>> here's what's coming up on the show. >> visa, it's everywhere you want to be. >> and maybe some places you don't. like your portfolio. because some things happening on the charts suggest visa is going lower. we'll give you the trade and big money and big oil. >> me, i'm going to have more money than you ever thought you would have. >> we will break it down. plus, is it time to bet the farm on ag stock? >> okay. you must have we heard that. >> a curious move on the grains

could be your signal to making serious bread. the action starts right now ♪ green acres is the place to be. >> let's get to it. this week was all about the trump on trade, with energy and materials outperforming the rest of the markets. so what a way to play catch up if you missed out open these games. >> health care stock, some of the names you mentioned with sectors have to do with what people perceive to be the next policy, deregulation, how it may affect those sectors. one sector that got a huge upon right out of the dpaet was health care stock, biotech and big pharma. they have since given a lot of that back. i think that sets up interestingly, the reason those stock versus sold off and have more to do with surging rates and the dollar, especially when you look at the big pharma stocks, considering the 50% exposure that some of the big ones have overseas, that's the dollar indication and all are good yielder, they have about 3%

dividend yields. so to me, i think it's not just you know the fact that they've given back has little to do with the rotation about regulation. >> we have talked in the past about high dividend paying stock, some may believe they deserve a lower multiple. few take a look at the valuations and compare it to ten years ago, a lot of the big fames trading 15 times less, they don't look all that expense i ive. >> there is the dow, this was a hume outperformer, specifically biotech. then two years of under performance. this year was a desert. last year was a disaster. at some point, the conversion comes in. year-to-date you are talking a group down 5.5%.

sol at some point it dsp add up. >> let's look at that. this is the energy select. i want to look at this one in particular, johnson & johnson and pfizer and merck. >> xle. >> that's the energy selection. >> xld. >> health care. >> lv. and 25% of that etf like i said those three names they all yeed 3.25%. one of the things i think is interesting, though, when i looked at this here, we prefer i hate to step on your toes. >> you say that all the time. >> i think the near term down 66. the worst performing sector etf. i think we get that to to the dow to play carter set up before the fed meeting. they're going to raise rates, if the statement is a bit more

dovish, you could see the dollar stocks going up, that may be enough to go back into these stocks. so one of the things i want to do, we head into the holiday season, where we have two extra days off, i want to do a trade, a risk reversal, selling the downside put. we look at the january exprarks we want to capture,dogs trade here, xlv was trading 6.5, you can buy one of the january 70 calls for 75 cents. you can put that on for a 75 cent credit. what happens is the stocks move higher, closer to that long haul. you will have mark-to-mark losses and you will have losses below 56. what i want to do here is to define a range when things do go sideways, i'm not buying the stock. i have wide range here.

so if nothing happens, i make 5 cents. >> i like these strategies generally. i can see where you pick that 66 level. obviously the stock hasn't traded below 65 t. only thing i would say this is a local volatility space. you find out those are tight. you are not getting a lot of the cushion to the downside. >> quickly, think about what buying a january call over the next week and a half or two or three, it's going to decay. what i'm trying to avoid is setting up that decay. >> i think the key thing started with is this did movesh it's this pullback. the only thing i would point south that it looks almost the same. if one wanted to get more juice. >> specifically looking at the xlv for the reasons i stated about the yield, about the performance.

>> and the downside is going to be relatively small. johnson & johnson, pfizer. these are not names that will take a big header. >> as noted the financials have a standout in a trump rally. the sources that followed the group have not participated. take a look, visa and mastercard falling 9% since the election. you say there could be more pain ahead? >> it's interesting, in many ways, visa doesn't trade like a financial. visa trades more inline with tech. a couple things bothered me about the recent action, i thought maybe we could talk about them. so a two-panel chart. it says vis sars, so that's what it is. and the situation ask as follows. but the relevant proportion, visa was never able to make a new high. in fact, it hasn't made net

progress in about seven months, as recently as a couple weeks ago. so then is the actual cart, itself. this is the absolute low of the last few years, that your interday crash slash low. we broke it. we've broken trend. that usually the beginning, not the end. we look at the long-term trend and where we might be headed. to my eye, we're going to come down and basically to say this could be moved up a bit. i would say another 70 bucks. >> mike, how are you trading this? >> you know, this is interesting. it's been a real success story. we have things that aren't quite as good. they got about 40% of the payment processing space,

