw, around high 40s we're looking at a safe entry point. you could sell put and work into a call spread and risk reversal and at that point we haven't lost any money. >> i like the debate. send us a tweet. we might read it later in the show. check out "options action" at cnbc. videos and news and exclusive trades. what more could you want. check it out. here is what is coming up next.

we owe them nothing less than the best protection. >> well today is your lucky day, tim. because we could show you how to protect your apple shares for free. plus -- >> at these levels, we'll back the truck up and buy as much stock as we can. >> but should you. what has the bulls running from starbucks when "options action" returns. 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.

here at the td ameritrade they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade. welcome back to options action. apple shares crossing back above $100. having the best day since august 26th. if you are worried it could take a hit after reporting earnings on tuesday, dan has a way to protect yourself and the best

part is, it is for free. for free, danny boy. >> here is the deal. we know the stock had a tough go over the last few moz. today was a good day. piper jaffray said it could be up between now and the end of the year. but i believe investors are in a divergent path of that. and there are five holds and one sell. but the stock is down 25% over the last months so investors are not buying what wall street banks are say being apple. so obviously it is a bit of a contentious situation. the stock, we know the valuation and the balance sheet and the capital return. we have to get through the earnings report on tuesday night. the options market is implying a 6% move. if you are long stock and you are worried you might want to put a collar against your long stock. that is selling an upside call and taking in the premium and buying a put to the downside. and you are callering your stock. so lets look at stocks and then i'll give you the trade. this is how i'm arriving at the

call strike. this is a big breakdown level both in august and again in december. the stock found support at the opening of the august 24th low. it bounced from there. the other day. that is the one-year chart. this is the five-year chart. this is important. look at this uptrend. this is just working its way right there at $100. that was also the 2012 high of $100. the stock is at an important intermediate term spot. an this is the dig one. this is the 10-year chart from the lows. you see this nice uptrend. this level, it is finding trouble. if the stock is going to continue to go lower on weak guidance, it has an eight handle on it. that is probably in the mid to low 80s. so back to the caller. when the stock was around 101 you could look out to march expiration and sell against 100 shares. one of the march 110 calls, so about $1.35 and use the proceeds to buy one of the march 90 puts

for $1.35. that cost you nothing. between 101 and 110, you could have gains up to $9. that is 9%. you have losses of the stock between 101, down to your protection point where you own the put, at $90. bur protected -- but you are protected below that. and if the stock is going to go down there, it could continue to grind and go down in one fell swoop. but you are not worried about it gapping up 10 or $15, there is one way to finance a downside put and helps you sleep at night. you want to take this position off or that upside call once the earnings are out. >> what do you think of the trade from -- the weirdest thing is it goes from one of the most loved stocks to controversial. >> because it is held and everybody buys their products and everybody single one of us owns one. i'm not so bearish. every time it dips down into the mid-90s, i'm a tempted put

seller. i was looking to do it today. i happened to look away from my screen. you could have sold the march puts for 3.50 and that is the trade i was going to put on. and i'm taking the opposite side of dan on this one. this is a big bucket of cash at the bottom balance sheet and they'll have another $50 billion in cash a year from today. so from my perspective, even though it is not the growth story it once was, i have a hard time seeing the down side. >> it is a stock that could have gone back to the flash crash low at 92 and it sits at 102. >> it was close to that. and you could say that a stock is fair price. whether it is fundamentally or technically, there is not a key level to look at our suggest some strength or weakness is imminent and that is the case here. we've had a little bit of a bounce. that is a stock coming down 30% from the high. and now what? it probably belongs just about here. >> up next, back up the truck. that is what that man -- that

man said. that is starbucks ceo howard schultz. that is what he is doing with the company stock. one of the traders said you may want to think twice before doing that. he'll explain why, after this. >> "fast" go to hollywood florida for the largest etf conference in the world. we'll look into some of the top minds in the industry, live on monday, at 5:00 p.m. eastern on cnbc. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm 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.

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steve, other than making i'm here atme move stuff,rade trader offices. 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. welcome back. i'm julia boorstin in los angeles. breaking news on the lawsuit against sumner redstone. a judge has ordered a medical examination but denied the request to dispose him. this is the latest in a lawsuit filed by his ex girlfriend claiming that the chairman of cbs and viacom is incapacitated. judge said a doctor hired by her

zer could examine him for one hour in the presence of his nurse and speech therapist. sumner redstone's attorneyish oog a statement saying that we are gratified that they discredit his attempted to depose mr. redstone. we have reached out to her zer's attorneys and have not gotten a comment back yet. but certainly a win for her camp today. back over to you. >> julia, thanks. and shifting gears now. take a listen to what the starbucks ceo howard schultz said to jim cramer this morning on cnbc. >> give us the magnitude of how much more stock you are buying back here than you were a year ago? >> we think the stock is undervalued relative to creating long-term value for shareholders so we will -- at these levels, we'll back the truck up and buy as much stock as we can. be very thoughtful and disciplined about it. but the stock is undervalued relative to our performance and view of the world. we are opening 500 new stores a

year in china. >> well despite the bullish comments and an earnings report, the starbucks stock was flat today. you've been bearish the name. you've been short. >> well, we put on a put spread ahead of earnings because we thought if there was any risk, it would be to the downside. a lot of people pointed to china but i think actually regardless of whether the economy is strong there, it is migrating in the direction of a more mature sort of service-based economy. that is helpful for starbucks. it is not helpful for a bearish bet to have them come in and say we're going to start buying back even more shares. this is a very tough name to short. i tried it once or twice before. >> at your peril, right. >> at your peril. and spilled the coffee in my lap, i have to say. >> it is a managed story. if you look 12 quarters, three years, they beat by a penny or matched the earnings. it is what citibank used to do. it is not bad or good but there is no surprised here. they know what their guiding on the street and it will hit that again and again. >> it was an interview-driven

tape today with starbucks. the stock was down. sentiment was negative. schultz comes on cnbc and certainly spun it as positive as you could and you see the reversal. >> this is a company that has executed very well over a lot of difficult environments and difficult geographies over the last few years. so when you hear him say we'll back up the truck, i don't know if that is disingenuous but it does trade at 31 times earnings and it is not cheap. i don't know too many guys that are -- >> here is the good news. so i'm going to take howards side of this bet. same store sales growth and adding more stores. >> but for the second quarter in a row they did miss the china comps estimates and how it will be long-term. so to me it is not a layup and not back up the truck time. >> up next, final call from the options pits. 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.

steve, other than making i'm here atme move stuff,rade trader offices. 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. time now for final call.

carter. >> microsoft, long. >> michael? >> that is the apple 52.5 call spread. >> dan, the man. >> facebook. wait for a bounce to put on a put. >> it is an interesting week. a lot of earnings. going to drive the market. fed meeting meeting and a lot more. that's it, see you next week. "mad money" begins now. 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 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 save you money. my job is not just to entertain but coach and teach. call me at 800-743-cnbc. or tweet me @jimcramer. sick of this roller coaster ride yet? where stocks travel all over the place in a split second as we fi