hey there, we're live on this friday afternoon following a busy day for the markets. the guys are getting ready behind me. while they're doing that here's what's coming up on the show. >> oh, snap! >> that's what traders were saying about snapchat's ipo. but the offering has traders looking at another social media stock. we'll tell you how to play it. the bond market is doing something very strange and it could signal the next contrarian trade. we'll explain. and missed a run on disney? ♪ relax. because we have a way to buy shares of the mouse house for less than a buck. it's a blockbuster disney trade, and we'll show you how.

the action begins right now. >> let's get right to it. because it was the best day of the year fort dow but despite the rally there are signs in the bond market that not everyone is getting on board. let's get in the money, dan, what do you make of that? >> i think an environment where we've been in, we have banks moving, they like the fact that rates have moved up but haven't gone a heck of a lot of late and the fact of the matter is you have a treasury yelled at 2.5% and the stock market feels pretty good about it. it seems like they could move together for all intents and purposes. to never problem that you have to me, i think the problem that you have here, though, is that there's nothing out there in a week that we saw the fed suggests these guys will get hawkish too quickly. it's set up for something. >> i don't know about the fed getting hawkish. the fed is going to influence the short end of the curve more than the long end. when people are worried about what the longer rates will do,

we're looking at economic growth and inflation. basically discounting that back to right now. we, obviously, got a pretty good looking jobs report. that's just one jobs report. revisions will follow and could very easily be a revision downwards. bonds were weak for a while. we've had a very big move in long year rates and it would surprise me actually if they didn't stabilize here or go a little lower while people are digesting whether trump will mean real growth. >> right. the headline number was upbeat. we know back two months, the net are revise down. it was all about wages. there was no movement in the average hourly earnings or work week and i think it's also a tell that we've been stuck in this range for a long time. what will get us out of this range? i don't think anything for now. while everyone is expecting higher rates, i think it's time to be contrarian and expect some giveback in the long end. >> so you say the bond blood bath could be coming to an end

here. >> let's look at charts and see if we can figure out together. i've got the 10-year yields. you can see that here. so, what, let's see. you can draw some lines like this. i mean you can clearly say that has that look to it. but in many ways if that's the neckline, it's sort of completed what it's supposed to do and gotten back to the high. you also could draw the lines like this. what i'm thinking is that not only have we completed this we're at a difficult level, but that we're going to give back a big part of this so-called, you know, trump or post-election move. in fact, were we to come down, to trend, that would be a move to about 2.15. the low 1.3. we doubled to 2.6. we're here at 2.4, that would take you to 2.15. 2.15 not a random number. 10-year chart of 10-year yield 2.15 often you revisit before

going again. so a pull back to trend here. that's about 2.15 as well. 2.15 is exactly a giveback on the short-term trend. 2.15 is where you would be were you to check back the point at which we moved higher and so here is the tlt. it's the re. i pro call, right? this is what my eye sees. take it away. put it back. i think we're going to bounce here bounce here. i'm anticipating a little bit of a bounce here. short-term chart it's not random that we held these lows. this is tlt. i think we're going to work our way like that. which ultimately would be the same thing as a move in yields back to the 2.15 plus/minus level. >> so are you bullish as well? >> yeah. for the reasons we just discussed. we're not going to retest those

ten-year rate lows that we saw within the last 12 months. looking at 1.45 or something like that. i think that's ridiculous. but i think we're in a show me state as far as the bullishness and economic growth forecast that seems like a lot of the investing world took on after the election. at this point i think people getting skittish would be be bullish for bonds. one important note is that bonds don't move around that much. although options premiums are quite cheap, there is a good reason they are so cheap. and even though it doesn't cost that much, i will look to offset the decay. and spread the trade. what i was looking at is the april 126 call spread. you could spend $2.35 to buy the 120s when i looked at that today, sell the 126s for 65 cents. a net spend of $1.70 looking at just 1.5% at this level. about three months for this to play out and that's the way you make your bullish trade here. >> do you like this trade? >> i do. you make a technical case. you have the jobs number, the