including visa, europe. also acquiring new business like, for example, getting the costco affiliation card from american express, they are giving up more incentives, so i think one of the areas where they have done very well is obviously continuing growth and growing margins. so we want to use a spread, specifically i'm looking at march at the 75, 65 put spread when i was hooking at this earlier today, you can gooi buy it for 345. >> that helps offset some of the decay that you will experience and dan was alluding to this, between now and january, maybe not a whole lot is going to happen except, you know, probably something coming out of the offer. >> it's a really difficult time to own option especially when we get to the feds meeting. like the markets are okay with

it. people are continuing to sort of this slightly upward trend. if you stay put, it will be a hard way to make money in the game. if you are looking out to march, like mike is doing, he is buying that near the money put, maybe there is a way to finance a calendar and that kind of offsets it a bit. >> it comes to light. many have bottom that show some accumulation, where these are retail stocks. the best way in the world, it's heavy paypal is heavy. >> some of the data we have been getting also indicated the transaction was very strong, it goes back to potential future growth and margins, both will not see the expansion you have sen over the last two or three years. >> let's focus on visa.

to underscore, you think they all deal the same way? >> they did. in fact, obviously, mastercard traded. but even paypal, heavy of late, not keeping up, going down the last four or five, eight ten sessions. >> sinsd tweets, for everything, check out our website, while you are there, check out our news letter. what are you waiting for? here's what's coming up next. >> stock commodity versus wilted this year, but there is something in the chart that suggests now is the time to buy. we'll explain. plus...pretty cheesy, but it pretty much sums up what oil did this week. if you missed the moves, there is one more way to make money in crude. we will break it down when "options action" returns. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade.

well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade.

generosity is its oyou can handle being a mom for half an hour. i'm in all the way. is that understood? i don't know what she's up to, but it's not good. can't the world be my noodles and butter? get your mind out of the gutter. mornings are for coffee and contemplation. that was a really profound observation. you got a mean case of the detox blues. don't start a war you know you're going to lose. finally you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. hthis bad boy is a mobile trading desk

so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade >> welcome back to "options action". it's been a wild couple of months in commodity space. >> by and large, it's been a big year for commodities. as you know, not everyone has participated in the rallies him take a look at copper and palladium getting a boost. then there is gold and silver, which have been hit hard lately. both are still up double digits

this year. crude oil is surging up 40% in 2016. on the flipside the stocks adds are closely tied to farming are getting in farming. there is wheat, signature close to a 52-week low. there has been one bright spot, soy beans up 19% year-to-date. but prices are down about 15% from their recent highs. the strong u.s. dollar as well as over supplied concerns have been a head wind for many in this space. whether or not the soft ax can firm up remains to be seen. >> seema mody in the newsroom, carter, it can create a buying opportunity with wine stock? >> there is a lot going on here. commodities, again, you have butter, eggs, cheese, you have, of course, steam and gold, but what i thought i would set up is the current spread from what you saul salt or food stocks and raw

industrial commodities, the objects are clear the blue line is raw industrials, the lager, the green line, food stocks, in the middle orange is all commodities of which these two are a subset. this is the chart absolute. if i were to freeze all commodities and hold them as a constant across the screen. there's the orange line but a different way. all three absolute. i'm going to expose the spread between the lagers and the leaders. let's do it on a longer term. there they are, slurkts five years, raw discrims up here. food stuff is down here. here's the spread. let's do it even longer term. this is since all data begins. here's the spread. now this has only happened five times in history, where you have harder basis points and spread. so 15% in either direction, in fact, we're beyond that now.

what happens going forward in this fairly rare circumstance? where everyone loves one thing and hates the other? you agree the right to take the road less traveled. so these are the data points. what happens two weeks later, three weeks later, one month, this is the relative performance of the food to materials. and what you see is out performance, out performance and every time frame, whether it's the median or the means and what we are so far in the cycle now, two weeks later, this is starting to outperform and with that it will continue to play in lean with history. so a rare circumstance only happened five times t. spread is extreme and everyone loves this, everyone hates this. i think i will take the other side. >> mike, what's the trough with this? >> i think pot, a i think a simple what i to handle this is to sell the january 18 put. that's playing off the dynamics

we were talking about. trading sideways, and the fact that this bottomed out here. i think that's the play that you are making. if you have a put to you. it's a favorable level. >> the only other thing is, if you really do believe what carter is selling here, you want to look out a bit further. what i'm saying is -- >> i think it sells itself. >> i don't mean it like that. here is a one month great trade, if you think this thing, this stock is cut in half or more so sense the mid-2015s. you want to set yourself up with a bit more time and profit than 18 cents on the stock overtime. >> when we look at the chart, they use a gradual orderly bottoming out, a roupgd bottom you can see it on the screen, even if this is wrong, not necessarily that commodity thing. >> that will play out.

