ne. only xfinity gives you more to stream to any screen. download the xfinity tv app today. we're live at the nasdaq market site on this friday afternoon. it was a busy week for the markets. the guys are going to make sense of it all. here's what's coming up on the show. we're out of gas. >> that's what the charts are saying about one hot center. we'll tell you how it is and how you can cash in. a million dollars isn't cool. you know what's cool? >> buying facebook for $3. we'll show you how using options. and a soaring group of stocks could be in danger of stalling out. and here's a hint. we'll tell you how to profit. the action begins right now.

>> let's get right to it. the nasdaq just closed at a record high and tech is one of the best-performing sectors this year. facebook, amazon, net flick, alphabet, near record highs. with facebook and amazon reporting next week, could fang give you the most bang for your buck? >> i think unfortunately, a name like facebook's 15% games in the last few weeks is probably going to get in front of whatever good news that they have. and that's just one view that i have. i think you can put amazon in the same camp. you just said they're back towards those prior all-time highs they made before they reported in q3. i think there's something important. there was a bit of a rotation that happened no doubt about it, the last two months of the year. the fact that investors have come back to them means they're less enthusiastic about some of the things they rotated into the end of the year. especially after you look at google's reaction to its results which actually the results weren't fantastic, the reaction

wasn't bad as some might have expected. i think you're going to get a lot of meh next week. >> case by case. they didn't respond that well to google's earnings which were quite good. take a look at netflix which i think the stock performed very well. and then has done very well -- >> $50 billion name versus behemoths approaching $400 billion, it's a different ball of wax. >> it's binary. when you get to a prior high, you either fail there or exceed that high. often it's a news event that causes it. it caused netflix to break out, could cause facebook on break out or maybe the energy's already expended and you've gotten back to that high. so it depends. it is case-by-case like you said. >> the other thing is people are continuing to look for growth. if you're uneasy about what the next 12 months might hold, in terms of where you're going to invest, top-line growth is one thing that everybody can bank

on. irrespective of valuation in many cases in these stocks. >> you think facebook could make a new high? >> that's one of these big ones. it is at a critical juncture. it's in the context of the general conversation of fang. we know that some had a little trouble recently. that would be google on its news. others, netflix, quite good. in a way it is binary. errings often are. here's a chart of facebook. we can agree i think that it's basically uptrend. to sort of test that theory, that's exactly what it is. i didn't make the lines fit. they fit. top of the channel, bottom of the channel. we're kind of at sort of the top third. and i'm thinking here that this channel, not only is it going to continue, we're going to get back to or close to the high of the channel. all right. zero in on this moment right here. we're going to look at this part in detail. here we go. so -- what do we know? well, looks like a triple bottom

of sorts. so those are those lines. here's the prior high. exactly 133.50. yesterday's close, 133.14. we're right at that high, we closed a little bit below today, it's sort of make your bets. you're either going to earnings breakout, netflix, or earnings disappoint, and that. could you say 50/50? you could. we're going to bet facebook is going to exceed the high on its news. >> all right, mike, what's your trade? >> i think this sets up very well, actually, for an options trade for two reasons. one, we have an identifiable catalyst. secondly, we have basically this juncture carter has identified. what's interesting is that this is a stock that's moved well over 7% on average going into earnings. and options are actually quite inexpensive here. implying a move of 5.4%. you can spend $2.85. so just a small percentage of the current stock price. to buy the 135.45 call spread. that can be worth as much as

$10, your maximum risk in this case is $2.85. spending premium into catalyst is something that often is kind of a fool's errand. in this case, because options prices are low, because we have two reasons why the stock might break sharply, one direction or the other, i think it sets up very, very well. >> you like this trade? >> i like the trade if you agree with the potential breakout. then that's the level you're targeting, 135, paying a few bucks in premium to do that. you have a couple of months that makes a lot of sense. i go back to technicals. take his word for it over mine. i see double tops in amazon and facebook. if they do what they both did in october, and they talk about higher expenses in 2017, that's kind of my view. facebook in particular. i think they have a fake news problem. i think they have 1.8 billion users that i don't think are going to start -- i don't think they're going to see any reacceleration in growth. i think they had some measurement problems about key things, how they sell ads. i think this is going to be a digestion year. >> facebook is beaten the last