fed. when you look at this you're looking for a checked package. not looking for a massive bounce off the up trend in rates. mike's trade targets that check back to 2.15. that being said, we get and then they start going higher again. at some point a lot of people believe there's no stock market bubble. it's been a bond bubble and that's been going on for years now and at some point it has the potential to overshoots to the upside. may 2013 where did the 10-year yield get when we had the paper tantrum, 3%. the stock market was like much lower than right now. so at some point, the equity investors want to see rates move. >> that's the thing. look, you can never get anyone to do something when it seems so obviously wrong. no one wanted to buy crude at the bottom and guess what, no one wants to sell it. it's not going anywhere. no one wanted to buy banks and now you can't get them to sell it. no one believes rates are going lower. take the road less traveled. >> to your point, considering the kind of move that you could

potentially see, we've seen it already. 100 basis points move in no time. the idea that you want to get net long bonds. after a 30-year bull market in bonds is stupidity. you're taking massive risk for minimal reward. the option trade lets you play for the small amount without risking a great deal. >> do you think this means financials will stall? >> you can see the chart if you do the bkx index the sideways action? rates has been same thing even with the so-called news that maybe there will be a change in the environment. banks have not made new highs. they're still stuck in that range. >> moving on to another big story. this week snapchat filing for an ipo and many comparing it to the likes of facebook and twitter. josh lipton has the details from san francisco. hi, josh. >> some investors might think of snap as the next social media super star and that immediately might draw comparisons to other tech companies focused in this space like facebook and twitter.

snap described itself in different terls though. in its filing snap calls itself a camera company, the word camera highlighted almost 80 times in the filing and that could draw comparisons to gopro which investors might not appreciate gopro reporting disappointing results this week. let's take a look at snap and how its performance does stack up with facebook and twitter ahead of their ipos. start with the top line. snap generated revenue about $404 million. twitter, $317 million. facebook, 3.7 billion. as for who lost and made money, snap lost $515 million in 2016, twitter lost 79 million the year before its ipo in 2012. facebook raked in a net income of 1 billion in 2011 and when it comes to users snap only disclosed daily active users in its filing, 161 million, twitter had more than 100 million at the time of its

filing, though it no longer provides that metric. facebook crushed both with 526 million. of course, the grand hope is that the company into the next facebook, but many are comparing snap closely to twitter. for example, brian wheezer of pivotal research says snap like twitter a niche platform in his opinion and snap would maximize the value of enterprise by improving the core product for consumers and advertisers not trying to be ubiquitous for its own sake. >> thank you. >> so dan over here is suited up. to -- >> what do you mean? >> here's the thing. these are my snap spectacles i ripped off my 13-year-old daughter this morning. here's the thing about this. that's really interesting. go back to 2011 and the link up to the ipo, 2013, back to the twitter ipo, and alibaba in 2014, we heard the same sort of nay sayers about all of those

ipos. those were sort of niche for all intents and purposes. snapchat is niche but one of the interesting things about this company, it is not -- they don't see themselves as a social media company. they see themselves as something different, a camera company and a growth opportunity for a company that has 158 million active users it is niche right now and a really tight demographic and they can go to a lot of places. i do see the similarities to twitter and twitter of that group we mentioned the only one that flamed out for all intents and purposes. they're talking about a $25 billion valuation for this thing. >> flamed out in the long term. is think is real. let's not forget that -- >> stock prices. >> facebook traded on the syndicate big going out and lookeded terrible. that's fine. the question for people looking at this ipo will be, should i be buying it right about that time and i would issue this caution, we've seen that exercise before. the long-term story doesn't necessarily mean you won't face

some very significant short-term pain. >> >> is this good for twitter? you have a twitter trade. >> i think when people think about snapchat and their limited financial and history that they have right now, twitter has $2.5 billion in trailing month sales it is a $10 billion enterprise value. i think it could make twitter look interesting, they report thursday morning before the open. it's move on average over the 13 quarters since it's been public about 12.5%. what's interesting to me here the stock is up 8% on the year, sentiment couldn't be worse, only five buys on the stocks, 28 hold, eight sells. there's a price target, average 12 month price target $16.5 below where it's trading. i wouldn't be buying the stock here. i think the quarter will be good, guidance bad. i think the run up to the snapchat ipo could be good for this relative valuation okay, so here's the thing into the print,

