we'll explain, plus. and there's one stock that has a huge move next week.

we'll break it down and -- ♪ >> that's how investors felt about drug stocks this week. but if you missed the rally relax there's one name you can still buy. options action begins right now. >> let's get right to it. call the commodities crush. take a look at gold and oil tumbling more than 3% and nearing multimonth lows. even copper that saw a huge move earlier this week got dragged down in the sell off. is there more pain ahead or could this be the ultimate buying opportunity. what do you think? >> listen we talked about this a little bit over the last few weeks. crude oil has been in a tail spin here. obviously the dollar had the move up to the high end of the range over the last year but one thing that caught my eye is that energy stocks and oil stocks showed relative strength relative to that 16% drop in crude since mid october so to me it could be some what of an opportunity when you look at --

let's look at an etf like the energy select etf, 40% of that exxon, chevron, so i do like the strength that they're showing relative to the commodity. >> the important thing about all the companies is that we should be taking a look at their valuation relative to the forward curve and not to spot and the spot story in crude is one of oversupply, disappointing news from an oil producers perspective coming out of opec the fact that everybody is producing everything that they can. and the long end of the curve hasn't come down as much so that might actually support the thesis that they didn't deserve it. >> if the market wasn't such a huge story this is what we should have had with fast money. >> and there's a lot of it out there and there always seems to be more and more coming out of the pipeline that's not the

reason. there's fundamental reasons why crude is going down which makes these stocks although attractive expensive. that's not a cheap stock and i have to tell you something if you're piling in because you think crude is going to reverse higher you're making a big mistake. >> the spot situation in crude oil which is driven by oversupply. if you believe there's going to be a stronger economy going forward. if you believe oil demand is going to pick up then you believe it shouldn't have moved down and that supports a longer view. >> you're trading. >> i want to take that longer view and do contrary to what you're talking about. >> gang up on me. >> what's nice about this program is we can define our risk and target events and one of the themes in the market was rotation. you can see rotation back into oil stocks that have shown good relative strength. especially if crude finds support in the low 40s and works it's way back to 40. i want to look at the xle and

look at that chart right there. that is crude. we have an xle chart. it's approaching that break out level here. i like that price. option prices are fairly reasonable. they're down to the low end. i simply want to buy a call spread. i want to look at it. 70.5 call spread. trading 69.5 today. you get paid $2.25 for that january 70 call. you can sell one of the 77.5 calls at 25 cents your max risk is $2. you can make up the 5.$5. i like that risk reward here. the options are cheap here but i'm finding my risk. >> that's why you do so every friday at 5:30. that's fantastic. >> i want to win the lotto this weekend. that ain't going to happen

either. take a look at where it traded up to over the summer. about $84. all the way back down to 75. look at the recent high. $84. 78 now. i think then we'll have a conversation. >> in defense of his strategy it's not a lottery ticket. that's an important point. you're not going to have to sit here and wait and find out you won or lost. he's playing out to january. s going to offset the decay so you can sit in this trade for a little bit and all you need is for a modest rally. >> taking you down tonight. >> i like the risk-reward of this thing. that's a big break out level. unable to get above 72. we get a rotation back in here. people don't think about it on 40 times existing earnings. if they start thinking about what was the peak earnings they were down 75% from a few weeks ago. >> if opec does get it together

we could see a spike. >> let's switch to retail now. >> nearly 8% this week. so what can we expect as we head into another busy week of reports for this space? seema is in the newsroom with a preview. >> earnings season may be slowing down but there's still a number of retailers on deck. next week we'll hear from dick's sporting goods, l. brands and foot locker but let's focus on the big box retailers expected to see moves. the options market is imlying a 3% move in either direction and then there's lowe's. the stock is expected to move up or down by more than 4% and last is walmart on thursday morning. traders expecting a 4% move in either direction following it's report. now what is interesting is that these are three stocks that have fallen sharply from their recent high but have seen a resurgence of late. whether or not this momentum will continue remains to be

