the eve of the olympics. mike is going to compete later on. he's stretching. in the meantime, let's check out what's going on in the show. ♪ ♪ >> with the nasdaq nearing new highs, its partnersing like it's 1999. there's one that is about to break out. ples, how would you like to make money in disney shares go up or down on earnings. >> perhaps you haven't been telling the truth my noek owe.

and something curious in happening in the crude markets and it could make for a perfect trade. the action begins right now. >> will let's get right to it because stocks hit another record on a blowout jobs report. the goal is simple tonight, if you missed the rally what are some of the names you can still buy to catchup. >> we're going to hit a few names here that have missed out on the rally, especially in 2016. names that were really, really big participates in the rally leading up to when we flat lined over the last year or so. the one i want to look at is nike. this is a name i specially in front of the olympics you would see enthusiasm. this is a company that also reported the fiscal q4 in the end of unijune. it was a good report. in the biggest growth market in china put up really big numbers. it's down 10% on the year here.

listen, i've been very skeptical about the market rally. i'm not trying to buy breakouts here. nike could set up as an interesting trade over the next month and half. >> the stock is trading cheap to its group. they're going to get some new management. light going into it. getting out of the equipment business which is a good move. representing only 5% of their total revenue. the opportunity to buy a stock blow historical average and growing. bottom line and at a discount to the group, i think it's a good name. >> you sort of inferred this when you started talking. it's not just this. we've seen in in disney. starbucks. a lot of the strength of the market has value coming up and even the old sort of names like microsoft are value. meaning the growth names, the starbuc starbucks, the nikes, so forth have stalled. these are ones that would start toll participate.

>> the value names rnlt really values anymore. this thing is trading four turning cheaper than the average staple stock for example. so you take a look at that on a risk reward basis. there's a lot more potential upside here. >> do we have to believe there's a rotation in the market to belief there's a catchup trade. >> we've had a lot of rotation. that's been embl blematic. my point very simply is oswaldo arcia not going to buy the stuff on a run away breakout. if you look at a thing like nike. you can see some catalyst in the name. they're not going to report their q1 until late cement. maybe you get a move up. i'm not committing new capital to buying stocks at highs like i i just said. september expiration. it's not going catch the earnings event so it's a sediment trade into that and i want to do is sell a down put and buy an upside call.

it's not cha convicted. if the get the when the stock was about 55.65. you could have sold a september put and 40 and used the proceeds to buy the september 57.5. your net debit is 15 cents. all you're going to lose is that 15 cents. as the stock moves closer, you're going to have market to market losses. as it moves to the call, you're going to have gains. if there's ever a big move back to 60. that looks like the lechl on the chart. you have a tremendously big trade to the upside. the worst case of the stock. >> it's a bad chart. that's the opportunity here or the trap, right, when you're looking at something that's lagged, the hope would be usually that it's been a long and protracted wipeout that starting to come to life. this is the underperformer.

it's growth. we've seen it in netflix. if this is going come to life, it's highly speculative. the next one is the same thing. you're basically saying this loser because everything else is working. >> i like these kinds of trades for a couple of reasons. one of the things here is the call you select suicide a little bit closer to being the put you're shorting. that's a nice thing. one of the other nice things is the put is right near the lows. you're getting long at basically the best price you could have gotten long. and finally look, if you do have the stock put to you, you're going to own it at what, eight% discount. that 20 .5 earnings. that's probably a good place to own it. >> one last thing about the trade structure. we're in the summer. we know we're going to have a labor day holiday. here's the thing you would trade this. at some point your going to

cover your risk then you have the opportunity to spread and it sell a call against the call you're long. that's how i like to trade these. i specifically chose september expirations because then i won't have the single stock gap risk. i have event risk, market risk. >> is this a trade in your view that should be put on suchling the market is going to drift higher or go higher. >> there's certainly nothing wrongdoing it in this case. if it drifts higher, you'd be happy owning the stock and you'd be happy in this trade. it's not a long premium trade on balance. if it does drop back, it could work against you, but you're going to own it at a discount. i think that's why he's structuring this way raern saying go buy calls or buy the stock. >> it's media giant disney that could see the biggest move when it releases results on tuesday. >> this is literally as big a brand add nike and has a

problem. it's been stuck, underperforming. i would call this a perfect standoff. yes, equal librium, meaning bearish and bullish forces are balanced. he's a two-year chart. there's so many things you would saw about it. you're going from 90 to 120. then you're plunging and going back. it's all sort of just a big old mess: if i get rid of all that, what we do know is also that it was sort of double top, there's sort of the double bottom. what if we just bylaw the lines this way. what we do have and this is the equal librium part. ript it representing a standoff. let me put it in a longer term context.