the stock trading 17.70 and look to a risk out in june exper operation, sell the june downside, the june 15, use the proceeds to buy the june 20 call. it gives you a lot of leeway. five months or so. that stock as it goes up towards the long call strike you will make money, down short put strike you lose money. the worse case scenario the stock is at 15, has an $8 billion enterprise value down there. >> all you can say is trade. nothing wrong with that. people make fortunes trading. as an asset and premise it's uninvestable. it was at $75, christmas 13, here where are at $17, a one-way story down to the right. at some point can you make a trade there -- >> well there is a bit of an exception to that. a round of current evaluation of -- valuation of $12 billion or so. there has been this tepid

response by the street. every time it's gotten down 15, $14 you've done the trade several times and several times it's been successful. i like that because relatively speaking -- social media party -- >> somebody will figure out how to make some money. with an $8 billion valuation. >> you don't need them. >> i got them. >> are you putting bunny ears on me? >> yeah, right. and you're puking rainbows. >> got a question send us a tweet. for everything op opgss action check out our website. we have this week's super bowl winner. just wanted to see if you were listening. while you're there, check out our super cool news letter. here's what's coming up next. >> mom, dad! it's evil! don't touch it. >> that's what traders are saying about one crucial group of stocks. we'll tell you what they are and what it could mean for the rally. plus, how would you like disney shares for less than a dollar? >> okay, it's a deal. >> you've got it, mickey.

we'll show you how to do it 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.

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." i'm julia boorstin in los angeles. it's a busy week for media earnings with a slew of reports. fox on monday afternoon and disney tuesday time warner lionsgate and viacom on

wednesday. hot topics in focus, advertising revenue, the health of the tv bundle and what trump's presidency will mean for regulation and deal making. fox fresh on the heels of the super bowl will likely give an update on the big boost from the big game's ads and could face questions about turnover at the flag ship news network. lions gate about to boast for the benefits of "la la land" with a record seven golden globe win and 14 oscar nominations. time warner will focus on what and when the acquisition of at&t will close and what the telecom giant is getting in that dial. viacom is likely to focus on the turnaround plans under ceo bob backish on the heels of weak performance from studio paramount last year. the biggest focus will be on the biggest media giant disney, reporting after the bell tuesday. with lingering questions about the future of espn and disney's media networks division. it stusds yo coming off a record year with four of the top five films of 2016, and a number of

big film franchises ahead. last quarter ceo bob iger was confident espn would adapt and succeed over the long term and near term the company deals with issues. we'll see what kind of update iger gives tuesday afternoon. melis melissa, back over to you. >> thank you very much. with all eyes on disney, how to you play the stock beyond earnings? mike is at the smart board with all call to action. >> sure. we're going to talk about the use of a calendar spread. one of the reasons you'll use spreads generally speaking, number one to reduce cost or risk. also in this instance, we're really looking to profit from time decay and, obviously, always helpful, improving the near probability of success. taking a look at this, we can see disney has had a very strong run up over 20% off its recent lows. the trade we're going to look here is going to be leaning in the same bullish direction but only mildly so. this is a stock that moves 6% on average. specifically what i'm looking at is the february/march 1.15 call spread.

you can buy the march calls for 1.25 and sell for 60 cents. that's a net debit of 65 cents. and the idea here is, that you kind of want at february expiration for the stock to run up to the strike. these options will decay away and you'll own the marches for just a net cost of 65 cents. this is basically a trade to the upside looking for maybe a four or 5% move which is slightly less than average. >> do the charts align with this trade? >> well i mean, it's come a long way day to day. if you were to judge the october to february advance from 90 to 112, it's fairly mature in terms of magnitude. 12, 13, 14 weeks in the making. the one thing we can say it's not a popular stock on the street. you've got a price target on wall street only a few dollars higher than it is now and you've got analysts equally split between buys and sells, there's not a lot of love for it.