even if potash is not the vehicle, you have a downside. you could get a huge move or muddle along. >> and 75 krepts on an $18 snokt course-of-over a monst a decent rate of return is there that's the wade, asymmetric. when you are selling a put, you can only take 75 cents. >> that doesn't speak to the opportunity of a chart. >> he also talked about a gradual reversal. not something taken out tomorrow. >> a thousand gallons. that's all right. >> i think we are talking two different strategies in a way, two different time period, we are buying what you are selling. >> all right. >> still ahead, oil discloses its best week from 2011. that's great news from all of our traders. we will tell you why when "options action" returns.

>> after the call, we take a look back at our winning trade, last month, carter made a call on oil. >> i'm going to break a rule, which is usually means a breaking down turn. i want to be long crude and mike's got a trade on the uso. >> uso, you can buy the ten, 11

call spread. you can spend about 30 cents for that carter what's it like? >> you have to say that's like force dejure. >> that is up known. you might want to move along. >> mike. >> it blew through that strike that we were actually short. in fact, earlier, i said if you more than doubled your money, there is no shame in taking profits. this will be worth 80, 85 cents, so you definitely would want to take profits, even if you wanted to press oil. >> they aren't the only ones back in oil's glory, dan made a bullish bet a couple weeks ago. what are you doing with this trade? >> it was a jan '77 call spread. you could be selling that today,

you know, i guess, i'm in agreement with these guys. they moved so far so fast. you can see consolidation, few gains. it happened. you have a good winner here. i'd like to see the xle consolidate and set up for a movie and o i'll look to get back in. >> i think at this point it's wait and see? we have to see inventory data. >> that will be the tell to prove they're sticking to it. the big disagreement was, well, we should cut. it will be you not me. but this is what it's been like. >> to return us a day ago. you wouldn't go up two, three barrels. you'd get it to where people who are bulls believe it should be. >> right. >> of course the question is, once it guess to its own point, then we are back if that division. >> so a lot of the industry in the occupation, west texas, these places. a lot of these companies have

been recapitalized. essentially, their lifting costs have been flushed out, now it's the new profit for producing. it's substantially lower. if we get over 50 for anything any length of time. >> coming up next, your tweets and the final calls from the "options action" desk. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade

what?pony neighing] 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. >> ask and you shall receive, january 120 calls, you agree? >> my valuation looks fairly decent. let's talk about the charts. if i was going to make a foolish bet. i think the january 120 calls are not a bad way to play. i might look further out.

>> amazon, google. people that don't pay a lot of taxes are under pressure. it has to do with prospective news. if i were to go up that's a good place to make a decision. >> i expect to see tension. >> very direct. they ask any trade, huge option buildout. carter, what do you see? >> it's bonds sinking, you have banks surging. i think either sell puts or do a risk reversal. it has come down a bit. i think at some point you get a throwbackme throwbackment. >> i think that probably a

decent way. to make a bullish bet. >> what's the fundamental reason to do it right now? >> fundamental reason? gold is not an investment. >> it's not a safe haven in anyway, you have to have it in your portfolio? isn't is that what we're taught? >> that's nonsense. >> last but fought least, buying puts into the fed hike? >> i think so. this is an epic short-term move. it caught people off guard, calling for a bond crash for a very long time. i think eighth good chance the feds will make the same rate. they will raise 25 bits. i don't think they will do another hundred basis points over the next short period of time. i think you see bonds moderate a bit. short term rates will be much more volatile. >> it's 1, 7, 2, 5, probably go

the other way. >> i think that's the best way to do it. visa also. >> our time has expired. i'm mellissa lee. see you back here next time friday. meantime, "mad mon" starts right now. >> announcer: the following is a paid presentation for the nutribullet, brought to you by nutribullet llc. ♪ >> hi. i'm david wolfe. and for 25 years, i've been teaching people, to get the most out of your life, you need to get the most out of your food. all this food is loaded with nutrition, and you don't just need some of it. you need all of it. and the nutribullet is the machine that can get all of it. for a limited time, nutribullet has an incredible offer. when you order today, we will upgrade you to t