eight quarters in a row and it's gone up the last seven. the most recent one it didn't go up, it went down. if there's going to -- if you believe that it backs away here, that's the other side of the coin. >> i think that last one reflects the fact that people understand some of these problems. we're talking about 50% top line growth, hard to find anywhere, certainly in a company this size that also happens to be diversifying their revenue stream. so the -- previously, a couple of years ago, are they going to make mobile work? have they ever made mobile work? now looking at some of the other things. honestly, the investments that they're making, people mooid might take an amazon-like approach to vr and things like that. >> '16, it's supposed to accelerate massively in 2017 to 34%. >> that's why it's trending five, six times forward. >> in terms of facts there, my main man. >> you look at the forward numbers, it's reflecting that, it's the lowest multiple it's been in a long time. >> let's move on to another

group of hot stocks. the transports hitting a new high this week. now up more than 4% on the year. breaking down the move is a man who's always on a high, nbc's tom shoe. >> i appreciate that. first of all, thank you. always moving. always going here. but when i look at the chart for the dow transportation index, i think about channeling that inner chris berman, the night ranger, motoring, what's your price -- anyway. the index was lower today but a record high yesterday. today's down day only the second one in the last eight. a lot of strong near-term momentum. the airline stocks dragged overall after american airlines reporting earnings in line with expectations but there were concerns about rising labor costs among other things that helped drag shares lower. the entire industry as well. the i-shares transportation average etf, iyt, tracks this the dow transports index and shares over the last few days have traded more actively than average. like other parts of the market, the index is now trading at a

level that is well above its 200 average price, the longer-term average as you can see there. the bears may be looking for a pause or pull-back. the bulls will take comfort the dow industrials and transportation stocks are making kind of simultaneous record highs in concert with each other. the transports continue to be a focus for traders as they battle around these record high levels. >> all right, don, thank you, have a great weekend. and dan, you think the transports may be a little choppy? >> i do. iyt don's referencing, it's an untradeable vehicle, especially as far as options are concerned. i want to look at one of the big components, u.p.s., we have data points. back in december, fed ex reported, that was before we had a whole heck of a lot of news about the holiday selling season. but investors got a little bit rattled there about some of the costs that they were going to entail in 2017 for logistics and all that sort of stuff. that's the chart of u.p.s. right there. you see that they've stopped

out, and fed ex, in mid-december before fed ex's disappointing results. u.p.s. is a combination of valuation too. this stock trades 20 times expected 2017 earnings, supposed to grow 6%. fed ex on the flip side traded 16 times, it's got 11% expected growth this year. you do the comparative valuation and it doesn't make a whole heck of a lot of sense considering they're likely to face a lot of the same problems. you think about the rhetoric, trade war heating up, i don't think that's going to battle back a heck of a lot any time soon. their visibility they have for this year is probably going to be less than some sectors they obviously rely on a lot of international trade. u.p.s. sets up as a really good short into their earnings next week. the implied move is only about 2%. the thing doesn't move a heck of a lot over the last four quarters. it's only moved about 1%. to me option prices are relatively cheap. i want to give it a little bit of time. i would look at the new expiration where the stock was

trading 117.75. you could buy the 118, 110 put spread in february for 2 bucks, paying $2.25 for one of the puts, selling one of the fed 1 en10 puts at quarter, $2 your max risk. you break even, max gain up to $6 between 1.16 and 1.10. i'm not expecting the stock to go to 1.10 in the next three weeks. but that chart that we had up before, the breakout level is about 1.12 from november, that would be a reasonable pullback level here. this put spread gives me a good risk/reward, gives me room to the downside. >> this sets up very nicely i think for the same reasons that facebook did. the options here are actually cheaper than what the stock has historically done. you have an identifiable catalyst, risking a small amount of the current stock price. if it sits here there's a decent chance you won't lies all your premium anyway. the chances that the stock can move 2% over the week or so following are still quite good. so this trade i think makes a

