hey there. we're live at the nasdaq market site and look who decided to get his gamma on tonight. the one and only guy adami. must being a big expiration tonight. he and the crew are getting ready. here's what's coming upch. >> honestly, we're out of gas. >> that's what some traders are saying about the run in energy stocks, and we'll tell you what it is that has oil bears growling. >> plus -- >> look for the boys from brazil. >> that's because they are on fire and we've got a way you can make even more money. we'll break it down. and -- >> you know what they call a quarter pounder with cheese in paris? >> yes, it's a royale with cheese. it's all about the metric

system, and do you know how to buy shares of mcdonald's for just 6 bucks? we'll show you how. the action begins right now. let's get right to it and with today's rally stocks posted their longest weekly winning streak since october and driving the surge a breakout in crude which is up more than 40% from its february low. is this rally sustainable? let's get in the money right now. mike, what do you think? >> you know, i think it's kind of interesting here because the fundamentals for crude really aren't that strong, right, so i think everybody had basically said this thing was going to go to 20. there were people talk become it going even lower than that and even with modest level declines we're seeing builds week over week. i feel like we may have come too far too fast and bear in mind with 530 million barrels in store which are basically near all-time highs and in truth only 30 days of consumption for the united states. a really volatile commodity and that's why we basically use a lot what have we produce in realtime. when i look at this, i think

right now we're probably going to see it level off from a turn south. >> on tonight inventory numbers we get every week, a chatter which could be a meeting which producers could decide to cut production next month and then the dollar came down. >> the dollar has been a huge tailwind for oil and that rhetoric started on february 11, around 2:30 or so in the afternoon and off to the races ever since. i'll say this. you had john kildoff on your "power lunch" show two and a half weeks below and he talked about the potential to go back down below 18 and i don't know if we're going to get that low and what i do know is this. oil reverses to the downside for the first time since that february 11 date. that is interesting. i think the ovx bottomed out yesterday as well, and if you want to chase these equities and oil names, do so at your own risk because in this environment a chevron at 40 times trailing and forward earnings is downright expensive. >> thanks a lot, guy adami.

>> nice to be here. >> listen, we talked a lot about supply. we talked about production cuts, and we didn't really talk about demand. one. things that's really interesting in the week that we saw the federal reserve take a more dovish tone than i think a lot of people thought they might do is they are really worried about global growth. no doubt about it and we've seen a lot of bad data in china. the data has been incrementally better in the u.s. to. me that's a huge part of the whole crude story and the way i see it is this. since crude topped out when the dollar started rallying at the end of qe and at the end of 2014, been in this massive downtrend. crude oil has not been before its 200 day moving average since september 2014. a couple of massive countertrend rallies. last year we had one in the spring. in the fall about 35% and now like mel said we're up 35%, 45% off the of the lows and five or six weeks ago and in each of the instances the countertrend failed at that the 200-day moving average and i think it's

setting up kind of interestingly. when you think about what guy just said about the ovx, about it basically bottoming out with crude oil turning here a little bit, i think you can set up for a good countertrend name. >> and specifically to get at the larger cap names you're going with the xle, the etf that tracks oil stocks. >> correct. schlumberger, exxon and it's a very cons straighted bet. i want to look out a few months. that's the chart of the xle, the one yifrmt look at the downtrend. $60. looks like that was a level that it broke out and got going to the upside here, but if it fails at that downtrend, i think it sets up for an interesting trade. i was looking out at june expiration when the xle was trading 63.5. you can buy the june 56 mutt spread paying $1 towards the june 60 put and selling one in the june 50 put and you can make up to $3 between 59 and 56 and

