hey there, we're live at the nasdaq market site. look who is back. hi, carter. the guys are getting ready. while they're doing that, here's what's going on. >> we have a simple and profitable way to reduce the dead stocks in your portfolio. >> and we'll tell you why the bond market may be time to buy and how you can profit. and -- >> this soup comes from the best

ingredients. that's true, but some soup stocks may be setting up for the trade of a lifetime. the action begins right now. >> let's get to it and we're going to start with the hottest group of stocks and that would be of course, small caps up 2% today. up around 14% since hitting their lows february 11th. is this confirmation of the rally? let's get in and find out. >> you're looking at the rest of 2000. we know a lot of the components were exposed for a lot of the same reasons we saw weakness and commodities. poor balance sheets and cap, that sort of thing. the fact is, you look at the rustle 2000 it's up 15% from the lows. the s&p's up 12%. when i look at the performance it's not staring out at me saying you missed something here, stupid. more importantly, the russell 2000 was down 20 1/2% from its highs last spring and the s&p

was down 15%. >> there's more beta in the stocks, and there's more s&p off the low. you would expect that from sort of lore quality high beta names. the other thing is on the week, the rustle 2000 was up as much as half of the s&p. on this week, it's suffered more damage. it's not all that encouraging. >> looking at this space, this is one of the areas you were just eluding to it. there's obviously, a lot more cross over and issuance in this sector of stocks and the high-yield marketplace. there is obviously, a lot more risk. it still looks weak. we're probably down 12% over the last 52 weeks if we look at this space. it doesn't look like a lot of strength. the other thing is when you have such a period of strength you start to wonder when it's going to start running out of gas and usually it's where the high beta is where you'll see the gas run out first. seems like that's what's happening here. >> is it possible we're in a market environment where investors want to be exposed more to domestically oriented stocks and not multinationals? therefore small caps may be in favor now? >> it's been an argument for quite some time that there are

things worse, so one might want to be domestically focused. yet perhaps now if one's really trying to play for beta, there's more beta trying to catch brazil off the bottom for something very progressive like an oil name in turkey, per se. if you want to be progressive, it's playing junk off the bottom around the world. >> yeah, we have a chart here. sorry to step on your toes a little bit. this is the eight year chart that tracks the rustle 2000. when you look at this nice uptrend over the last eight years, it came crashing down in the last half of the 2015. here's the one chart. this is to me i'm scaring always. every chart in the market of risk assets, this break of that long-term trend, and it's inability to get back up above it, that's the sort of thing i want to reshort when the timing is right. i want to make one point about going out and buying puts in a market that's been volatile over the last couple of months in a period trying to look for further volatility. it will be a tough time do that.

the s&p is around 2000. we've rallied into these central bank meetings this week and next week and maybe things calm down for a bit for a while. i think for those of you making long premium directional bets in the options markets, it really makes sense to try and finances the purpose. >> what's your call? >> in the iwm, i believe it's going back and retest the prior lows. i need to give myself some time. in order to do that, i need to finance the purchase of longer dated puts. today when they were trading 107.5 you could buy the april, september 100 put spread paying $3.50 buying the puts for $4.25, 3.50 is my max risk. what i'm trying to do here, if the etf comes in out of my short strike t is out of the money. i don't like buying out of the money puts in a market like in. that's why i'm selling that

april put and giving myself an opportunity to once again turn into a calendar or a vertical put spread. reduce that cost of that long dated put. >> the time to buy outright put options is when the price of options is extremely low and we aren't there yet. it has come in a lot, but it's not low. probably 22%, normally 16% for this index. the other thing that's interesting is selling the april 1st and it's catching the earlier part of earning season. those are going to be juicier. still, the jury will be out by the time those things will expire. i think that calender sets up very well if you think you might get another spike in volatility later on. >> i want to ask carter about that chart. let's throw out the chart again. at the end it breaks below the line. it's peaking back up. how do we know it's not going to go back above and follow the trend. >> anything is possible. things are incontestable. a well defined multi-year trend. two, a break in trend. and now a throw back to trend trying to repair himself. but the throw back after that much damage typically encounters

