we're live at the nasdaq market site. it was another busy week at the particul markets. the guys behind me are getting ready. here's what's coming up on the show. >> mick? we'll do you one better. we'll show you how to protect your portfolio for just a couple of bucks. plus -- >> you can hear the sounds of nature. it's a lot to like sailing. >> and tesla shares have sailed on, nearing all-time highs, but there's something in the charts that suggests the run might be done. we'll explain. >> and -- >> there's no place like home. >> that's what home depot shareholders are saying, but if you missed the move, relax.

we have a way to get long for less than five bucks. the action begins right now. let's get right to it because it was another record week for the markets, but there is a catch. check out this chart. the s&p 500 has gone 49 consecutive trading days without a 1% move in either direction. that's the third longest streak since 1970. the question is simple, is this the calm before the storm? with the vix so low, is now the time to buy protection? dan? >> it's a matter of time horizon here. those 49 days from the chart of less than 1% move, that could get extended. you saw the longest period of 60 days. it doesn't mean a lot. we know the vix, it can only go so low and it happens to go up pretty sharply, pretty quickly. when we do start to have a little bit of a selloff. to me, listen, in my 20 years in

the business, i've never seen such a level of complacency given so much uncertainty and it doesn't make sense. it could go longer than we think, but i'm getting increasingly nervous. >> one of the reasons you see that complacency, we use vix to measure complacency, the price of options. one of the reasons it is so low is that the people who trade them, you need market to move trunld get the price of those options elevated. it isn't that individual stocks are not moving, it's just that a lot of them are moving in opposite directions. i think what's happening here is that, you know, stocks were generally highly correlated, and since the credit crisis correlation has dropped and dropped and dropped, now therapyings season you have some winners and some losers. the index will tend to be very steady. >> we know markets, individual stocks, commodities, they are characterized by trends or pu pullbacks. if you were to look at the s&p 500, there have been 216 5% plus

givebacks. and they have a frequency to them. they come on average about every 65 to 70 sessions. so every three plus months. we have gone exactly 70 sessions now without a 5% correction. it would be perfectly normal to have some sort of giveback or abatement after this kind of strength. >> so you think it is a matter of time. you have a way to protect your portfolio for $3? >> yeah, i love this trade so much. it's a great outright so thing. especially with the fed, we have two meetings, one mid-march, one early may. i think you look out to may. we can't time when this will happen. the s&p 500 is up about 5% of the year. it's up 3% this month. and people are scratching their heads. i don't know about you guys, but during the middle of the trading day yesterday, i was scratching a lot of other things listening to the president speak. i'm shocked people weren't reaching for protection. the way i think about this, if you have nice gains or are getting nervous, option prices in indexes like the spy look

really attractive for outright purchases. the first chart is 2200. that's the breakout late november, early december. and then the air pocket. i'm going to use the spy. i want to buy when the stock was trading 34.70. may 2.30, may 2.10 put spread, that costs about $2.75. that breaks out about 227.25. that's down about 3% from the haven't stock price. i think 2.10 may be an aggressive target here. but when we had such a low period of volatility, if we were to get a vol shock, i think you would be disappointed if you had too tight of a spread here. i like the risk/reward relationship. risks 2.75 to possibly make 17.25 on a 10% pullback. >> using spy is your proxy, this

will pay a $1 dividend. if you own a basket of stocks, chances are you will collected some dividends. you could use those dividends to by some portfolio insurance, and it's pretty cheap. >> using spy as your proxy. this will pay a $1 dividend. chances you'll be collecting some dividends. there are numbers matter. it was pre election just before the victory. and it is the breakout juncture. so very precise. 6-1? 7-1? >> we talk about portfolio protection. you need to be tactical about it. the stock market is at an all time high. we have volatility levels, very low readings here. to me, something is out of whack here. you want to do this tactically. and i've tried to sit on my hands the last couple months here and not push this thing. this i think the timing is very soon. >> we have a big week ahead for retails, a number of big names report next week. some big moves in the space.

breaking it down is dom chu. >> good friday afternoon. it's the pocket square, i have never worn before at cnbc. i digress. we have 47 s&p 500 companies reporting next week and a dozen are in the consumer discretionary space. so let's take you through calendar first. you can get your trading plans of attack in place. on the big box stuff, tuesday overall, walmart and home depot both there. tjx on wednesday. and the recently controversial nordstrom on thursday alongside with gap stores and foot locker on friday. i will throw in jcpenney because there could be some fireworks around that stock, even though i know it's not in the s&p 500. check out what happened with the options markets overall and what they're pricing in for moves after earnings. nordstrom could move up or down by about 9.5%, according to options prices. macies around 6.5% up and down. wal-mart and home depot a little less volatile. consumer discretionary is the

fourth biggest sector in the s&p. so, melissa, we could see another read on the market direction given what's happening next week with these retail earnings. they have been a focus for a lot of investors for the past couple of weeks. >> thanks.com. no one rocks a pocket square like you do. carter, there's one name you say is unshortible. >> not unshortible, but a big name. it's home depot. the biggest in the country is walmart, then costco, number three is kroger. home depot is the fourth largest retailer in the united states. i thought it would set it up this way by looking at a chart from q4, 2015 to present. what you have here, despite the volatility in home depot, is that both home depot and the s&p are exactly up the same amount. about 22%. now, hold that as a thought. let's pull them apart individually. here the same time frame. there's home depot with earnings. again, versus earnings.

