hi there. live at the nasdaq market place. a dreary times square. the guys are getting ready behind me. while they're doing that, here's what's coming up on the big show. >> shop till you drop! >> well, they may have just dropped, because retailers are rolling over. and it's about to get a lot worse. plus ♪ ♪ cover >> if you're looking to protect your portfolio, you might need to do more than that. thankfully we have the ultimate portfolio protection. and -- how would you like to get paid to buy shares of disney? at a discount. ♪ it ain't no fairy tale. but it is our blockbuster trades

on the mouse house. the action be against right now. ♪ oh, mickey you're so fine >> let's get right to it. despite a huge reversal in the retail space the xrt posted its longest weekly losing streak since january with macy's kohl's's, jc penney reporting next week, is it about to go from bad to worse. carter, what's your take? >> it's not a great space. what we know, even though it's well above its own january-february plunge lows, if you look on a relatively basic how the xrt is trading to the the s&p, it's almost at new relative lows. it's a broad index, 98 names, equal weight or close to it, a lot of the soft apparel names are struggling and a lot of marquee brands you would expect to be doing well are not doing well. and then there's this, of course gasoline is starting to move back up. that's going to be another issue for this group in aggregate. >> yeah. >> one of the issues, though, when i look at this, it would be an awfully tough short press right here. a lot of these stocks are getting pretty cheap. you have to feel like a little bit of good news could cause a sharp rebound, i think. i don't know when that rebound

comes. you're going to -- it's hard for me to sit there and take a look at a name like macy's and say i want to sell at with it trading 9 1/2 times earnings. >> this is kind of how it traded last year. it did have a rally this year. now it's headed back to the lows. i think we're in the sort of market for traders that you do want to press weakness. it's really hard to try to sell strength here in this market. amazon is a great example of that. i think just getting back to the retail conversation in general here, what's happening here is amazon is just eating everyone. all the other guys, you know, that don't have the multiple channel selling, you know, to better compete with the likes of amazon, they're spending a lot, keep saying transition and this and that and whatever, that means lower profits and amazon is making up a lot of room here. >> they were trying to transition. jcpenney tried to transition, the transition failed. the old ways represented a dying business. a dying business model and dying business, going back only

delayed the inevitable. >> if we're talking about retail overall, are we trying to thread the needle a little bit? it's expected that the discounters are going to do well. they're the week after. whereas the macy's, kohl's, the department store sort of dinosaur legacy retailers won't do as well. >> look at some of the charts. price action, wisdom in price, dollar general, act better, tjx, than some of the names that you mentioned like macy's or nordstrom's. >> it speaks to the part i was saying before, people are very fearful. you've got a name like macy's, for example, expecting close to a 6.5% move next week. kohl's stores, 7%. obviously jcpenney is its own basically bucket of problems. implying 11 or 12%. >> you can try to say, you know, down market, up market, i'll just say this, starbucks, look at nike, these are obviously names that consumers here in the u.s., or all over the world, spend a lot of money in. those stocks are down 10% from their all-time high.

made last year. down since they reported earnings over the last couple months. so when i think about retail here, i think it goes back to what carter is saying. when a lot of these guys reported in february, and early march, a lot of them were talking about the potential tailwind to lower gas. now all of a sudden, when you think about how much oil has moved, and how much gas at the pump is up since february, since these companies last guided, i think it has a potential to be a headwind. i want to look at the xrt and do what mike doesn't want to do and press it here. this is a trade i've been on today. i took a fresh look at it today when the etf was trading at 43. i want to look at june put spreads. i want to isolate these earnings events over the next couple weeks. and very simply, you know, you can buy a put spread when the xrt was 43. you could buy the june 4238 put spread paying 75 cents for that. that is your max risk. it breaks even down at 4125. make up to 3.25 and 38 on the downside, one of the reasons i picked 38 on the down side, that was the double bottom low from january and february.