lot of sense. >> it's also the market on steroids. we know the transports endured very severe bear market, down 33% at their lows. and they've had an incredible recovery. that's the nature of sort of boom/bust cyclical areas of the market. airlines have been great, truckers have come out well, you look at csx driving with its news. so the transports itselves back to an inherently different level, u.p.s. as well. i think you've got to dead to rights. press it and be aggressive. >> i'm with him. >> to be clear about csx, before that news the stock traded off 3%, 4%. that's what i'm expecting here. >> got a question out there. send us a tweet. check out our website, optionsaction.cnbc.com. check out our newsletter. tonight's edition has the winning powerball numbers or something like that. what are you waiting for? here's what's coming up next. ♪ >> oil was on fire last year. but there's something in the

charts that suggest the run might be done. we'll tell you what that is. plus -- ♪ strange magic >> apple shares doing something unusual ahead of earnings. and a good signal, more gains ahead. we'll tell you what that is when "options action" returns. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. 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.

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. welcome back to "options action." energy stocks sinking today on the heels of disappointing

earnings. jackie deangelis has more. >> good evening to you. energy stocks and earnings certainly in full swing here. we've heard from hess, halliburton, baker hughes, a big miss from chevron. some of what we're hearing is part of the narrative we already know. lower oil prices last year continued to be a challenge in the fourth quarter. still, companies seem to be slowly increasing cap ex budgets as prices have risen and stayed over $50 a barrelling showing a little optimism for the future. now the equity market reaction, a little cautious here. chevron's miss today doing some damage to the group. s&p 500 energy sector profits are now on track to sink 20% from year ago levels. as of the first of the year, only a 5% decline according to thompson reuters. meantime, more big names on deck next week. exxonmobil, valero.

crude oil prices logging a roughly 1% decline today, flat for the week. we seem stuck in a range, frustrating for some. the mark is split on which way we go from here. back to you. >> jackie, thank you very much. energy was one of the top performers last year but has lagged in 2017. the chart master says more pain could be ahead. carter what do you see? >> as jackie said, stuck in a range. the future predictions are also stuck in a range. what we do know is energy as a sector has the distinction of claiming best performing sector on the year, yet all the results wa in the first quarter. crude first. first just to -- i've got a tom sawyer going on. i sent in the wrong stat. current crude, 53.17 right now. what's important, look what the futures contract, christmas crude is 55. christmas 18 is 55. meaning the market itself has expectations for no progress looking out quite some time.

it's a great standoff. i don't think energy stocks are going anywhere. energy stocks. s&p 500 gets sector energy to bes. exxon, chevron, halliburton, the whole thing. the bottom panel's relative performance to the s&p 500 which it as part. the energy stocks have continued higher almost for the past 12 months. and even as they're making new highs here at the end of last year, their relative performance peaked in april. so that despite being the best-performing sector on the year, all those results were generated january, february, march, april. if you weren't in early, you didn't outperform the market, having picked energy as a bet. okay, etf xle. you can draw this any way you want. some would say it's a head and shoulders bottom, surely is. something on the shoulder here, you might call that a neckline. what we know is those are very precise lines. the level from which it broke

out -- what we're thinking is at a minimum it's going to check back to the apex here. and/or just continue to do this. that there's no great life. so we're going to bet this is going nowhere. right call, sell puts, do something. if you're long, don't expect much. >> mike's got a trade. >> that's right. so one of the things you want to do when you are faced with a stock that's really not moving anywhere, you want to sell premium, you could sell puts. you could sell calls. you could sell both. when you sell both, that's a strangle. that's what we're looking at on xle. specifically the march 70 78 strangle, selling march 70 puts, collecting 55 cents for those, also selling the march 78 calls, collecting 30 cents for those, net 85 cents, an extra 8.5% per year. this is due to go ex-dividend in march. you don't want to sell it, you're relying on that dividend income. you can collect a little additional premiuming to this.