a lot of overhead supply. >> okay. >> now let's go to the yield on the tenure. it's soring as investors sell bonds to resume stocks. the deal may be a little overdone. >> it does seem a little overdone. almost back to 2%. let's see if we can put charts up and figure it out. i've got -- we're going to look at tlt as the trade. this is ten-year yields, basically over the past year. we know for the most part we were basing this range of 2 to 250. and the plunging of this so-called -- maybe the china syndrome, if you will, or whatever it was. recession fears. and now when you throw back like this, you start to get back to where all of the memory is. so we're back to a fairly difficult level. sorry, there's that chart. now this. so here's our range and what we know is this point here, from our low of 152, our high started

the year at 233, we've thrown back almost to the halfway point at 198. that's a very difficult juncture. it's where the overhead supply is and is also a huge move. 152 to 2%. here's what i'm going to make a bet on. tlt is a reciprocal. we've checked back here to the point at which we broke out and you can draw the lines this way and play for a rebound or draw them this way. this is a big stand off. it's back to the top from which we broke out and my thinking is here this is going to get resolved up which is to say that yields having moved almost at 2% are going to fall back down. >> so, mike, what's your take on this? >> you know, we have a little bit of a situation here. there's really a bifurcation of what's going on here and what's going on in europe. it seems right now the market is not pricing in any kind of a rate increase. that would be consistent with his point of view.

the flip side of that is the labor markets are extremely strong. for those of who have exposure essentially here and you might be inclined to basically bet on falling yields, rising tlt, i think what you want do is hedge that position. the way i would do that is by buying a put spread on the tlt to maintain that long position. specifically the may 127, 120 put spread. you can buy the 127s for 310 and sell the 120s at 70 cents. you'll notice that lower level we saw in tlt, in case we see rates go higher. i think it could break either way frankly. and the u.s. market, i know everybody on this desk maybe and the desk here before have had a lot of fairly skeptical things to say about the market but if you're wrong about that, rates are actually going to go higher. >> so walk us through. >> so again, the may 127, 120 put spread. by those 120st for 310. sell the 120s for 70 cents.

this is a way to protect yourself on the down side in case it goes to other way. >> it's interesting, the estimates for fed funds have gone all over the place. there's probably low probability trades with high potent initial payouts if the fed were to surprise, be more hawkish next week. your trade covers that. you'll see the tlt flatten. it will go to the low 120s so quickly if they basically intimate that they are going to go in april. now fed fund futures are pricing about a 50% chance of june. that's kind of the consensus for the move. still only 50%. to me, this trade has the potential to work quickly if you have more hawkish talk. >> you have the paradigm of the spread with the other rates. it supports this general premise, that the move to 2%, things are not quite as good as that would argue for. >> okay.

what happens to the utility and telecom trade? i thought what was interesting today, we soared on the s&p 500 and still had new 52-week highs in telecom and utility. does this put a floor under those trades and help support it. >> the thing about those trades, if you look at tmvz, they have und underperformed for four, five weeks in a row. this ricochet from the violent move is out performing. they are steep. not all reits and utilities, but many are. >> the other thing i would say about that particular space, first of all, i think a lot of the yielding trades have been looking fairly stretched for a while. while i have not been that skeptical about the market as some have been this is an area that i have been skeptical. we continue to see moves to the upside. one of the republicans is people buying into that are betting this is more of an inflation adjusted yield trade rather than a fixed yield trade. that makes it more appealing.

>> all right. got a question out there, send us a tweet. check out our website auctionactionscnbc.com. we have the hottest options news, videos throughout the week, exclusive trades. while you're there sign up for our newsletter. it makes for a great weekend read. here's what's coming up next. ♪ >> he's alive! in the name of god, i know how it feels. >> you're going to feel a lot better when we teach you how to revive dead stocks in your portfolio. plus one group of stocks may have come too far too fast. here's a hint. we'll tell you the names and how you can profit 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.