here's the thing. this is not a massively widespread here. really targeting a breakdown level here. i don't want to risk a whole heck of a lot and i like the technical side. >> this is an inexpensive options trade in an area that's been highly volatile. take a look at chevron's most recent earnings. actually if you keep an eye on product storage. there also we're basically at all-time highs so, you know, that big margin that they are making on the refining side, operating full out on the operating size. that's an area that won't continue to be a surprise ta tailwind like in the past. >> schlumberger within the xle. take a look at schlumberger, "fast money" airs every night at 5:00 p.m., you might be familiar with it, you're the host, we talked about the potential for that stock to trade down to 60 bucks and make a double bottom. that's pretty much what happened. had a pretty incredible bounce since and just like the xles in the monster downtrend slow as

schlumberger and look at that on the tape, down 1.5% and that's topped out and get closer to earnings and schlumberger a month out, april 21st or so, people will ask do i want to be long schlumberger off this rally at close to 40 times forward earnings and i think the answer will be a resounding no. >> dan, i'm wondering what is the one thing that would keep you up at night in terms of being directorially bearish. >> the dollar, in it kept on going down. that's something that's been a non-consensus trade here and that's one where we'll show the chart later hon about the dixie and it's been in a tight range. i'm expecting it to continue to be range-bound and if some. economic data firms up a little bit, chairwoman yellen said april is a live meeting. if the markets started to anticipate that, you would see the dollar weakness reverse very quickly and then i think you would probably see oil move the other way. >> the surge in oil has been a boom for a number of emerging

market stocks. seema moldy at headquarters with this story. seema? >> a stunning reversal for a select group of emerging markets. check it out. china now up 10% so far this month and india up 8% after unveiling its annual budget earlier this month, russia which has benefited from the rebound in oil prices and today the central bank said inflation is retreating and brazil, this is what's really captivated the attention of global investors, the stock market there up 22% on track for its best month since october 1999 due in part to the rebound in commodities and politics also a major driving force rising speculation that president rousseff who has been blamed for not implementing enough forms will be impeached and investors are now betting on a change in government. that not only helps stocks in brazil, but currency as well. the brazilian reial the best performing currency in 2016 and all the factors are happening

the broader market etf as the rebound now up 12% in march and still trading at a sharp discount to the s&p 500 so valuation, that's also a big part of the discussion here, melissa? >> seema mody, thank you. mike, despite the huge run, valuations are -- are relatively cheap, what do you think? >> the reason the valuations are cheap is if you take a look at something like eem, the biggest group of stocks represented their financials and just like in the s&p, that also tends to be the cheapest. this is actually the sector that's been underperforming equities globally for the whole year so there's a little bit of a catchup trade that you can potentially play here, whether you're looking at the banks or something like eem where financials are very well represented so i think even if we saw some weakness in the broad equity market, this is an area that could play catchup so i don't mind making a bold bet here. >> what you can do is do a call spread risk reverse a. looking at the may 34.5 calls, spending $1 and selling the may 30 calls

for 27 isn't and the may 31 puts and i picked the two less. 37 represents an area where we've seen some resistance and 31 is an area of some support. did see a low of 28 and change in the eem so basically if you do have it put tow it will be down close to the levels, the low levels, that we already saw this year. >> what do you think of the trade? >> i like the target that he has on the call side to the upside. look at the eem, right at the 200-day moving average. not there for a very long time and also something that could fail. i like defineding the risk to the upside and defining a break. i'm not sure i like selling a put to something that's been so volatile on the downside. that's why you should be happy to take a shot at $31 and the eem. not the end of the world. selling a put 11.5% of the basic underlying stock price and looking at it, egh. >> we're trying to mitigate some of the decay and options premiums because of the volatility is slightly elevated

and should be. to your point, wouldn't be a bad place to get long eem and i won't be uncomfortable to get long it again. >> mitigating decay, high brow. >> hon my google machine. i will say this though. the eem has been in a pretty significant downtrend since the end of 2014, and the bounce we've seen since the trade of 28 or so, seen bounces that have magnitude a couple of times over the last year and a half, two years, so although i always like what mike says, this might be trading right up against the resistance just like oil is, just like the s&p is, so, i don't know, i would -- i would travel with some trepidation. >> 20 cents may not seem like a lot, but actually getting a little bit of of the decay at that level and will have a chance to appreciate, that's out there. >> send us a tweet to "options action" and if you can keep the tone civil we'll keep it on the air. the only place to go is "options