42 also seems like a pretty interesting level that if it gets through there, i think there's going to be room to the down side. i'm going out of the money here. i don't love doing that too much to be very frank with you, but we have all these events and it's not going to take much to break even on this trend. >> the only thing i really like about it, the only thing, is the risk/reward. getting long premium into earnings is a tough bet, right? trying to press shorts is a tough bet. and doing it, you know, this -- you're basically compounding a couple of things that makes it kind of challenging. the good news is, spending less than a buck on the spread, is that the math works. meaning that if there's a 25% chance, you're right, it's a fair value trade. that's what you like. you want to have bets put on where you don't have to be right 50% of the time and it's still a good trade. >> i haven't looked at it, what is the base? it's so broad in some many components. what is the beta of this? a lot of the names are quite high. but you have names -- i don't know how it trades relative to the s&p. in terms of a day to day beta basis. but we know that poor action suggests that the path is lower. >> you would agree with --

>> oh, sure. i'm just wondering -- i haven't looked at what its volatility is like on a -- >> can i make one last caveat. we did this, again, listen it's down an awful lot. it reversed today. closed on the highs of the xrt. we don't like pressing on a single day and don't like pressing something down especially over down about 6% in a week and a half. wait for it to bounce a little bit and put it on a little bit of a bounce before the earnings. that's how i trade these things. >> let's get to the markets. it wasn't just stocks reversing today. take a look at the ten-year falling this morning on the jobs report. closing the day sharply higher. the chart master says this might be setup for an opportunity. what do you see? >> look, after all this, you know, seven years of fighting on the part of central banks, yields are still where they are globally. it's a race to the bottom. but i think reits are a little bit of a heads you win, tails you win as well. this is a defensive way to play equities. let's look at a few long-term charts of, well yields and other things. ten-year chart, the trend line draws itself.

right. i don't make the lines fit, you just connect as many lines as possible. what we do know is, of course, we've broken through this to the downside. here's the long-term chart going back to the 1980, and we're very much still in the down trend. that's incontestable. to my eye there's no real risk of great move up in rates. and again, let's talk about this here. this is important. if you were to look at the msei u.s. reit index versus the s&p, in each year, since the bull market started, and then more importantly, right, it's only underperformed in one of basically seven, eight years. and then here is what we have. and this is important. it's total return, right? you're talking about an aggregate that's outperforming the market, total return, on a consistent basis, and on an

absolute basis when looking at total returns. and day-to-day, it looks quite good. it looks like it's going to break out. a couple of charts related to the oir. the past four years or so. today the bottom panel is relative performance of the answer on the top. relative to the market. and today we just went above this down trend line. we just broke. so we're -- what i think is the beginning of what should now be a period of more meaningful outperformance. and then here is the chart, and one of the reasons you'll notice, this pen doesn't work sometimes, so i tried to draw the lines in ahead of time just in case. we have a double bottom. let's see if we can get an arrow. we don't. but if you were to draw an arrow there, it would imply it will break out. i like this long. i think it's a defensive way to play equities in an environment where rates are going nowhere. >> like a boy scout, always prepared. pre-drawn lines. it sounds like the data carter presents is very compelling in terms of performance. >> it is. although it's had a huge move

off of the february lows, we're actually not that much higher in terms of aggregate valuation, if you go back looking about one or two years. one of the things i would say is that there is a potential for significant volatility. in iyr. a lot of leverage in the end of these represented by this etf. if your ainclined to make a bullish bet the only way i would be interested in doing it is going out and giving myself sufficient time. i was looking at the september 80 call. i'm going for a longer dated option that will not decay away as rapidly. it's going to give me the opportunity to spread in at a future date if we get a rally. in the meantime i'm not going to risk a significant amount after we've had a rally off, whatever, 66 i think is where we were in february. that obviously represents where the down side could be if it rolls over. >> you sound moderately bullish. >> i would agree. >> don't use the word only. >> yeah. well look, i mean, this is the same situation that you have in xrt. if you have a situation where something has really been

hammered, for me, getting in at the last minute and saying, okay, there's all the evidence you need to short it there, that's not the way i operate. generally speaking i focus more on fundamentals. i hope the technicals support them. here this is more of a technical trade. >> let's talk the options for a second. you know, i think the high in 2014 was 84, and iyr here had a considerable sell-off last year. at some point it was trading at -- >> the high, exactly. >> and i guess the only thing i would say is i don't really love the options trade. you're risking two to make two if it gets back to 84, 85. the strongest likelihood is the option will decay over the course of the summer. if you don't have an explosive breakout any time soon, which i would bring you back to maybe tlt. if this is your view, that's much cheaper options in general. when you think about it, pound for pound. i think there's ways -- >> the options are cheaper, though, in part because you're not going to get the same kind of move you saw here. >> except, mike, when we've had vault shocks in the last year, we've seen tlt vault double.