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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." let's look at the markets, because despite all the volatility we're seeing, the s&p 500 is basically stuck between its may high and february low. that's left a number of stocks lost in no man's land. breaking down as a man once lost but now found, cnbc's done chu. >> i don't know about lost and found. i may be a little bit of both. we wanted to take a look at the stocks lost and found or not yet lost, not yet found all at the same time. pretty much, it's been a no man's land for the stock market. let's take a look at the dow. if you look at where the 52-week high was, the high over the past year versus the low for the past

year, right now we're smack dab in the middle of it. if you take a look at the dow components, it's more so. this is what i mean. check out what's happening with shares that say visa. if you look at visa stock it's trading around $71, $72 a share. that's right there in between its 52-week high and low. between $60 and 80-some dollars a share. then there's merck. also 53 bucks a share. now we're talking 52 range and maybe 45 talking 61 and change. again, right there in the middle. caterpillar, a stock that's been beaten up in all kinds of ways here in the global macro economic sense. that stock again, $72, $73 a share. right in the middle of the range. jpmorgan on the big banks of things. $59 a share. that stock stuck in the middle of its 52-week highs and lows. it becomes a question about whether or not traders and investors take a look at these stocks and see more down side or

upside. right now the glass can be half full or empty, lost or found. it depends on how you want to play them. >> thanks so much. have a great weekend. with many stocks treading water, mike has a clever strategy. they might be able to revive them. do tell. >> actually, i'm going to look at a stock there. here it says how to use a strangle. specifically what we will talk about is how to sell a strangle against a stock you already have. first of all, we're looking for stocks that are range bound most likely. the other thing is because we're selling options, we're looking to do that relatively short time frames. usually, i like to look for options that expire 90 days or less. the other thing, we want to collect yields that's going to pay us for the risk we're taking. in this case we're going to be selling a call and a put, we want to make sure we collect at least 1.5% or more a month. that's going to depend on how

volatile we think the underlying stock is. caterpillar has had a sharp rebound along with a lot of other commodity associated names. the thing is commodity markets have come a little too far too fast and not far enough to revive that super commodity cycle stock like caterpillar. this is one of those names where i think you should feel comfortable if you own it, selling it at a higher level. the other thing is it has fallen very sharply over the last couple of years. buying at a lower level might make a lot of sense. what we're looking to do specifically here, if we can get over to the next screen, here we go. we are going to look to sell the april 77.5 calls. you can collect 70 cents for those and sell the 67.5 puts. collect 85 cents for those. this creates our stranglehol. essentially, what's going to happen is if the stock rallies through the 77.5 stock price of the call we sold robby's going to have it called away but we collected 1.55 for selling that strangle, to the effective price

will be north of 79 bucks. contra we collected a dollar and a half premium to do that so our effective purchase price adding to the $66 level. this is the kind of trade you want to do when you really feel like we're probably going to be capped out a little bit on the upside but i would be interested purchasing more at lower levels. if it stays right in here, just collect that premium. >> this is a play book for stocks stuck in the middle. not just for caterpillar. what do you make of this sort of trade? >> i like it. if you own it and you're a long-term holder and you're looking to add yield and would buy lower, that's the most important point. you can always cover that call to the upside if you're called away. the main point i would make is mike is using april. i wouldn't use this strategy looking out months and months. especially in a market that's following this and a stock this volatile and a stock tied to the global growth story we know can change quickly. >> it is exceptional volatility. if you think about it, this was

trading at 75 on november 1st. plunges at 55. back to 75 last week, now back at 72. you get more of that volatility and blow outside the bands you're talking about. if you get a v and return right back to the point in which you plunge, you typically for a while will go back did orment and back and fill. depends how much time you can put on the trade. >> for those that's mentioned in no man's land, is that the ones you mentioned something should happen? >> it's about the precondition. let's say you started with visa. they've gone out five or six years and rolled a little bit. caterpillar has come down from 120 to 50 and just bounced a bit. so their circumstance and their precondition is completely different. it's not just because you're between the 52-week high and 52-week low. it's where you came from. >> there's also material differences between the fundamentals between those two businesses.

