is disany about the rock the world of capable? and mike co's best against tb market was seriously wrong, but still didn't lose any money.

it's the magic of options and we'll explain how. the action beginning right now. >> let's get right to it because stocks are sitting near record highs. what do you do now. let's get in the money. >> one of the trades i was looking at in the immediate aftermath of the brexit vote when we had the stock market volatility across the world i wanted to go to u.s. stuff and one of those things was target and it sounded kind of intuitive in a lot of ways to me, but a name that made a lot of sense because they don't have any international exposure. it's got a 3.35 dividend yield. it outperformed peers. a massive gap in may and if they can get just a few things right when they report in mid august, innings you're going to have

this stock fill in gap. i think a name like target makes a lot of sense. if that did become a trend, you're going to want to focus on u.s. consumer again and target fifths that. >> the former one was pretty bad, but one thing you can say about target it's not an expensive stock. it's not relative to the market, its own history. anywhere from a 30 to 40% discount. obviously much cheaper than the rest of the market. we're seeing that consumers are actually spending. they're taking the on more debt. it might not be good for target, good for other discretionary areas. >> i'm on options actions tonight. i can't -- >> i'm glad you're aware of your surround sglgs i love being on

oa. this is my fourth time. almost makes me a regular. let's talk about target. it went from 85 to 68 in two days of trading. that was a huge move for a very big stock. so if they can just get it right for the next couple of weeks, here's a stock that should trade up tow 77. especially giving the fact it's at a all-time high. i think if it treads water here, it could grind up to 77 and do exactly what dan is going to say it's doing. >> if they were to miss and guide that again, the stock is going back. i was involved in this game when it was about 70. you want to buy a cal spread. today when the stock was 71.50.

you could buy the august, pay about a 1.15 for that. that is the max risk. you can make up to 3.58. that's more than three times your money. i think it would overshoot there. this call spread risk 115 to possibly make 385. it's out of the money. i don't generally like on an event trade, but a gap fill could be in place. >> this trade structure from you surprises me because you're selling a call that's really pretty inexpensive, whatever. normally what i see you dough is let's buy an upside call, wait fernando rodney that stock to rally and look for a spread. >> that's a good point. i think the stock rallied 1.50 in two days. then it would roll the position up. i would roll it and you happen

out a little bit here so that.15 call that i'm selling, it's just to offset the near term, but i would look to spread it if we had the move before the earnings event. >> lots of calls involved. >> i learned a lot about these. >> the premiums are really low. >> someone puts to me statistically it works 75% of the time, but what they don't tell you, the 25% of time it doesn't work, you get your face ripped off so i'm not a big believer in selling puts especially when the vix is trading 13.5, 14. yur not getting paid enough to sell puts in this environment. >> if you were yoing to look out and you wanted to look 65 looks like really good support. it gives me a pretty wide birth

there. >> that is a way to offset. you want to sell some puts. >> let's talk about earnings. getting into high gear next week. some names that options traders see having particularly large move. >> steve: earning season officially kicking off next week. we'll hear from some big names, all eyes will surely be on the financials. j.p. morgan, city group and wells fargo the first of the big banks to report and the options market is expecting big moves out of the names. j.p. morgan could see a 3% move in either direction. and then there's wells fargo and city group on thursday. they could move nearly 3 pnkt while option trade is expected more than 4% move higher or lower for city group. those companies combined could create an 18.6 billion dollar shift. with all the volatility we've

seen in this specific sector, investors will likely be on their toes. >> thank you very much. how are you trading. >> number one, we talked about all the stocks that have rallied. they're cheep on valuation basis. the reason they're cheep the people have a pessimistic outlook for them. that sets up better for making an upside bet. i was looking at selling the august puts for 1.14. going into earnings in city group. to your point, do you want to sell options when premiums are really low. the vix is employee 14 here. in city group it isn't pl particularly cheap. earnings is the reason. i think there is a lot of bad news backed in. you have a decedent amount of downside. >> it's a fascinating earnings

period for the banks. you talk about bond rates and talked about it prior to the show, they have 10-year yields continuing to go down. the environment does not bow well for the guys and girls to make money. i get the valuation argument. and i get they're as well capitalized as that i have ever been my concern is how do they make money in this environment. the february 11 when he bought stock at 53 in app morgj.p. mor has held up. i don't know how they make money in this environment we're in. >> if you're worried about something internationally, usually city andstanley get pegged. >> i wouldn't do this trade if you gave me the money to do it. >> we had a trade on city group and that worked out well into the brexit here. i actually rolled it out and

ended up being along the put you want to sell. that's is what makes a market. if you think it's just an earnings trade, i would look to do something in the weeklies. i don't like the duration of this trade. they've had a day and a half off. i think that's going to be a main main story in august. i think it's going to heat up and i don't think you want to do short puts. >> if you were going to systemly sell weekly puts and stocks i'd be all about it. if you're going to do it into a single catalyst, you need some premi premium. we've seen big bets. i don't think they're situation is the name. you brought up morgan stanley. asset management is the answer. asset prices rise, so do the fees associated with them.