quick point, if it does rally through that upper strike, you're going to have your stock called away from you. if it rallies through that put strike, you could be forced to buy more of it. those are two risks that you face. if you really do believe that it's going to remain range bound, if you have one of the stocks that's a component of this index, you could look at strategies like this to enhance the yield. >> do you like the structure? >> i do reserve i think we wanted to talk about xle to talk about energy holistically. i don't think it's a great strategy, etf like this, option prices are so low, to look at one of the underlyings where option prices have moved up a bit because there is idiosyncratic risk. they do have earnings. you're going to get paid to sell a call at say against the stock that you own, maybe enhance the yield. exxon has a 3.5% dividend yield. if you were to sell a one month out, 3% of the money, maybe take in 1.5%, annualize that -- >> 50% of the index is made up by the top five or six stocks, two of the biggest ones have

already reported. you've got chevron's result realize are whether you're going to get a surprise is unlikely. it's true options premiums are low but there's a reason they're low. this thing is not moving. in fact, the volatility of xle right now is as low as it's been in two years. that's the reason why people aren't putting much of a bid to the options. >> netflix shares are up 7% since reporting earnings, no rise to our chart master who predicted a move to new highs. how did he know? he will explain and tell us where it's going next. >> nobody knows. >> you knew. 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!

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watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more. i mess around in the garage. i want to pay more to file my taxes. i want my tax software to charge me at the last second. paying $60 to file my taxes was the highlight of my day. and you just saw footage of me flipping burgers. want to charge me extra to itemize my deductions? no problem. i literally have too much money. said no one ever. file for free with credit karma tax. free to start, free to finish. creditkarma.com/tax. a big tax company needs that $50 way more than me. hey nicole. hey!

i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. 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. welcome back to "options." total recall, take a look back on open trades. dan offered a stock replacement trade on apple, take a listen. >> i think you want a replace stock. january 3rd, you have this 10% gain on the year, 30% gains from earlier in the year. if you're long stock and you're worried about guidance, i think the guidance is going to be poor, you may want to replace stock with a call. look at the february expiration. >> i don't know if you caught that, dan was wearing one of

those -- >> what? i can't hear you, what? something's stuck in my ear. >> anyway, the company reports tuesday. what do you do? >> $4 move implied in either direction. the theme of the show, it doesn't seem that aggressive one way or the other. when the company reported back in late october, they disappointed on guidance, the stock sold off a little bit. it's obviously rallied a lot here. there's a big gap to be filled. back to that prior high from 2015. if they say anything decent, it's going right back up there. i still like the idea of having to find risk. >> a solid chart. better than a lot of large -- but not 4 bucks. that seems like a big move. >> netflix, two weeks ago cohen carter thought the stock would soar to new highs. >> here's the setup. here's your gap. nice. think we can gap again. we're going to bet long. we like netflix for a new all-time high. >> i think the best way to play it is look at the march

1.35-1.55 call spread that will cost you $5.75 right here. >> they were right. carter what do you see in the charts and does the chart have any similarities now to took? facebook? >> might have said the same thing before, it's binary. you are gambling when you go in front of earnings. could have gone as much in the other direction. we got it right with luck or insight. think you stick with it. the stock is particularly robust and not extended. >> the nice thing about options is you can stick with a bullish thesis but also take some of the money off the table. you can roll the 135s to 140s or roll to the 145 calls, you've taken your money out, some profit, and still have some potential upside. that's the way i think you play. >> next, your tweets and the the "final call" from the options desk. [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.

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

let's take a tweet from cam, how are you playing gold in this market? looks like it wants to go to 1,300. carter? >> i like gold. gold is the best thing you could have done last year if you're investing in s&p 500 industry groups. gold's given back a lot. the presumption is gold's going to get back on the horse. >> mike? >> we have a trade in gold. if you're using gld, options premiums are relatively low. call spreads probably sets up very well. >> gold's not your -- >> i think it's in a massive downtrend. i think you're going to retest those lows from early december. >> all right. >> that's what makes a market. >> a diversity of opinion. time for "the final call." carter? >> facebook long to earnings. >> options are cheap in facebook by call spreads. >> facebook, to be nuanced, i'd sell calls against fit you own it outside of that implied move. >> it's got to be big. >> looks like our time is expired. i'm melissa lee. thanks for watching "options

action." check out the website optionsaction.cn optionsaction.cnbc.com. see you back here at 5:30 monday. a paid presentation for the abdoer 360 fitness system proudly brought to you by thane direct [ male announcer ] 20 years ago, millions of people in over 80 countries discovered a revolution that rocked the fitness world. one of the most successful tv fitness products ever became a worldwide phenomenon -- the abdoer. ♪ i love it! this is really a lot of fun. it feels really good. i never realized that a machine could work out your abdominals