visa has been growing their business demonstrating the success they're going to have in the payment space and meanwhile connected caterpillar has seen their revenues plummet. we're selling a short dated strangle here this is going out a little over a month. shorter than usual you would be looking for to make a move. >> in general, in a market like this, would you look to make a play on one of these stocks stuck in the middle or do you go break? >> i think after the moves they had i think they set up soon for descent shorts. i would be careful on the short strike on the down side. again, i think you're fine for april. >> this is in the calender spread you're doing, you're doing this selling that. if you want to buy longer data premium, it might make sense. coming up next, one hot soup trade. shares of campbell soup at an all-time high. but is the stock a no-chart? we'll tell you what has a chart master so worried. 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.

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.

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exploration when the etf was 133.50. you can buy the april 130.15 put spread paying $2.50 for a 15 wide put spread. >> since the time of the trade, transports have rallied more than 3%. dan what do you do now? >> so the stock was up 3 bucks today. the stock in general is up as much as the s&p was when the trade was put on. to me, that doesn't concern me so much. i think it's had a massive rally. here's the problem with the trade. i was early and that makes me wrong. long premium directional trades especially as the clock is ticking and you got to use a stop at some point. i use a 50% premium stop. it's there. i will look to roll this view out early next week. this is one where i have to cut my losses. >> dan, just a little encouragement. how many times has the dow jones transportation been up eight weeks in a row which it's just done? exceedingly rare. you'll be fine. >> i have to roll the view out. i need to give myself more time here. >> also last month, carter thought the run in campbells soup would cool off.

take a listen. >> look where it's struggling. it's gotten right back to its all-time high of 1998. touched there and closed down on the day. we think that's exactly where it stops. you got a situation of a whole bunch of this or that. the third opportunity or prospect of this higher we would say is 1%. >> simple thing to do here, look out to may and buy the 60 strike put. this will only cost you about $1.60. >> the stock hit a new high today. carter, you stick by the view. >> well, in this case, yeah. if you have a v bottom and it's going against you, those can accelerate. if you have something getting increasingly extended, it's bayically end stage kind of behavior this has gotten steeper and we think more vulnerable. >> looking at this thing fundamentally, i don't see how there could be more upside. this thing is very rich here. there's a lot of air underneath it. i'm flummoxed how the stock is

trading. i would tell you if i was going to be short anything this is one of places i would want to be. >> coming up next, the final call. stay tuned. 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. i'm spending too muchs for time hiringnter. and not enough time in my kitchen. (announcer) need to hire fast? go to ziprecruiter.com and post your job to over 100 of the web's leading job boards with a single click. then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. (announcer) over 400,000 businesses have already used ziprecruiter.

and now you can use ziprecruiter for free. go to ziprecruiter.com/offer2 hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day.

introducing wifi pro, wifi that helps grow your business. comcast business. built for business. 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. time for a tweet. this is a common one we get. looking to learn how to trade options. can anyone recommend a good book? thanks. so, mining, maybe you can take this question. >> i'm happy to take this question. coincidentally, this week the options edge was released written by yours truly, myself and long-time colleague mark w. w.guthner. that is on sell now. this is suitable for both novis's and people with a lot of experience. >> who knew. final call time. carter. >> i want to fade the bump and yields from 15 back to two. >> stay short campbells. >> it's interesting, i got in the mail last night the options edge and looked all over for my name and mel's name.

we've been doing this for seven years. >> nada. >> max and diaz up in -- >> i thank all of you. >> fair enough. >> put calendars. >> have a great weekend. our time expired. stay tuned. "mad money" is up next. >> announcer: the following is a paid advertisement for the back2life 12-minute back pain solution, brought to you by back in five, llc. pain pills, hot and cold packs, endless doctor visits, injections, even surgery. if you or anyone you know have tried these or any other ways to relieve yourself of back discomfort, only to find you still suffer from debilitating back pain, then stay tuned, because your life is about to change forever. introducing back2life, the 12-minute solution to a lifetime of back pain. back2life has caused a sensation around the world and is now here in the united st