>> very an taking nisic at times. >> they're charging like 8 bits to manage you money. those fees are going down down. it's become accideincreasingly competitive. >> it's going to take a long time for them to start. >> it's happening right now as we speak as far as asset management fees every day in the wall street journal and wall street.com there's a story of asset fees going down. >> let me say, mike can do no wrong many wrong in my eyes. with that said, i happen to agree with dan. banks have rallied with the broader market. they have lagged considerably now for quite some time. again, i don't know how they make money. i understand valuation. it's just not the environment

for the banks right now. >> got a question out there, send us a tweet. check out our website and if you're looking for a good summer read, check out of news letter while you're there. in the meantime, here's what else is come can go up. >> a couple weeks back, mike bet against the market. he was wrong, but didn't lose a time. how? he'll explain. plus, is disney about the rock the world of cable. some moves out of espn could move the program forever. we'll tell you what it is when options action returns. 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 acti actions. >> approaching square again cutting back position in sew wet tis soetis. from 5% to 3.8%. >> it is worth noting he had a difficult year. soeti is higher this year. >> he probably should have -- i don't know where he got in. he should have done well with

this. it's pushing towards all-time highs. if you want to stay long in this stock, it has to close about 50. i don't think it's particularly expensive. i would be inclined to stay with this and look for a breakup to. >> lots of talk about espn going beyond the bundle. >> reporter: that's right. we're hearing disney is looking at ways to bring sports content to consumers outside the tv bundle. john skipper here along with his boss. they would be the ones who would be negotiating deals with say the nfl and nba who are here in sun valley along with other lead commissioners and team owners. sports was an increasingly large presence in sun valley. it's inevitable that sports will be offered outside traditional paid tv and disney must already

be working on options. as well as offering more niche programming options. >> obviously they're not going to do anything to affect the value of their cable contracts, but no question they can start in certain areas and focus ongoing direct to consumers whether it's a soccer specific products or a very specific product around a sport or rights. >> we reached out to espn for comment on the reported investment in the works as well as new digital officer they're working on. no word back from espn. what a good job twitter did with streaming wimbledon. there's lots of talk how twitter the likely looking to make more sport's content deals as it

prepares for nfl streaming deal. >> what could knees moves mean for disney. over at the smart board breaking it down. >> a massive leader for years and really stalled out about a year ago when concerns about the unbundling of some of their broadcasting properties took home. down about 20% from all-time highs. the stock is trying to mic a little bit of a bottom here in the high 90s. i just want to look out. they're going to report on august 9. if you think about it we have a month between august 12 expiration that's going catch the earnings. the option market is implying a move. that's kind of fair when you think about it because we have a month duration and then if you were going to just think about the movement over the last four quarters it's been about 5, 10%. it's been about 3 .5%. when we figure out that implied

move of 4.65. that's the at the money call. you will be buying the call for 2.30 or the put for 2.35 if you were bearish. one of the things that's really interesting here is the implied volatility is pretty cheap. that one month move that catches the earnings is pretty cheap, but here's the thing why i think this stock could really move over this tame period. i think the stock is at a bit of an inflection point here. when i broke below, it's just trying to find some room. it's still down below the one-year down trend. it could get back to the uptrend where it could find resistance. on the flip side of that, we have this little try angiangle

if there's any news that helps reinforce the story to the upside, i think you're going to have a breakout. or if they continue to see the headwinds, you could see a breakdown in that stock and if you look at it, there's really lows down to 86. that's where it bottomed out in february. >> i wonder what carter would say about the lines on the smart board. >> you can draw your lines however you want to. i draw them like this. one of the things i would say though is in the 30 days that surround earnings on disney, you're typically going to see moves. and viewers may remember that actually we saw situation like this a year ago as well going into earnings where the straddle was a little bit cheep. what happened the stock got really lacksed. if you are inclined to make a directional bet in either way, the stock is very reasonably

priced. >> last august it went from 1.20 down to.98 in the flash of an eye. you astro ask yourself, what the right valuation. it's between 16 and 17. that's where we are right now. >> dan did a nice job over there. it was a little messy. carter would have crushed that thing. i think there could be pressure on the stock to the downside. >> up next, strange, but true. carter made a bet on the market, stocks have rallied by get this, they made money. how? we'll explain when options action returns. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day

or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.

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 onptions actions . huge draw downs, ebola down 10%. the plunge down in august. this is not a desirable risk

reward setup. it's sort of buyer be ware. >> so what i'm looking at here is a 1 by 2 put spread. specifically i was looking at the september 200 puts. when i was looking at these and selling to 1.87. basically you're going to sell two of those. net net you're not going to spend money to put this on. >> here is the interesting thing because mike sold more putting than he bought, he's up on the trade. >> the reason you sell more options you buy in that case we did see slightly elevated volatility. you have though pay attention to what the market is doing. if it's working, you don't want to spend a lot of premium. i do think you do want to look at adjusting your strikes here. i would probably take this one off. get long maybe the 2.10s and sell a couple against that. again looking to spend, you know, small amount of premium.

>> does that get riskier? to me, i think carter had, you know, i liked his technical work. i'm wrong. i agreed with him. mike's trade was a perfect trade if you were wish wash on carter's tactical call. >> i have been a lift bit wish shi wash shi. what do we get out of the markets. we're not getting the big draw downs. >> we had a pretty big draw down the last week of june. >> you get a move on 10%. >> that trade structure, the one by two doesn't work if you're playing for the draw down if you get that draw down. if you had tried to take that off a 1 by 2. >> to your point, this is something you have to let sit. >> can we agree though, this was an options trade. this is not a trade that really fit carter's technical view. right. >> it was a trade to fit my

view. >> like frick and frack tonight. >> get the direction wrong, but still make money. >> that's why you do a show like this. up next, your tweets and the final call from if options bids. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. wearing powerful sunscreen?

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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 actions." >> i hear you, i respect that. i go with the tie. i don't wear the jacket. that's just the way it works here. >> time for the final call. thanks guys for coming aboard. >> i love being on board. you want to see something, watch

the bond market. the 10-year-year-old yields ar down. >> i played target for a gap fill here. >> looks like our time has expired. check out more action. mad money starts right now. the following program is a commercial presentation of total gym fitness. i work out to stay young. to stay in shape. to be able to do things that i wouldn't normally be able to do. and that's what total gym does for me. it keeps me active. it keeps me positive. it keeps me focused. age is a state of mind. my results were fantastic. i