hey there. we're live at the nasdaq market site on this sunny friday afternoon. the guys back here are getting ready. while they are doing that, here's what's coming up. >> money will always be paper, but gold will always be gold. >> and the gold chart is doing something very unusual. it could make you a lot of money. we'll break it down. plus could the success of the model 3 mean the end of musk at tesla? >> it's april fools somewhere. >> but this ain't no joke to tesla investors. we'll explain. >> and here's what u.s. stocks are doing to the rest of the world. but here's what could happen next. >> drago with a hard right hand and stuns rocky balboa.

>> and believe it or not we'll tell you how to profit from all of that. the "action" begins right now. >> let's get right to it. tesla shares surging nearly 4% on very heavy volume on mold 3 demand. two big questions today. can they make good on the deliveries, sand there more room to run in the stock? let's get in the money right now and we'll kick it off with carter braxton worth. he's back. >> thanks for having me back. this has been a huge gain off of the low. talking about something up 75% since the market lows, and the market up 15. the issue is is this move overdone? and obviously on a percentage basis, on a duration basis, 12, 15 weeks in a row it is a little overdone and that's why it's backing and filling here despite today's gain. my eye i think this is going to be a dormant asset which means it won't give back a lot nor reaccelerate. a lot of backing and filling as it consolidates and digests this very steep move. >> mike, what do you make of it? >> right now tesla is a business

plan more than it is a business, believe it or not. ford is a legitimate ongoing automaker, and that's the other thing, right? so we sort of feel like we're hitting peak auto sales. tesla is 240,000 cars and 8 billion in revenues and i probably would put a deposit on one of them myself except when you do that you're basically throwing that money into the general fund and deciding that you're going to loan a high yield company money interest-free for two years. and i think it's going to be at least two years before that car comes out. inevitably these things have complexities and delays and saw that with the model "x" and saw that with the model s so i wouldn't expect this to be any different. >> concerned about execution. >> yeah. there's nothing to work with to your point. no valuation. if an asset can drop from 250 at the beginning of the year, to 140, and then back to 250 -- >> it is a valuation. they have a business valued at $30 billion and ford is a $40 billion company. >> you're just playing with numbers at that point so now

it's a question of somewhere out in the future is this ultimately going to grow into these values and nobody knows that. >> i know dan is out there and is yearning to get in. dan? >> well, here's the thing. these guys are right the valuation really doesn't matter. it didn't matter last july when the stock was trading at 280. it didn't matter two months ago when it was trading at 140. and mike is correct about the whole notion of a business plan. mel, you bring up the point about execution, you know. you saw elon musk in a presentation do a shruggy when he said, yeah, we hope to have this thing out in late 2017 so the likelihood is that deliveries en masse start coming in 2018 so the question i think you have to ask yourself here is what is between now and the basically these things rolling out of the lot, you know, at best at the end of 2017? and i'm not sure there's a whole heck of a lot. last year they sold about 50,000 model ss and model xs here and i want to make one point. we have an interesting chart of crude versus tesla over the past

year. we know model "s" or "x" buyers are not that sensitive to the price of crude oil or gas at the pump when it's about $1, springing for a $100,000 sedan, electric vehicle, but look at that chart. every time crude oil has turned down essentially if you look at the correlation between tesla stock, tesla stock has followed, and they have actually converged for all intents and purposes on that chart. here we know crude has just come off here about 10% here, and we saw this divergence of tesla stock into this event. so the way i see it, i'm a little more bearish on it than carter. not saying that carter is bearish. i think it's backfilling. i suppose you get a move back towards 200 in the next couple of months because expectations are high and not a lot of cat lifts between now and when they release this thing. >> what's your trade, dan? >> to me the stock, it just basically broke that downtrend that had been in place since july here. i think you want to look to finance out of the money puts and looking out a bit. when you look at the relative cost of options versus the

underlying movement of the stock, the options look pretty expensive, so you want to look to finance. so today when the stock was trading at about 235, that was off of, you know, it opened up 8% today and closed up about 3.5%. i think you could look to do a put calendar. i think you want to sell april options and look down to the 210 strike and you can sell the april 210 puts at $2.50 and look out to june and buy the june 210 puts for $12.50. you're paying $10 for that spread. over the next couple of weeks, i do not think that the stock is going to be trading at 210. you basically then have the opportunity to look to sell another put, maybe turn it into a calendar again and selling something against the junes that you own or turning it into a vertical, but in a stock like this that's moving around a whole heck of a lot where expectations are very high and just had this nussi event, i think you want to look to finance puts and don't want to be long premium just on an outright basis. >> what do you think of the trade? what's going to come next in

