hey, there, did anything happen in the markets today? a wild day, a wild week, a wild quarter comes to an end. our guys are going to make some sense of it all when they're getting ready for the show. here's what's comin . >> a criminal enterprise. >> are talk about criminal. we have a way to buy.

what are some of the names you can still buy? let's get in the money and find out. and dan, surprisingly, has become a bit of an optimist as of late. >> i think it has something to do with the callender and technology. when you think about some of the m&a. and i know some of you have been bullish on semis. intelligence division, that was the news this week. there's a lot of stuff that

people have been stuck on this pc and smartphone supply chain are thinking about the next 20 year. it's kind of repositions itself. >> tech is not just about mobile hand sets and pcs. you have the ceo of volvo coming out and saying he expects to have self-driving cars in five years. you have a secular shift going on in the economy. even if the economy is weak, this is one of the areas we're bound to see, obviously, a lot of things happening. there's plenty of room, i think. >> and they're definitely yield chasers. some of the old names. getting long and really big tech in general, i'm not sure that's what you're saying. >> the charts still look good, carter? >> here's the issue. it's been for a while, it's the biggest weighting in the market,

21%, 22%. to some extent, if one is thinking that there is more m&a and more consolidation, how many of that is priced in now? not all of them are going to consolidate. >> there's a greater pool in that. >> what about this notion that microso microsoft, y 2 k, 57.5% right now. the thing is going to trade at 60 at some point. when they october on october 20th. the stock is going to break out and make an all time new high. i'm not bullish on microsoft. they're trading 20 times. that's like a ten-year high. it has underperformed the broad market. it's only up 4% versus the nasdaq. it's up 6%.

i'd rather take the shot targeting the earnings. it's going to make a bullet for the 60, but i would want to do it with defined risk. if i was long stock i might c consider the detail. here's the trade. very simply. you look out to october expiration. the companies are going to report a day before that. the october 57.5 calls are offered at $1.45. 2.3% of the underlying stock price. the stock has moved 7%. that's a pretty reasonable, defined-risk way to play. the next three weeks and an earnings event, if i'm wrong, i'm wrong. i'm not willing to make a bearish bet. >> you can keep it really simple and just own premium. in this case, just owning calls or the puts, especially in net of what happened this week is really the easiest way and least

expensive way. >> if there's any guidance as who how the earnings might come out, one of the best things you can look at is the prior quarter. there was that gap. you are playing for this fatherly tight range. >> there are new businesses, lower-margin businesses. you don't like the linked in deal. you have to differentiate your product. the cloud services are going to have to get people basically built onto their platform. >> we're not going to know anything about linked in. obviously, we want to know the cloud revenues. salesforce.com, one of their major competitors right now issued billings below expectations. the enterprise software could be soft. investors may be looking beyond it. you have microsoft at 20, a massive bucket of cash, momentum to their back. this this is a good, defined wa.

and this is a chart for you. i think the stock has really good support, 56, 57. there's risk down to 54. but if you can hold here and they have good news. the stocks go to 60. >> there was not a moving -- >> that's a moving average. >> that's not moving. the reality is that you're playing for this tight range to be resolved up not down. if it goes that way the last quarter, you will get that, presumptively. >> let's november on from tech to financials. it was a brutal week for wells fargo. take a listen. >> if somebody walked into wells fargo tomorrow and robbed your bank, or defrauded your bank, and then after they are caught, they say, well, i'm sorry. i'm going to take full responsibility. would you allow the person just

to walk out after robbing your bank because he is now sorry that he robbed the bank after he took the money already? >> i have come to the conclusion that wells fargo should be broken up. it's too big to manage. mr. chairman, i'm going to be talking to you and the members of this committee hoshoed their outrage today. i'm who having forward today to break up wells fargo bank. >> that's an outrageous thing to say. >> talking outside your court of -- >> the chart master says the bank might be so bad it is actually good. >> this is the antithesis, he's saying something down so far, maybe you can catch a firm bounce. let's see some charts and see if we can figure it out. buying in weakness in principle is the worst thing you can do.