here is the equal librium. you've got to make your bets here. in fact i would say this is 5050. based on the way the market is acting, this is the kind of thing like nike that could dock back to life if the earnings are good. this is a good opportunity for options to play in a more clever way than just to say up or down. i'm going to bets on the upside. this is just flipping a coin. >> what is you take, what's your clever way of playing in. >> it sounds to me like he's straddling the fence on this one although he is taking the bullish toneover all. you can use a straddle if that's your view. it's not a tried we recommend a whole lot. this is interesting because disney for years didn't move. basically just chugged a little bit higher until this time last year. last year a little bit of concern about cutting the revenues on the espn side and the stock was able to move in am

short period of time. right now the options market is saying it's going to be another nonevent. it's only implying a 3 percentage 4% move. that's an opportunity to safe buy that straddle. you can buy for 3$.33$3.55. your going to see profits. if it pegs impactly at 95.5, you could lose. >> you have to understand how to trade this. over the last four quarters the stock has moved about 5% on average. it does look to be at an inflection point. the bun thing i'll say is i've been kind of skeptical about this story, but i'm doing a little market research right now on cutting the cord. you will not be happy doing it and a lot of people going back

to the cable company saying we want your passage. we' if they are able to come in and guide a little bit, i think the stock gets back to 100 really quickly. >> 30% of the revenue coming from parks and the largest being in orlando, you could have all kinds of things that rattle people one way or the other. >> you're owning the moves. you think it's cheap. even if you get to 100 you're going to make money. >> what did you find on your rerge. >> it's hard because if you get rid of that cable box you are streaming everything online and then you are relying on your interpreter connection and if you live in a concentrated place like i do in new york city where there's 500 people streaming netflix every nights. when you start adding all of these apps and apple and netflix and everyone's bet is you start adding up, you're going to be more than your cable thing anyway. so i'm telling you all the

unbundling is going to go back to bundling. i think if you see disney in the 80s again any time soon, you want to buy it. >> it was interesting to hear you talk about both charts because you sounded on the fence. >> not on the fence. the point of this entire segment picking disney. no one knows the answer to this one. nike actually has the same thing if you draw the wedge, apple too, after a great run up, if you work into something like that, it represents those who have been selling and selling are probably finished with it and those who resisted buying are probably maybe finished with that. you typically get a very big resolution. it literally is 50/50, but i'm going to bet up because of momentum in the market. >> got a question out there, send us a tweet to @option disease @optionsaction.

in the mean thiem, here is what's coming up. tech stocks are going nuts. ♪ ♪ >> and there's one old tech stock in particular that looks like it's about to breakout. you can add lost money to that last list, they may have a way to get your money back and they'll explain 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim.

only at td ameritrade. news alert on tesla. >> reporter: given the size and complexity of undertaking and operating and building the gig gentleman factory could compete the current expectations and the factory may take longer to bring online than we anticipate. shares afterhours basically unchanged. >> thank you very much. an updated 10 q on friday. how do you think the stock will do on monday. >> it seems to be teflon pretty much when you consider the valuations here, but i don't think this is really going to be a big surprise to anybody. sit a complex undertaking. i think a lot of people had very high estimates of what the cost

would be and i don't think the people who support the stock are going to lose faith in it because of this. if you just looked at the nasdaq, you might think we are living in a 90s time war. since the brexit, those names helping to push the nasdaq to new highs, but if you missed this rally, for is one name that could soon break out. let's go to the man who still lives in the '90s. >> it's not that i want to chase the market here because the s&p is making new all-time highs. i think there's stuff going on in technology that could make investors look at ibm once again here. when we see intep intel, we see microsoft. i want to look at ibm because i think there's an opportunity for some sort of corporate action. not too different than what we saw in hewlett-packard here.