terms it of catalyst force the stocks? we do have earnings, we do have the monthly sales figures that will come out. we're acting as if there's no other data points aside from data points related to the model 3 that will come out and we could actually get more numbers on the s and the x. that could confirm both of these. >> the way he's structuring the trade he captures earnings catalyst and is basically selling into that. the other thing that's kind of interesting, options premiums, while very high because this is a very volatile stock, are not so high for the may expiry but i think we'll see that increase as people get over the euphoria that the model 3 sales have generated. and when you see that happen you can roll into another calendar. staying long the june puts and i think that's a very smart way to make that trade. >> this is what i was thinking about last night. elon musk said this about a reuters interview in 2013 that once there's a successful rollout of a mass market vehicles the model 3, that he would probably step aside from tesla. so in that case, i mean, what sort of premium, dan, let's say, do you think tesla has because

elon musk is the ceo? he's one of these rock star ceos, right? people compare him to steve jobs. that's very rarified air to be compared to steve jobs. >> well, i think there's a massive premium. listen, he is his visionary and also a billionaire that has put his fortune on the line on numerous occasions for his company. it's very unlikely that a successor to him about do that so to me i think musk is very much engrained in this story. when you consider the fact this is a $32 billion market cap on a company that did 5 billion in sales last year. >> apple hit its all-time high when tim cook was ceo so there's always that. >> let's move on and talk gold here, falling more than 1% today after posting its best quarter since 1986. could the recent pullback present a golden opportunity for investors? chart master, what do you see in the charts? >> i think it is a golden opportunity. let's take a look at the charts on the screen and figure it out. we've given back about a third of the gains this year, and i think that is the opportunity.

i'm going to start with long-term charts. what we know, of course, we have this epic run in gold, and just to put this in context, gold retraced exactly half of the move, right? we touched 1,900 and it dropped to 1050 and bounced at the 50% retracement mark. doesn't need to be that convenient and what i'm going to do is talk about the bounce in the context of last three years. this is essentially march/may of '13 to where we are now. we've had several countertrend rallies. this was 20%, 17%, 14, 10. and this one, 22. and you say why isn't it on its way to zero? here's the thing, each time you make a high, had a lower, lower, lower. each time the ricochet got above the prior peak, which

did not happen in any of the other ones. same chart and draw the trend line, draw the trend line. what's key here is we did break above the downtrend line and we settled back and coming back to the trend line this. this giveback, i want to zero in on this on the next chart. so what we know is the low in gld was literally intraday low, the high, 122.37. that's a $22 rise. we've given back exactly a third. seven times three 21 and a one-third retasment. and today we closed at or near the high. we've bounced quite well and closed at 117 and you have the visual there. this is an opportunity by my work. we would get long gold if you're not already there. and if you're there and worried, it's okay. >> it's okay. mike, what do you say? >> we saw bullish activity in gld options. that's the way to play a bullish bet in gold, and it makes sense given the fact that the fed has taken a more dovish stance, and the way to police it is to go out to june and buy the 117 and 126 call spread. the $9 spread will cost you

$2.40 and basically getting long the 117 strike, right at the level he was identifying giving you a little bit of an upside and an opportunity for this to play out. that upper call will upset some of the decay. so you get to rent some upside just in case it is fails. >> at this point after its best quarter would you want to remain long gold? >> i don't think so. it's interesting. when you saw the massive move that gold had off of the lows in 2008/'09 with the debasing of the dollar and all the qe and things like that, it just stopped at one point in 2011. we hear, you know, all of this talk about the dollar's relationship with gold and qe and rates and all of this stuff, well at some point all the additional qe didn't really help gold anymore. and like carter said it was trading at, you know, 1,000 -- gld was at 100. so to me, i think this is a countertrend rally. and i look at that downtrend and i say if it breaks that downtrend that he just said