fossil watch, people aren't buying watches. there's something wrong, their shadow accounts. but here's the thing that appeals to my eye. you have the bank index itself of which wells fargo is a big piece. and this spread is starting to become optically something that appeals to me. i want to show you on a two-year basis. tight. keep in mind, if you didn't have the orange line doing this, the blue line would actually be higher. there's auto correlation. so that appeals to me. i think perhaps, perhaps, it's so bad it's good. everyone knows the news. look what we just heard from those esteemed congress men and women. this is the same chart as this. these are the two lines absolute. and then this is held as a concept. this is the bank index as though it didn't move and showing you the relative performance. you're making shocking five-year

relative lows. and literally, it's a free fall. so it was outperforming and then now, okay, here's the chart. five years, we've got ten, not the bank index but the market. so here's wells, there's the s&p. that optics is starting to say, you know what? i want to play for mean reversion. that perhaps it's so bad it's good. here's your daily chart, and what i that i you have lehere i the real prospects of a triple bottom. and perhaps the news is based on an intermediate basis. >> wells far sgoe go is relativ inexpensive. demanding on how you look at it with j.p. morgan. compared to those banks, they are a are' the only ones who have seen positive relfvenuerevenues.

all the other big banks have seen declines of like amounts. if you are going to try to do the risky thing, which is to reach out and try to catch the falling knife, there are fundamental reasons why you might want to do it here. >> how would you do it? >> very simply. we already articulated, options are cheap, keep it simple. i'm just looking to december, $1.45. so you're spending a relatively small amount, relative to the price of the stock. though is this is a situation where the stock price could continue to decline, and if you don't believe congresswoman waters that it would be broken up, she has no authority to do that, by the way. >> we all love carter's work, and the chart work was very convincing, carter. >> it was? >> in today's session where financials were up so sharply,

wells fargo. >> that made the opening remarks that buying weak naus ness, it' four-letter word. oh, it's cheap, i love it, at 7, i love it at 2. >> it's a rich history of cheap stocks that got cheaper. >> first of all, i'm sorry to say this. i disagree with your charting. i think the stock's going to be at 40 before it's going to be at 48. >> there are three bottoms. the question is, does it break or does it -- >> to my go-to chartist when you're not around, a new 52-week low, below the last two lows. so this one headline away from -- >> that's whole point. that's why i'm calling at that. >> stump gets stumped when he

goes to the hill. >> today and then look what happened to the stock, nothing. >> know the rules to break the rules. the rules are, don't buy weak stocks, but i know that. i'm going to break the rules. >> the whole trade -- >> if you're going to do that, you're going to break rules. i wasn't counting the table on microsoft, but the idea of buying a call for 2.3% of the underlying stock price makes a sense. >> premiums are high relative to other names in the banking sector. >> if the stock sells off a little bit, you want to sell some premium and you could sell it at a discount to where all the banks are. >> while you a're at "options action," check out our newsletter. in the meantime, here's what's

coming up. >> have we got the trade for you? we will show you how to make money if stocks go up or down. and here's what traders think could happen to one dow stock. we'll tell you what it is and how you can profit when "options action" returns. i'm here at the td ameritrade trader offices. "options action" sponsored by think or swim by td ameritrade. 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. welcome back to "options action." it's been a wild week for the

markets, we don't know where stocks are heading next, we have a call of action for a volatile market. >> let's look at the spy and what the options market as it relates to movement. you hear us talk about the implied move all the time. and i just want to talk about what we're doing a little bit. we're looking at the at the money is straddle. what is an at the money straddle. this will help you understand how we think about these. the straddle is the call people yum plus the put premium of an underlying security in the same expiration of the same strike. you put it together. and if it's at the money, that is basically the amount of money that somebody's willing to bet that that stock could move up or down during that time period between that and expiration. okay, why would you seussuse a sfradle. let's say you wanted to buy movement. maybe you had conviction that there was going to be volatility, but you weren't sure

on direction, that way if were you long a call, at the money, if the underlying were to go up a lot you should be able to make money to clear the premium that you paid for or if it were to go down in the same capacity. you would generally try to do the this when options prices are cheap. when you're buying expensive vol, i just want to go over an example here in the s.p.y. today when it was trading at $2.17, the october was $2.50. each one costs about $2.25. and what's really important, when you think about this, is that that $5 in premium, if were you to buy the implied move in the s&p a hundred through the .