we've seen huge movements in u.s. treasury by the etfs. rates aren't going anywhere. i'm becoming increasingly convinced the fed isn't going to increase rates again. >> 100%. >> again. so you can buy these things -- >> again ever? >> look, if that's true, then there might actually be hope for the energy space. there might be hope for oil and there might actually be hope for gold. so -- >> gold is up. >> the bullish bet we decided to take money off. but what i'm saying -- look, we're going to have to have a rate increase at some point. you're going to see that increase when you start seeing meaningful inflation in places. that's when equities will roll over. they will not roll over before then. if i seem a little tepid in general that's the reason. >> well, okay, basically the only person who likes this trade is carter. >> apparently. >> all right. i just want to get that clear. >> it's not going to decay that much in one week to the next. if you're going to get the move you're going to get it relatively soon and not risking a lot. >> importantly, of course, we've had ten sectors since 1990, the

s&p is now going to go to 11. reits will take on their own official sector which changes people's benchmarks how you relate to that and it's important. >> can't get enough options actions? i know the answer is yes. you're in luck. there is this amazing website called options actions.cnbc.com. we've got the hottest options news, videos throughout the week and exclusive trades. check it out. in the meantime, here's what else is coming up on the show. >> may the force be with you. >> you got it, hillary, because the force is with disney and we've got a trade that pays you to get long to stock. plus -- >> calling all "options action fans" got a question? reach into your pocket, grab your phone and think nice thoughts. we're taking your tweets when "options actions" 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. (singing alougetting to know you. getting to know all about you... getting to like you. getting to hope you like me... is someone getting to know your credit? not without your say so. credit lock lets you lock and unlock your transunion credit report with the swipe of a finger. getting to know you. getting to know all about you... get one-touch credit lock, plus your score and report at transunion.com. get in the know.

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. i'm julia boorstin in los angeles. "captain america civil war" is a box office smash and huge success for disney and it just opened here in the united states last night. it's poised to dominate the box office and sell some $200 million in tickets this weekend. fandango reports that the "captain america" sequel is the top selling super hero film of all-time. overseas it's already grossed more than $290 million. it hasn't opened yet in china. this isn't just a profitable movie for disney studios, it also bodes well for the avengers franchise.

"captain america" has drawn rave reviews an average of 93% according to rotten tomatoes which usually means the film will hold up well after the opening, and keep people hooked on the characters. meanwhile, disney has been on a massive run this year with blockbusters, including the "force awakens" "zootopia" and jungle book. dis eny seems to have a strong lineup for the rest of the year, including pixar's "finding dori," "alice through the looking glass" and steven spielberg's movie. it could be another record year at the box office for disney. melissa, back over to you. >> thank you very much, julia boorstin. disney shares hit a 2016 high today. ahead of next week's earnings reports. let's go to carter. do you see a breakout coming, carter? >> well i mean i see higher. so here. a couple charts. again, relative performance is one of the most well-documented things in tests. and what we do know is, top panel disney, bottom panel

relative to the sector. what you can see here, even as it was going up, it was making new relative lows. right? even though the stock was ascending, it was not only performing, it was underperforming. but importantly we've broken above this relative downtrend line. that is a big development. now, let's look at the chart itself. all over the place. you could draw the double bottom, you could draw the double top. double bottom. double top. and what i see is, something along the lines of this. so here's the -- the pen doesn't work. it's working now. the presumption is we're going to conclude this by higher prices. so up here. where the pen's trying to write. there you go. shall 1-7, 1-10. >> i love it. carter in his own quiet polite way is taking it out on the pen. >> we were just hearing from julia boorstin about all the

excitement around the movies. which is generally where people tend to focus their attention when they think about the company. but that represents less than 20% of the revenue. where is the money actually coming from? media networks, principally espn, probably their marquee property, and parks obviously bring in a lot. here's the interesting thing about disney, obviously disney had much higher levels a year ago. we have a company that's trading at about an average market multiple except that it's growing in the high single digits. even though there's all this concern in that marquee property about core cutting, they're continuing to grow. they will probably continue to grow by 8%, 9% this year. that said, i don't like going into earnings getting in the long premium bets, and going after things that have been rallying. i think a better way to play that is take advantage of that, the premium will be slooil slightly elevated going into earnings and sell the june 105 put. collect $2.80 for that. that's going to expire in just over a month. and basically you're going to be collecting a little over 2%. what happens is, if the stock falls below 105,