it could categorize the stock higher. this is going to be the fifth consecutive year. consensus has revenue growth kind of flat for the next couple of years and i think investors would be happy to see that. here's the thing, the ceo is coming up on the four-year anniversary here. the board is going to again anxious if they don't have a plan to move forward with the faster growing business. one of the thing i wanted to take a quick look at ibm. if you look at this thing it's up 18% on the year. it's massively outperforming the s&p 500. it has a 3.5 dividend yield here. and investors are starting to price in earning and sales for the thing. looks like support here. this is the 7-year chart. it is interesting. looks like it may possibly earlier this year a pretty epic

double bottom. here's the problem. it broke out above that down trend here. to me this mooup move makes a lot of risk to taking upon i think they're going to make an acquisition of do some sort of split or something like that. that's why i thing you want to look right here. this is implied volatility. is hitting a 52 week low. if you look out a couple of months. it's 17ish%. option prices are cheap. if you think that tech is going to carry some of these long-term laggards with it, still down 25% from the all-time high in 2013. you may want to look to the next catalyst for i brandon moss that's goi ibm. the options are very cheap like i said. the stock was about 163 today you could buy the october 160 call paying about 6.50. that's 4% of the underlying

stock price. that is in the money. the stock guess x dividend on monday: the stock is going to be adjusted for that. what i'm doing here is trying to pick a very near the money. i'm in the money, but very near participation on the upside here and if i do get the stock moving well into the mid to high 60s, i can look to spread it and reduce my cost. what i'm trying to do is i have 2%. break even on this thing. i know i'm risking 4% of the stock priegs right here. if there's any action, the stock is going to be above 170. if you want to look at the gap here, this is between 180, 190. that's where it's going if there's any good news. >> do you like this trade or reduce cost earlier on and spread it. >> it seems like it's expensive, but this is $165 stock. compare the price of the option to the price of the stock, it actually isn't that much.

something else, is the stock itself cheap. it's hard to say. 12 times forward earnings, but this is a situation where the best part of their business which might be cloud, for example, is not very well respected compared to as aws and their other competitors. >> it's small. >> that's right, but it is growing. it's not an insignificant business. the multiple if they could get some traction would good. i do like the trade. bear in mind, the stock is up 40% plus in five months time. up 20 bucks probably. >> isn't that why you want to define your risk with options. >> it's 100%. >> a year ago it dropped in gap on earnings. we're toying with retracing that gap to the upside. that's probably a reasonable price objective. puts you about 175. lines up right with what you're saying. >> let's think about hewlett-packard. it's at all-time highs right now. there's rumors this week it's going to be taken out of private

and i think she is going to need to take a page out of meg whitman's play book here. that's the sort of thing that could happen. stocks are hitting all-time highs, but crude is stuck in the mud. that could be a problem for one corner of the credit market. we'll explain when option s "op 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. parts a and b and want more coverage, guess what?

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oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face.

mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. welcome back to "options actions." last week carter made a big bet on big pharma. >> a nice head and shoulders bottom. we think this throws higher. long pfizer and we want to be overweight health care. >> if you wanted to make a bullish bet right now, you could buy is september calls. >> a big earnings miss hurt the shares so what are you doing now. >> we got smoked. meaning really literally up on money and then earnings on disaster. walk away. >> it's informative in a situation when you put a trade on and your thesis was the wrong

one as it was here. you lost 48 cents if you hit the bid on that call right now. the stock down $1.50. of course didn't go the way we thought it was. this demonstrates why you want to trade options sometimes. i like health care. i like ibb here. pfizer, not so much. >> moving on, a few weeks back looked at falling crude prices and offered up this trade. >> so today when the hyg was trading above 86, you could buy the august, october 84 calendar paying $1.20 for for that. buying one of the october 84 puts at $1.45, $1.20 is your max risk. so far the decline is crude is yet to hurt the market. what gives. >> remember that one of the ideas here was to sell that august 84 put to finance the longer gated one. i don't know when this is going to crack or if it ever will.

let the august 84 expire over the next two weeks or so and then you can think about if you like this idea, you can spread it by selling a lower put. the trade may be done. maybe crude did what it needed to do. break 40, and old there. it's a masmall leaser right now i would look to wiggle out of it and make better moves. 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. he tweeted, we listened. here's a question. do we have free will? carter? >> that's really up to you. and it depends which endeavor. at home or in work or in the market. >> final call now, carter braxen, i'm trying to be contrary here and buy some disney at this perfect standoff

between bears and but also. >> and options are actually fairly priced to do that. you could buy a straddle unless you want to make a bullish bet. >> i like carter's call. we're off for two weeks. go to the website, options action.com. see you in two. following is a paid advertisement from star vista entertainment and time life. >> ♪ you're the meaning in my life ♪ ♪ you're the inspiration >> ♪ that's how much i feel >> ♪ feel for you, baby >> ♪ how much i feel >> ♪ well, i need your touch >> intimate moments, cherished memories, unforgettable romances, the language of love can be spoken in many ways. and nothing ignites your emotions like the power of love. >> ♪ i'll always love you