action" and while there please sign up for a newsletter. some say it's bert for the "new york times," really. mean time, here's what's coming up next. ♪ i'd like to buy the world a coke and keep it company ♪ ♪ it's the real thing >> it sure is because mike coe doubled his money in coke and now he's got a way to make even more. >> and -- ♪ nobody can do it like mcdonald's can ♪ >> that may be true, but how would you like to buy shares of the golden arches for just 6 bucks? we'll explain when "options action" returns. ♪ it's hip to be square 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." stocks have officially wiped out year-to-date losses and if the dow were to close the month right here, it would mark the test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. test. if there's high valuation.

maybe it's market volatility. i want to use mcdonald's as an example of a stock that's actually shown very good relatively strength, broke out and went straight to 125, that was the all-time high back in january, and we'll look at that in a second and recently mcdonald's has been the beneficiary of the selloff in the dollar. the dixie here is the u.s. dollar index is down 3.5% from march 1st from its highs, look at the range that dixie has traded in over the last year, high above 100 and as low as 94 and seems to have found a little support and trading stocks off of, you know, intramonth moves in the dollar probably is not a great strategy and can provide a little volatility. this is the last month. mcdonald's versus the dixie. look what the dollar has done and look what mcdonald's has

done. seems fairly correlated. this is the one-year chart of mcdonald's. we talked about it consolidated. made a new high early this year, consolidated again and higher's the move that i think has a lot to do with the dollar. here's the thing about mcdonald's. trades at 23 times forward earnings that are only going to be growing to the high single digits here. it is an expensive stock for all intents and purposes. report q-1 earnings on april 22 nd you know a lot of shifts in the menu have caused people to get bullish about it, but if comps were to change, if the dollar were to real, mcdonald's at 23 times could be extensive. want to think about using low volatility options prices to replace stocks. here's the stock i was looking out in june, in mcdonald's with the stock at 123.50. buy the june call for $6. i know that sounds like a lot of premium but it's already 3% in the money. it breaks even up 2%. you're buying a cheap option that's in the money, and you've defined your risk to what i think is an important breakdown

level at 118.5. that's one way you can use options to define your risk and replace stock. >> mike, what do you think of this candidate forever stock replacement? >> it's a perfect candidate for this, because he was talking about mid-low single digit growth and talking about eps growth and the top line has actually been declining over time and this is not really a growth company and yet it's trading at a modest growth multiple. one thing i might consider and i'm curious why you didn't do it is reaching out and buying the first out of the money call strike. one of the things about a stock like mcdonald's is a big dividend pair and one of the reasons would you own the stock is if you own the dividend and own the call you don't get that. if i thought it was going to stretch to the upside i might look at that first out of the money strike and otherwise i like the trade. >> i think what i'm looking at is a risk/reward relationship. i don't want to be long extra premiums although the fact that the options prices are pretty cheap. to me what i'm really trying to do here is it if you're inclined

to buy mcdonald's here and think that things could continue to go, then you have all the upside as you would with the stock here and your defined risk to the downside and when i'm looking out of the money, i have all that premium and that's not what i was really trying to accomplish. >> what are some of the other candidates, sectors or stocks that could be due for stock replacement? >> whoa, you're throwing some stock replacement my way. >> the notion that things -- you take a look at utilities, for instance, trading at -- >> utilities are great. i think coca-cola is breaking out here and i think that would be much like mcdonald's. that probably sets up similarly which is a very difficult word to say. i can't speak to the implied volume tilts in coke but just off the movement that it's had. >> you talk about getting in front of things and you're supposed to read the, you know. >> we actually have a trade. >> you'll be talking about it. >> yeah. >> coming up next, exactly what guy said. let's go -- shares of mcdonald's

going absolutely wild. that's great news for some of our traders, and we'll tell you why after the break. 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.

♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. 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 to "options action." we take a look back on some of our winning trades. last week a bullish bet was made on coke and since then the stock has gone wild, so wild in fact it's turned into a "national geographic" special. take a look. >> ruthless capitalists, constantly on the prowl for new trades, a familiar opportunity appea appears. who is down? who is the best, who is the best? oh, he's rather be here than anywhere else. >> cool refreshing taste of the world's number one carbonated beverage intrigues the pred, to

but he must act quick and avoid the temptation to buy stocks. after all 100 shares would set you back nearly $4,500 so what does the trader do? >> this is a fairly safe place to be? >> so to spend less they buy the april 23 strike call and to make money mike needs share of coke to rise above the cost of the trade or in this case $44.15 by april expiration but it gets bet are because all things being equal in the wild, the value of the shares will increase faster than the stocks will meaning more money in mike's pocket and the shares rise 4% make mike a winner and with the april expiration around the corner the creatures of the wild only want to know one thing, what will coe do now? >> now.

you may have notice that had carter isn't on the desk tonight because guy is here but he did send us this postcard. hey, my waive is in maine for a childhood friend's 40th birthday and it's all hands on deck for me here on the home front with alden who is 8 and brewster 8. that means we'll be naughty this weekend and when the cat's away the mice will play. so have some coca-cola. >> confusing, crazy on a friday. >> carter cubs tuesday like coke and even said before he read the rundown. here's the story. if this thing is now in the money, what we're going to do is going to roll out and up. sell the calls if you haven't already and you can look out to the first money strike. those will be the 46s and those will cost you less than a dollar. you'll bank some profits and

still to the upside. >> largely technical and i way i see it. i don't know what you're paying 23 times for in coke. at all-time highs. >> same thing you're playing 23 times for in mcdonald's. >> declining for the third year in a row and to me i don't get it. know there's a massive secular shift against the core product. >> tell dan why he's wrong. >> first of all, this is -- i love this. i'm really enjoying myself here. >> i'm sure, but i'll say this, coke, the stock today is where mcdonald's was six months ago, banging up against an all-time high at valuations that are stretched and then you saw what happened to mcdonald's. i believe the same thing will happen to coke here. i think will take the step to the next level. report in about a month or so. yes, can you argue that the valuation doesn't make sense and maybe the business mod sell flawed. >> and you're playing with house marter. >> carter, c o'and guy. >> i'm the big loser. >> yeah.

i didn't mean to agree with that. >> coming up, the final call from the options pit. 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.

[martha and mildred are good to. go. here's your invoice, ladies. a few stops later, and it looks like big ollie is on the mend. it might not seem that glamorous having an old pickup truck for an office... or filling your days looking down the south end of a heifer, but...i wouldn't have it any other way. look at that, i had my best month ever. and earned a shiny new office upgrade. i run on quickbooks. that's how i own it. 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 to "options action." time now for some tweempts the first one from alan. too late to buy puts in valeant? >> the stock is at $27. if you looked at july expiration and the premium is $16, $17, i think it's too late. there is one trade you can consider is the 2010 one by two, only risk what you're paying but that's kind of dicey. >> next one from nathan. what why does guy adami have to switch chairs when he does "options action?" >> great question. my man, they tell me to move and the good thing about me is i'm ambidextrous so i'm able to go that side to this side. flawless. >> time for final call. lost worth from the options pit. guy? >> this has been fun for me. away for a whole week so don't

miss me too much. i'll say this. i think the market fails. >> mike? >> eem. >> dan? >> xle, i think fails at 200-day. >> looks like our time has exspired. guy have my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you 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 some money. england are the six nations champion, the first time the title has ever been won with a complete round still to be played. victory over wales also completed the triple crown.