you'll have the stock put to you. but net of the premium you're collecting, own it right around 102, and always sell calls again at that point. >> you can always sell calls again, unless it goes way through your strike and it's much lower. i see the stock and the chart a little differently than you, carter. i see two lower highs, and two lower lows. i see the stock 105 at the midpoint of the one-year range. it's kind of in no man's land to me. the reason why i'm making this point is that maybe depending how convicted you are in this trade, you may not want to do the at the money put. you know what i mean? 102 to turn to 98 pretty soon. you know what i mean. that's kind of my only point. >> but that's the point of the double top. >> but again, what's so key is, the market's troubled for four, five, eight sessions in a row. disney impervious to it. someone is not selling and/or the group is buying. stock acts well. the old-time technical expression. >> or they could just be holding out to see what earnings bring

before they decide to hit the sell button. i think the real issue that you face here is how much down side risk do you face in disney right now. the stock at worst, if we basically retest february lows, hit, what, the low 90s? i mean it's not a lot -- >> is that the down side, low 90s? >> sure. >> maybe it's a different market from the last quarter. >> the stock did after the last earnings touch 87. a lot of people didn't think it would get to 95. or 90. isn't think it had an 8 handle. >> it's a buying opportunity as well. >> well, you know -- >> coming up next, warren buffett's berkshire hathaway coming out with earnings moments ago. we'll get the latest on what is driving the stock right now. 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.

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. we've got an earnings alert on berkshire hathaway. let's get to seema moody in the newsroom. >> warren buffett's conglomerate reported earnings of $2,274 per share. here are the highlights, underwriting profits declined to $1.13 billion due in part to a rise in natural disasters. also, berkshire's railroad business was hurt by a reduction in shipments of coal. all in all, operating profits dropped in the quarter.

also significant, book value for class a share up 1.2%. keep in mind, preliminary numbers were reported last week at the annual berkshire hathaway meeting. class a shares trading at or around $217,000. back over to you. >> thank you very much, seema mody. obviously his business, follows or owns many kind of businesses. transports in today's session was a real standout. >> that's right. i mean this is highly correlated to that. despite the candy and all the other good stuff. it's an underperformer for the better part of the last 18 months. huge ricochet off the low. and so now a little bit like disney or anything else, it's middling. is it already gone too far in risk of coming back? or more to come? i would say this is priced fairly. belongs where it is. >> this is another sort of pretty heavily rate sensitive company. if you think about it. they've got a big, big truck load of financials in there. he's got commodity exposure in the form of companies like deere. and then, of course, he's got in

the financial space one company that i think has got a real problem with management is american express. that is a company that if they can figure out how to get themselves after back on track after the debacles at costco and jetblue, then maybe there is more upside here. i actually kind of like the positions that he holds. >> mr. buffett needs a good old-fashioned financial crisis to get some alpha here. when you think about it, i'm just saying, he needs some warrants and some fat companies about to go out of business. when you look at his holdings, like you said, wells fargo, is one of the biggest ones, heinz, coca-cola, ibm, you know, a lot of things in these sectors that shift as well. >> one of the longest options traders on the planets. >> and then he rails against weapons of mass destruction. he thinks this show is probably an abomination, i would imagine. the way he talks about it. >> he's the biggest trader of them. >> i know. >> maybe he likes the show. >> yeah. do as he does -- >> if you're listening, phone in to "options action."

your treats and the final calls from the options desk. 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.

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 to "options action." time to take tweets. the first one, as nice one, carter has such a soothing voice. >> i think we had a bizarre one -- thank you. something about the hair, the last time. it's all -- >> i don't know. >> it's very nice. >> okay. >> very flattering. >> you have a fan. >> so about the pen and it was soothing. >> at some point you have to wonder. >> maybe it's me. i forget to turn it on or something. the battery. >> next tweet, if i wanted to sell puts for google how long of a duration do you suggest. thank you. >> we know the stock just went down after earnings. it found a little bit of a home here at 725. a real support level looking back. let's say six months at $700. i wouldn't use too long of a duration. i might look out about a month, june expiration sell the 700 puts for about $10. >> 30 to 60 days is really your answer and earnings next in

july. >> time for the final call. carter? >> i like real estate. >> mike? >> accept 80 calls in yir. >> xrt. wait for a bounce. put spreads look good. >> i thought you would say i hate yir. we'll see you back here next friday. >> announcer: the following is a paid presentation for the worx air, brought to you by worx. prepare to be blown away. [ whirring ] you're not looking at an ordinary blower. there's no cord. there's no gas. it goes where no other tool could ever go, does things no other tool could ever do. it finds every kind of dirt in every kind of space... and makes your whole home cleaner in just minutes so you get to spend more time enjoying it. the incredible worx air -- so versatile, you'll wond