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 -- 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. these are blockbuster trades on the mouse house. the action be against right now. >> let's get right to it. the reversal in the retail space today, the longest weekly losing streak since january. macy's called jcpenney 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 that even though it's above its own january-february plunge lows, if you look on a relative basis, look how the xrt is trading to the s&p, it's almost at new relative lows. but the -- a lot of the soft apparel names are struggling. a lot of marquee brands you would expect to be doing well are not doing well. gasoline is starting to move back up. that's going to be another issue for this group in aggregate. >> 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. 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 9 1/2 times earnings. >> except for the fact this is 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 hard to sell strength here. amazon is a great example of that. getting back to the retail conversation in general here, amazon is just eating everybody. you know, the multiple channel selling, you know, to better compete with the likes of amazon, they're spending a lot. they keep saying transition in this, that, and whatever. amazon is just making -- >> they were trying to transition. jcpenney tried to transition, the transition failed. they went back to their old ways. the old ways represented a dying business. dying business model and going back to it 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 dynasty retailers won't do as well. >> look at some of the charts. dollar general, some of these act better. than some of the names 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, expecting close to 6.5% move next week. kohl's stores, 7%. jcpenney is its own basically bucket of problems. >> 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.

down since they reported earnings over the last couple of 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. i want to kind of press it here. this is a trade i've been on today. i took a fresh look at it today when it was trading at 43. i want to look at june put spreads. i want to isolate the earnings events that are coming over the next few 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 75 cents for that. that is your max risk. it breaks even down at 4125. you can make up to $3.25, and 38 on the down side. 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, but we have all these events. it's not going to take much to break even on this trade if we get the 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. >> 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. i don't know how it trades relative to the s&p. 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 -- >> 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, that's 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. >> to the markets. it wasn't just stocks reversing today. ten-year following this morning's jobs report and then closing sharply higher. this might be set up for an opportunity. >> after all this, you know, seven years of fighting on the part of central banks, yields are still where they are globally. 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 charlts of -- yields is another thing.

ten-year chart, the trend line draws itself. i don't make the lines fit, you just connect as many lines as possible. we've broken through this to the down side. 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 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. so we're -- what i think is the beginning of what should now be a period of more meaningful outperformance. and here's 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 is a defensive way to play equities. >> like a boy scout, always prepared. pre-drawn lines. 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. a lot of leverage in the end of these represented by this etf. if you're inclined to make a bullish bet, the only way that i would be interested in making a bullish bet is 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 will give me an opportunity in a rally. in the meantime, i'm not going to risk a significant amount after 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. >> don't use the word only. >> well, look, 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. >> i think the high in 2014 was 84, and iyr here had a considerable sell-off last year. >> the high, exactly. >> 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. 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. >> 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.

huge movements in u.s. treasury by the etfs. i'm becoming increasingly convinced the fed isn't going to raise rates again. >> again, never -- >> well -- >> look, if that's true, then there might actually be hope for the energy space. there might be hope for oil and gold. so -- >> gold is up. >> the bullish bet we decided to take money off. 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. >> 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. you're not risking a whole 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, and how you have to relate to that. >> can't get enough options actions? i know the answer is yes. you're in luck. there is this amazing website called optionsactions.cnbc.com. 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. 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. 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... tting to like you. getting to pe 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. i'm julia boorstin in los angeles. "captain america:civil war" is already a box office smash. and a huge success for disney. 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 the sequel is its 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 an average 93%. 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. pixar's finding dori, alice through the looking glass and steven spielberg's "the bfg." 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? >> 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. even as it was going up, it was making new relative lows. right? even always 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. 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. 1-7, 1-10. >> carter in his 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. obviously disney had much higher levels a year ago. we have a company that's trading at about an average market multiple, growing in the high single digits. even though there's all this concern in that marquee property about cord 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, 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%. 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. >> i see this stock, 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. 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. that's kind of my only point. >> but that's the point of the double top. 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 buying.

stock acts well. >> 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. at worst, if we basically retest february lows, hit, what, the low 90s? >> is that the down side, low 90s? >> maybe it's a different market from the last quarter. but it touched 87. a lot of people didn't think it would get to 95. or 90. >> it's a buying opportunity as well. >> well, you know -- >> coming up next, warren buffett's berkshire hathaway looking at what's going on with stocks 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.

we've got an earnings alert on berkshire hathaway. let's get to seema mody in the newsroom. seema? >> warren buffett's conglomerate reported earnings of $2,585 per share. $1.13 billion due in part to a rise in natural disasters. 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. >> thank you very much, seema mody. obviously his business, owns many different kinds of businesses. transports in today's session was a real standout. >> that's right. 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. 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 a pretty heavily rate sensitive company. they've got a big, big truck load of financials in there. he's got commodity exposure in companies like deere.

and 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 back on track, 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. i'm just saying. he needs some warrants and fat companies about to go out of business. when you look at his holdings, like you said, wells fargo, heinz, coca-cola, ibm, you know, a lot of things in these sectors that shift as well. >> that part of his business -- >> 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. >> phone in to "options action." up next, your tweets and the

final calls from the openings desk. 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.

time to take some of your tweets. the first one, a nice one. carter has such a soothing voice. >> i think we had a bizarre one -- thank you. something about the hair the last time? >> oh, really? >> i don't know. okay. >> very flattering. you're so ardent about the pen. >> at some point, i got to wonder. maybe it's me. maybe they forgot to turn it on or something. >> next tweet, 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.

>> 60 days is really your answer. >> time for the final call. carter? >> i like real estate. >> mike? >> yir. >> xrt. wait for a bounce. >> i thought you were going to say i hate iyr. we'll see you back here next friday for more "options action." >> announcer: the following is a paid presentation from worx. [ dramatic music plays ] nothing offends these members of the mount parnassus garden club like a neglected lawn. and they're here to do something about it. [ clicks ] their weapon of choice -- the all-new worx gt 2.0... the next-generation lithium-battery-powered two-in-one trimmer and edger that means business.