spy options, we know it's been consolidating a little bit. if you were to buy the $2.17 straddle in october, you would need that move at $2.2. but look where 2.12 is. one of the important things is the main point, it's a real tough way to make money, but if you are convicted on it, then you buy the call or you buy the put. because then those are relatively acheap and it's much easier to make money in that capacity, but if you get the direction wrong you're out of luck. >> we have had two trades, and it's buying premium. when do you decide going the simple route is better than

doing a straddle. >> a straddle is still a relatively simple route. buying a foot that it's -- i think it could. earning season is going to kick off before october expiration. alcoa's usually the unofficial start of the earnings season. that's going to happen before the expiration of that straddle. october is historically a fairly volatile month. you put those things together, add in maybe an election, and suddenly, you have a situation where it's hard to imagine that the market is going to be that range. here's the thing, though, folks, most of you probably already own stocks. you're already making the upside bet. a less expensive way to play would be to just buy that put. now you've got your straddle on. >> so carter, what do you see in the charts for the s&p? >> it's the same thing. we had that very tight range. 43 cents was not moving more than 1%. and then it was resolved down. we came in from labor day,

straight down. now we're just back to the point after which we collapsed. i think we stay in the range. but regardless of that, it really is about asymmetry. there's so much more down side risk in my opinion than there is upside. >> and how much are you spending? >> 1%. >> that's kradiest thing. >> 1%. >> i start looking at the straddle. what is the market implying over this period of time? this was kind of a volatile week. we had election stuff with the debate. deutsche bank and earnings news. and we're going to have all of that again in october. if you are convicted, spy options holook really cheap. >> it's been the rocky balboa, i don't know, but another hard blow, maybe it doesn't stay up there. up next, there's one sector that soared this week and took everyone by surprise. we'll tell you what it is and why there could be more room to

run. more "options action" ahead. "options action" sponsored by think or swim by td ameritrade. 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. welcome back do "options action." time for an upside call. dan talked about nike last week

ahead of its earnings report, take a listen. >> i just want to look out to a put spread in october expiration. i want to keep it really simple where the stock was trading 55.5 today. paying $1.25, that is your max risk. >> pretty good call, dan. nike shares took a dive this week, will it keep falling in? what do you do? >> it's down about $3 since that trade was put on. i don't think it made a really great rebound here. so this is one where it was almost a double at its lows. i'm going to keep this one on a tight leash. >> up next, carter talks about oil stocks. take a listen. >> i'm going to make the bet that we are going low, low, low, i want to sell and do xle as the vehicle. >> december, put spread, you can spend it $2. you can sell the 59s for 70

cents. >> energy was the best-performing sector this week. but theres a still time. >> we have acts of god, an opec day that ran us over. the question is, and this is to be determined, right, was the action in crude really that bullish? this is the first time they've gotten their act together in years. we've got some time that this still works. >> these types of promises for production cuts haven't borne much fruit. we have other producers in the region who have brought inkrimtal production far greater. has anyone forgotten, iran alone. they talked about upside call spreads to make up for the money we may have lost already. coming up next, final call from the options picks.

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.

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.

get a tweet in. dan callahan asks us, how do you know when options premiums are high. >> two ways to do it. the hard way is implied volatility versus realized volatility. think about what dan showed us earlier, though, with the price of the straddle. take a look at the call and put. and see how much the two of them are together as a percent ablg of the stock price. if it's 5%, is that a lot? if it's a stock that moves around a lot, that might be very cheap, but if it's procter & gamble, a stock that doesn't move a lot, 5% might and lot. compare it. >> class dismissed. >> make a bet that wells fargo

is so bad it's good. >> microsoft. that's a good stock alternative. >> looks like our time has expired. i'm melissa lee, "options action".cnbc.com. stay tuned. cramer starts right now. >> announcer: the following is a paid advertisement for the shark rocket complete with duoclean technology, presented by sharkninja. to get your carpets really clean, you might think the bigger the vacuum the better. but big means bulky and heavy. is that really what you want? so shark introduced a totally new idea with the original shark rocket ultra-light upright and nearly 2 million have been sold. with true no loss of suction... the power to deep-clean carpets and floors... and the versatility for above-floor cleaning, too. but shark wanted to create an