that it broke to the upside and if it breaks it to the downside then you've got problems and then you've got a retest of the prior lows. >> all that additional qe didn't weaken the dollar that's the reason commodities were so weak for that period of time. we're now at a point where people will question the strength of the dollar because we're basically the strongest currency in a bad neighborhood of currencies. that's no longer true basically based on what we're hearing. so i don't think the qe argument basically for gold weakness is going to hold up. >> carter, i'm curious. what does a chart of the dollar look like in your view? >> we know the dollar on a rolling 12-month basis had one of the biggest moves on record and then over the prior 12 months, we've been sideways. we think the dollar is range bound after that epic move, and while there is a correlation at certain times between gold bullion and the dollar, that's not always the case. and we think gold will do well regardless of what the dollar does. >> got a tweet, send it to optionsaction.cnbc.com, great

tutorials and articles, and while you're there, sip up for the news letter. we just crossed 100,000 subscribers. very cool and mean time, here's what's coming up next. ♪ >> that's what the u.s. markets have done to the rest world, but there's trouble brewing in the charts. we'll explain. plus -- >> that's what one group of stocks are doing, and it could mean more gains for the market. we'll tell you what it is and how you can profit when "action options" returns. 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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welcome back to "options actions. since we're talking options, let's talk about the volatility. the cbo volatility index or vix has had a tough go of it since the stock market hit bottom on that so-called dimon bottom back on february 11. stocks have rallied back by the most in a quarter since the great depression era, and volatility has collapsed. the vix stood at 30, that level on that day. today it's closer to around 13 or 14. we haven't seen a downtrend like that since the autumn of last year when the vix went from a level of 28 down to 13 in a span of about a month, a time when the s&p 500 rallied by over 10%. but it's what came after that has some traders' attention here. after a couple of months of largely sideways action, the markets hit that rough patch that we saw in the beginning of this year. so a big question is whether or not volatility has gotten cheap enough to be attractive. melissa? >> back over to you guys at nasdaq.

>> thanks so much, dom chu. have a great weekend. >> with the vix so low the chart master thinks it might be a good time to buy protection. carter what you are looking at? >> before we get to the charts, conceptually think about the trajectory we've traveled. started off the year with a plunge and recovered and now the dialogue at least in my day, are we going to make new highs? what if it was the exact opposite? if we surged 10% and gone to 2300 and then collapsed back to unchanged? we would say, oh, my gosh, is the bull market over? we're all subject to recency. what cannot be ignored is the divergence between europe, japan and the united states. so what i have here is a year to date chart. it's got the stocks, europe 600 is equivalent to our s&p 500 and the nikkei, obviously doing this, and they both closed terribly today for the week. and then the s&p doing its own thing. and it's not just the percentage, but take a look over since the mid point of last year.

so this is as of june 30, 2015, to where we are end of q1. something has to give here. so either these will get better, yeah, which i don't think it's going to happen, or s&p presumptively will not decouple and our market having gone up 15% off the low will start to give some of this back. >> mike, what do you think? >> this is a pretty -- this oldest saw in the investment business, buy low, sell high and in this particular situation take a look at the vix. we see that it's trading on its lows and take a look at the s&p, trading on its highs, i've not been as bearish at some of the folks on the desk here but i think it makes a lot of sense to hedge when you see this kind of setup. and i think the way you want to do that, specifically speaking to what dom is talking about. do you want to start spending premium? you need to mitigate that. specifically what i was looking is the june 205/190 put spread,

which takes you out to the second quarter almost and you can spent $3.90. you're basically risking one-half of the index to get close to 7.5% worth of protection, and i think that's a very attractive payoff. the dividends you collect are essentially offsetting some of the expenses you're heading. >> the s&p 500, as you know, dan, 5% off of highs. good time to have some protection in place? >> well, i -- yeah. but here's the thing. almost every trade, mel, that i've done on the "options action" desk are detailed over the last month and a half or so has really been some sort of a calendar in a way because after such a period of extreme volatility we could have a prolonged period of nothing going on. a lot of sideways action, so to continually buy long premium for hedging purposes, whether it's single stock or portfolio could get a bit expensive, especially now that we're back and under unchanged on the year. i'm not expecting a huge move to the upside and i think if we get a volatility moment like we had in january or february and back in august and september then i think it's probably going to take a little time to get there,

it's going to be something external. and i think you want to look to finance some longer dated put protection. >> it may, but the issue here, of course, is if it starts to break lower and you're in a calendar trade you're not going to basically have the protection that you want. this is trying to mitigate some of that expense by selling that out on the money put. it will offset most of the decay in the near term and look over the next 30 days or so and you'll still have that protection if you get back down to that 185 level. >> if one said, hey, we'll commit capital for three months and at the end of the three months, the trajectory you're traveling, at one point now you're down 10%, fund or other. you would say no thanks. that's an undesirable risk/reward. the issue is are we in a prolonged topping out phase for equities after a 6 1/2 year bull market. that's the presumption from my point of view, and others take a

different view. we know it's not nothing that we have a plunge in august last year of 12% and 15% and do it again in january and here we are struggling just to get back to unch. >> emerging markets up 9% in the last month. and that's very good news for mike. when we come back, we'll explain. 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.