that might help you out. >> i think it will help. it's interesting, the street loved this thing when it was trading 22 times forward earnings and now it's trading 17.5 times forward earnings and people can't get their arms around it. i find that interesting. so you know, we're not looking for a breakout situation from these prices after such a strong move but it trading at a discount to the market. espn is a strong brand for anybody who has cut the cord. i tried this. losing espn is a tough thing. what did i have to do? i had to buy it right back. >> the stock incorporates a little bit of iger's past comments saying espn is going to adapt and a lot of enthusiasm about the star wars release. and everything like that. i would say with the trade structure, you can tighten up a little bit. you're looking at 4% out of the money. i would be shocked if you had a massive gap after the run the stock had and then setting up for a move later on. it's got to consolidate these gains but the strategy makes total sense. selling short -- >> that's a very good point. the thing is, on the regular options what do you have, five dollar strike? you can go 110s slightly out of

the money to the downside, or 1.15s to the upside. i was taking a bullish stance. and that's the reason i selected those strikes. >> up next, shares of ups getting hammered this week which is great news for dan who more than doubled his money against the stock. what is he going to do now? more "options action" right after this. 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 and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe.

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so we know how to cover almost alanything.ything, even a "truck-cicle." [second man] how you doing? [ice cracking] [second man] ah,ah, ah. oh no! [first man] saves us some drilling. [burke] and we covered it, february fourteenth, twenty-fifteen. talk to farmers. we know a thing or two because we've seen a thing or two. ♪ we are farmers. bum-pa-dum, bum-bum-bum-bum ♪ 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. welcome back to "options action." time for total recall where we take look back at some of our open trades. last week dan said ups would under deliver on earnings. >> i would look at february expiration with stock was trading 117.75, you could buy the 1.10 put spread in february. for $2. >> the stock is down more than 9% since that call. dan, what's next? >> here's a situation where the setup looked obvious to me. when you go for something not like mike's calendar, go for a put spread at the money short dated into an event, that means you have conviction and the thing worked out better than i expected here. it's below the short strike, take it off, move on, you're risking the difference between what you paid and made just to get the last few nickels and that doesn't make a lot of sense. >> such a break like that in the chart, paid so quickly, just

take the money and be happy. >> all right. on to facebook, last week carter said the tech giant could hit a new high. >> you're either going to earnings breakout netflix or earnings disappoint, and that. could you say it's 50/50? you could. we're going to bet that facebook is going to exceed the high on its news. >> you can spend $2.85, just a small percentage of the current stock price, to buy the march 135.45 call spreads. >> facebook shares did touch a high after the earnings report but since given up gains. carter what do you do next? >> that's right. you did get this pop 135.50, we close at 131. it's that 50/50 thing i'm inclined to stay long. and bet this will follow through. >> we were playing forring by aer move but only risking $1.85 now. if it drops lower and you can pay for the call spread, i would do that. >> what's your take on facebook? >> i thought it was a horrible rejection at the prior high,

same thing with amazon and google. to me i think you see lower lows. in big cap tech. >> up next, final call from the options pits. [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. big drop in ralph lauren. what do you think of the july 75/70 put spread? for $2 credit. >> i like the $2 credit on a $70 put spread. i don't like the stock and you're trying to catch the falling life. -- falling knife right here. >> so no. >> no would be the answer. >> final call. carter. >> in anticipation that rates will go lower, buy tlt. get long. >> mike? >> to do so, 1.26 call spread is a way good way to play. >> yes. twitter next week, i think you will have a god quarter, bad guidance, the stock trades up after that. look at risk reversals rather than long stock entry. >> all right. looks like our time has expired. i'm melissa lee. thank you for options.

for more "options action", check out the website, optionsactions.cnbc.com. of course segment inside fast. meantime have a grade weekend. "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for the abdoer 360 fitness system, proudly brought to you by thane direct. 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 rd