seen. we'll keep an eye on those names. >> thank you seema. what is interesting about home depot is its not just a retailer but also occupies a space so it's a home builder play and they rallied this week. >> people are hoping on a stronger u. s. economy. it's interesting home depot has been out performing lowe's in a couple of key areas. appliance sales is hurting lowe's. it's trading at a cheap valuation. about 10% cheaper depending on which me trick you're looking at which makes it attractive. there's suggestions that this space was seeing stronger points earlier in the year due to the weather and some of the more recent results might be punishing. if you're going to make a bullish bet also option markets moves, larger than they are historically. you can use the call spread risk

reversal and home depot. the 120, 135, sell the 120 for $1.10 and buy them for $3 and sell the 135s. you'll spend 75 cents. the nice thing i like about this trade is we talked about the rally off the recent lows. that's where you would put the stock if it does pull back. otherwise you get to capitalize on a little upside move. >> it does take a little management to understand. i love how mike chose to sell that put it was there a week ago. it's going back down there and what you're doing here is you only have the ability to make $4.25 on the call spread and listen i had last week on the program and it went straight up. it was a bad entry. after a $10 move, you know, there's not a lot of room for

error. and a little flexibility i like. >> i'm glad you asked. i have been home depot as you know. >> for a long time. >> long time. >> but starbucks talked about consumers pulling back for the election. >> uncertainty. >> there's a good chance it happened in this quarter in home depot. there's a chance this they miss. it will be commensurate with hah they missed. i'm not sure they're going to obliterate the stock. we could see that 120 level. it was there a couple of weeks ago. >> even if the last quarter buzz disappointing people will be looking forward and look through and they're going to speak to that. we're in a very different environment and we have a lot of questions but right now it seems like the market is taking only the good side out of those questions. >> would you want to own home

depot at 120? >> i was looking at it. it got oversold. down 16 or 17% a week and a half ago from the recent highs here but i'll tell you if carter was sitting here and i was wishing he was what carter might have said is look at the weakness in the prior leaders. and maybe home depot was starting to make that move so this is a really important quarter in guidance i believe. >> may i say one thing, i have feelings too. i just want you to know that and for the folks at home. >> there's no trade here. >> i gave you a trade. got a question out there send us a tweet. check out our website. check out our news letter too. some say it's better than the new york post. really? really. what are you waiting for? here's what's coming up next.

>> it's cheesy but also how investors felt about drug stocks. plus bonds are crashing but there's something in the charts that suggest it might be the time to buy. we'll explain when options action returns. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at 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.

>> it's 2.5%. okay? so let's talk about a strategy. if you are inclined to play for a bond rally which would be in the near term very contrary juan and i would think about using a strategy called a risk reversal. in this instance you would be selling it out of the money put and using the proceeds to buy the out of the money call.

why would i do that? i would look for a low premium outlay. if i'm buying a call i am spending premium and i want to look to do that as little as possible so i would be low premium. i don't want to spend a lot and why do i not want to spend a lot? option prices in the bond market and the tlt in particular, that's the 20 year bond etf have been jacked while the thing has been moving around a little bit here and the other one is locon vix. yeah, maybe i'm going to get this thing right but i don't want to spend a lot of premium to do it. i want to give myself room to the down side if i'm wrong and give myself some leverage to the upside so let me just quickly go now to the tlt. that's the 20 year u.s. treasury etf we talked about. look at the sharp move from the highs. it to make a point here that this is an instrument that many times investors use as a flight to quality. it's not always just about interest rates. we saw that earlier in the year. it's broken this down trend

lastly this is the price of options. they have obviously spiked here again. that's making the case why i don't want to spend a lot to do it. and it was an 85% probability. and the next meet afghanistan that is february 2nd. all bets are off on that one. financial conditions going to be rocky and what's going on in emerging markets. and they acting poorly in the last couple of days and think about the volatility and emerging markets and other risk assets in january and february that caused the fed not to raise rates again since that hike. so here's the trait. looking out to february being a bit contrary juan here taking advantage of high option prices. i would look to sell the february 116 put. this is when the eff was trading 1 2 and a quarter and using the proceeds to buy the february 127

