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. ♪ flying high now >> let's get right to it. tesla shares surging nearly 4% today on very heavy volume on model 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. to my eye, anyway, i think this is going to be a dormant asset which means it's not going to give back a lot or 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 -- and that's the other thing, right, so we sort of feel like we're getting peak auto sales. tesla is more of a business plan. 200,000 cars, 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 money in 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. an asset can drop from 250 at the beginning of the year back to 140 and back to 250. >> it is a valuation. they have a business valued at $30 billion and ford is a $40 billion company.

>> that's the point. that's not a real valuation. 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. didn't matter two months ago when it was trading 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 last night 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 a really interesting chart of crude versus tesla over the last year. we know model "x" buyers are not

that sensitive to the price of crude oil or gas at the pump when it's about $2, springing for $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, let's say, than carter, not saying that carter is bearish. i think it's back and filling. i suppose you get a move back towards 200 in the next couple of months because expectations are high and there are not a heck of a lot of catalysts between now and when they release this. >> 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 about 235, that was off of, you know, it opened up 8% today and closed up about 3.5 today. 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 newsy 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 of catalysts for the stocks? we do have earnings and 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. >> what's interesting is 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're going to see that increase as people get over the euphoria that 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 because elon musk said this in a reuters interview in 2013 that once there's a successful rollout of a mass market vehicle, 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 this vision year and also a billionaire that has put his fortune on the line on numerous occasions for his company and very up likely 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. >> although apple hit its all-time high, right, when tim cook was ceo. there's always that. let's move on and talk gold here, falling 12% 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 that i think 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 arc. 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. what we know is we've had several countertrend rallies. of course, this was 20%. as you see here, this was 17%, this was 14%, this was 10. and then this one 22 and you can say why wasn't it on its way to 0? here's the thing. each time you make a high, it made a new low lower, lower. 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. there it is. and draw your trend line.

what's key here is we did break above the downtrend line and we settled in and we're coming right back to the trend line. giveback, i want to zero in on this on the next chart, so, what we know is the low in gld was literally intraday lows and the high, 122.37, that's a $22 rise. we've given back exactly a third. seven times three 21 and a one-third retracement and today we close at or near the high. we've bounced quite well and closed almost at 117. i lost my chart, but 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 you're worried it's okay. >> it's okay. mike, what do you say? >> we saw bullish activity in gld options. i think that is the way you want to play a bullish bet in gold here, and it makes sense given the fact that the fed has taken a more dovish stance, and the way to do it, 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 with room to play out. the nice part, that upper part is going to offset some decay, so you go 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 everything 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, but at some point all of the additional qe didn't really help gold anymore and like carter said it was trading at, you know, 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. >> how about additional qe didn't weaken the dollar and that's the reason that commodities were so weak during 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 and that's no longer true basically on what we're hearing. so i don't think that the qe argument for basically 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 its biggest one-year 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 the gold bouillon and dollar that's not always the case and we think gold will do well regardless of what the dollar does. >> got a question out there, send us a tweet. there's only one place to go. that would be

optionsaction.cnbc.com. the calls and tutorials and sign up for the newsletter. 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 of the 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 from "action options" 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.

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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. since we're talking options let's talk 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 that day and 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 the 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 are you lacking at? >> before we get to the charts, 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 had surged 10% and gone to 2200 and then chanced collapsed back down. we would say, oh, my gosh, is the bull market over? we're all subject to regency. the dynamics between europe, japan and the united states, and what i have is a year-to-date chart and 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 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 as 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 a setup. and i think the way you want to do that, specifically speaking to what dom is talking about. you need to mitigate that. specifically what i was looking at is the june, 205, 190 mutt spread which takes you out to the second quarter almost and you can spend $3.20. you're basically risking

1.5% of the index to get close to 7.5%. and i think that's a very attractive payoff. the dividends you collect are essentially offsetting some of the expense of hedging. >> 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 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, going to be something external and i think you want to look to try to finance some longer-dated put protection. >> it may, but the issue here, of course, is that if it does start 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 mogs, you're inch, the trajectory you're traveling, down 12%, 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 seat, 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. coming up next, emerging markets up 9% in the past month and that's very good news for our own mike kheouw. we will explain after this break. 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. td ameritrade.

welcome back to "options action. 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 100 puts at 75 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 kind of what i was walking. remember that the long strike is september. this trade will take some time whether it's protection or an outright bearish bet. you cover the april and it's worth 10% out of the money, and you look to sell let's say the may 100 put. you can sell that for about 50 cents. keep whittling down the price of that september put. that's the whole goal. >> carter?

>> as a professional trader and running real portfolios that actually small cap has underperformed so in that sense it's really adjusted for a beta quite markedly 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 spread 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 you want to stay with this 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 that we've made so far.

>> it's a little bit diverging from crude here, which crude has pulled back from 32 to 37.50, and correlation 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. at some point you want to take in that put because 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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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" and let's get to the some of your tweets. here's the first one. what do you think of campbell's soup now? is it still a sell? >> fundamentally, it is really hard to understand this. i'm completely flummoxed. the fact that it has remained so strong has made me hesitate doing that so i'm going to stick with the long puts for 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, utilities and staples and other interest rate sensitive or defensive areas they have all stalled on a relative basis for four or five weeks in a row and campbell's is that much steeper on an absolute basis. we would stay short if you're long and if you had profit, just take some off the table. >> here's the next tweet from steve. never realized what a great head of hair carter braxton worth has got. nice and thick, right, dan? you're probably envies as you've got good hair, too, but carter has 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 cold 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 website. and 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 the nutri ninja/ninja blender duo featuring the latest auto-iq technology, brought to you by euro-pro. ninja -- turn on your life. >> i feel vibrant. >> amazing. >> fantastic. >> incredible. >> whoo! >> i feel focused. i feel energetic. and i feel more alive than i have in a long time. >> announcer: why are all these people so excited? >> i have that energy that i had so long ago. >> i just feel so much more focused. >> i absolutely feel like a new person. >> announcer: are you ready to finally turn on your life? then get ready for a breakthrough that will help you feel fantastic, look amazing, and live a healthier lifestyle. get ready for the nutri ninja/ninja blender duo.