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. "can the time for total recall where we look back on open trades. a few weeks ago dan said small caps were about to take a big leg lower. take a listen. >> today when the etf was trading 107.5 you could buy the april/september 100 put spread paying about $3.50 selling the april 1 2,100 puts at 70 cents and buying one of the september 1 100 puts for $4.25. that 350 is my max risk. >> since then the iwm has rallied slightly, so now the first strike is going to expire, dan. what do you do? >> yeah, so you want to roll it. this is what i was talking about. remember that the long strike is september. this trade will take some time whether it's protection or an outright bear at best. here's the thing, you cover the april and it's near worthless, it's 10% out of the money, and you look to sell, let's say, the may 1,100 put, sell that for about 50 cents. keep whittling down the price of that september put. that's the whole goal. >> carter?

>> tim knows as a professional player and running real portfolios that actually small cap has underperformed. so on that sense it's really adjusted for beta quite remarkably. so i think it's been a good trade and you just stick with it. >> all right. a couple weeks ago mike sailed emerging markets could continue to break out. >> i think very simply what you can do is something called a call risk reversal. specifically i was looking at the may 34.5 calls and selling the may 37 calls against it for 20 cents and the may 31 puts against it for 40 cents. >> well, the eem is flat since that trade. mike, what do you do? >> actually this trade is mildly profitable here, but i think, you know, if we want to stay with position, the nice thing is eem could suffer a 10% decline from here and you're not going to be taking any risk essentially until it falls below that strike. however, we have had a lot of market strength, and this market hasn't seen it. that's got me a little bit concerned so i don't mind taking the small profits we've made so far. >> go ahead.

>> diverging from crude here, as we know crude has pulled back from 32 to 37.50 and core larry is breaking down with eem which is important it is a relates to the trade? >> dan, what would you do? >> mike's got the direction right here. they have the right trade on it. at some point, you want to take in that put. ultimately that is the only leg of this trade that really leaves you exposed in the event of a big collapse in the eem. >> all right. coming up next, we've got the final call from the options pit. 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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not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

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 toe "options action" and let's get to some of your tweets. what do you think of campbell's soup now? is it still a sell? >> fundamentally it's real hard to understand this. i'm completely flummoxed by the way the stock's behaved. i'm considering selling some upside call spreads to help finance the purchase that we already made. the fact that it has remained so strong has made me hesitate doing that.

so i'm going to stick with the long puts now. >> carter? >> i would sit tight. what's interesting, of course. this had a lot of momentum and if you look at the relative performance of utilities, staples, and other defensive areas, they're all stalled on a relative basis for four or five wiks in a row. and campbells is that much steeper on an absolute basis. and we could stay short if you went long and had profits. >> here's the next tweet from steve. never realized what a great head of car carter braxton worth has got. nice and thick, right, dan? i think you're probably envious. you have good hair, too. >> i do not. >> you should see his back. >> exactly. >> time for the final call. thank goodness. last word from the options pit. carter? >> i think you've got to take advantage of gold here, having given back a third of the gains in the past three months and buy. >> mike? >> insurance is cheap and the market is high. i love june put spreads for spy. >> dan nathan? >> yeah. iwm. i think you want to stick with this trade and continue to look

to finance longer-dated puts. >> looks like our time has expired. i'm melissa lee. for more "options action" check out the web side. of course our daily segment inside "fast money" at 5:00. meantime, see you back here next friday for more "options action." have a great weekend. >> announcer: the following is a paid presentation for cize, brought to you by beachbody. this is the end of exercise. >> get ready to cize it up. [ beat drops ] [ people cheering ] are you ready to dance? 5, 6, 7, 8! >> ♪ on my way in i'ma take it ♪ >> stop exercising, people. it's time to start dancing. welcome to cize. >> announcer: cize is the all-new dance workout program that's gonna make losing weight fun and easy. >> to me, it's not even exercise because i don't want to stop. >> announcer: it's simple -- dance, have fun, and get awesome