call. so i make money on the upside up five. i lose money down at 116. if you're looking at my tlt chart that is a big, big level. i expect to see support. i lose money as the etf goes down toward the short put strike. i like the risk-reward here. >> trying to reach out and catch the falling knife if i take a look at that. we had a 30 plus year bond rally and i suspect that we have just seen the end of it and we're going to find out next year clearly. i do like the structure though because there is some cushion and if jeff is right and there is only about a 35 basis point move the amount of risk you're taking by selling the down side put is probably not that large and we have seen how violently it can move which is one of the reasons they're elevated right now. >> he said he's going to see ten year yields back to 2%. he was right. you should think about this over

the weekend. are rates going higher because the rest of the world that owns our debt is terrified that the new regime might restructure debt and might do other things to debt. that would be my thing. so if i own u. s. debt right now i would be absolutely frightened that things -- that historically have been true would not be true. >> the other reason that rates could go higher is you could see higher productive growth. we could get gdp over 3% which we haven't seen in a decade. that would also actually justify money in flows because on a currency hedge basis you still have a positive carry on that trade because people are printing money away. i think that is the lid that you have which is probably why you're comfortable selling that put. >> i want to make one last put. they signal four rate increases in 2016. they're only going to do one and i don't think they're going to make that same mistake for mid december and signal a rate

increase or one after another so to me if you get any sort of volatility associated with the things that spooked us -- >> very quickly, even if you do have short-term and just because short-term eights go up doesn't mean the long end is also going to go up. >> up next, bio tech stocks posted their best week ever. ever. that's great news for our traders. we'll explain why after the break. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim.

only at 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. >> biotech was about to break out. >> today when the etf was trading 5975 i have to say this options premiums were not very high here. you looked at january expiration and the january 60, 75 call

spread that cost about $4. >> well, they just posted the best week ever. so now what. >> i think you take profits in this thing when you have a double on it. the risk-reward with two months out isn't fantastic. >> i do think it goes higher. if you have a -- you have to take money off the table. i'm telling you now the valuations and the air cover that they now have is strong so i think these things continue higher. can they pull back next week? maybe but i'm a big believer in bio tech especially now. >> let's stick to health care in general. bristol meyers is up next. he was due for a bounce. >> you have a good bounce here after this sell off. >> so i think the way you want to play this is just look out to january by the 52.50 call spread. you can spend a dollar and a half to get that.

>> you may have noticed that the chart master is on the desk tonight but he did send us a little postcard. hi team. i'm off today at a three day company retreat. have a great show, a great weekend and hang on to bmi for perspective further gains in the weeks and months ahead. signed cbw. >> this thing is still trading in a 20% discount to its evaluations. however our call spread is in the money. you can take some money off and still stay long. >> coming up next final call from the options pitts. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony.

oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at 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. first one is for guy. new york or chicago style pizza. that's obvious. come on. >> come on. >> ask that question. seriously. >> there's nothing chicago

style. nothing. >> john's pizza. >> chicago hot dogs are better than new york hot dogs but new york pizza is better. >> i'm telling you right now, nathan's -- you grill this weekend, nathan's hot dogs. nathan's hot dogs. >> i like hebrew national. >> next up black and white cat asks should i hold the wfc calls expiring next week? i'm up over 500% on them. >> no, no you don't. you want to take the profits and roll out that's fine. >> tow conquer? >> i do and you had a comment in the break about it. >> it's not repeatable but basically that's a nice fat profit take it. lock it in. time for the final call. >> veteran's day, thank you veterans for everything that you do for your service. the best. >> thank you to the veterans and also home depot earnings next

week. >> yeah, i agree define risk and also special that my dad retired in the army reserves. shout out to you big guy. >> thanks a lot for joining us. our time is expired. we'll see you back here next week for "mad money" with jim cramer starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. now, that was a week. a week for the ages. we saw the surprise election of a new president, which inspired a wholesale switch,