so, price per share, earnings per share leading. 31 verse 23. now let's do the s&p. same thing. up 22. earnings one. put it altogether. here are the two stocks. um exactly the same amount, 22 plus or minus percent. here we have the earnings for home depot up 31, we have the earnings for the s&p one. this superior name is simply tracking the s&p but it is, of course, doing much better in terms of results. so let's look at a few charts of home depot and figure it out together. you can draw this many different ways. you can say this is a head and shoulders bottom. here's the final thing, we'll go that way. you could also do this. the breakout is underway. we think the earnings will carry the breakout further. you want to get long home depot here if you're not long already into earnings. >> you have a trade, mike. >> i was looking at the april

145 calls, you could spend just about $2 over here. that's a way to make bullish plays. the options again, the stock looks very good except for one thing. it is going to be propelled by the housing market, low rates, housing formation and retail. you put all these together and could you potentially have a disappointment next week by using a call to make your bullish bet. you're basically mitigating that risk significantly. you're talking about something growing 15% to 20% earnings on the bottom line for the last seven years, and trading 20 times earnings, discount to the broad market. you don't get that kind of growth with that kind of multiple. >> while everyone has the amazon problem, you can't get a chainsaw through the mail. not yet any way. >> that's -- they have tremendous growth in their online sales. 5.6% and 0% of their online purchases are actually picked up in the store. if you have something that has to be picked up with a forklift, probably not going to have

u.p.s. dropping it off at your house. >> but is there any whimper or leak of border adjustment tax that could hurt home depot. it sort of sits in this nexus of retail and housing. >> i don't think you would argue with your technical setup. it's a beautiful looking breakout. 140 is the level to the down side. that's probably where you would want to define your risk. if it's rejected there, it may spend some time delbelow there. which if you get earnings wrong and it goes back to 140, you own this out of the money call that's not likely -- >> that's a great point. earlier this week, we saw a lot of activity in the march 150s. these are the march 145s, the first out of the money strike in april. if you needed a tighter strike, the only way to do it is move to a weekly where they have dollar strikes. if you're going to buy regular options and you want enough time play out on. 145s. and they will rally. if the stock goes up four or 5%.

>> there was also some call buying in lowe's. this is a company that performed poorly relative to home depot. they were buying the april 80 calls. this reports next month, a couple weeks after home depot. if the trends are so good at home depot, maybe lowe's plays catch up. >> they're sales per average retail square foot are significantly lower than lowe's. lows that been going after the professional customer, represents about 40% of their sales. that's why new housing starts and things like that matter so much. this is the broadest of retailers, speaks to so many parts of the economy. it will be important whether you're bearish or bullish what this says about the consumer. we think you make the bet that it does well post earnings. >> got a question out there? send us a tweet. check out our website. and while there check out our super cool news letter. millions of you have. don't be the last one on your block to have missed it. here's what's coming up next.

>> tesla shares are flying. if you're worried about a pullback, we'll tell you how to protect your profits for free. plus -- ♪ free falling >> that's what energy stocks have done this year. we'll tell you why it could get a lot worse when "options action" returns. hey gary, what are you doing? 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. so we know how to cover almost alanything.ything, even a "truck-cicle."

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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

action." tesla shares going to multi-year highs this week. expecting a move more than 6% up or down. how do you trade tesla ahead of earnings? dan is at the smart board with his call to action. dan? >> so, it's really a matter of whether you come in long the stock here. the stock has had this massive run. up 27% already on the year. at one point earlier in the week it was up 60% from the december 2nd lows. up about 50%. so you've had these ridiculous gains in a short period of time. we already know what the prior quarter's deliveries were. that's not a surprise. we do want to see about profitability and margins, any commentary about progress on their mass market model 3. these are all things investor also focus on. the last thing is capital raising. that's something we could see. if you have gains in the stock and they're short-term gains and fantastic, maybe consider a

trade strategy called a collar, using options to protect stock holding. when would you use a collar? if you don't want to sell your stock but you're worried about short-term risk but want to protect to the down side but are willing to give upside to do that. that's the first thing. it's about short-term protection. we have an event, use this thing tactically. the most important thing, why we will detail a zero cost collar is you don't want to pay anything for it. here's the five-year chart of tes tesla. it's been rejected at this level, 290 bucks. earlier this week it got to 287 and fell. i think at one point today, it was close to 264, 265. that's a pretty decent fullback. i want to make a point. that 50% rally is not unheard u. i want to make a point. that 50% rally is not unhearull. i want to make a point. that 50% rally is not unhearpul. i want to make a point. that 50% rally is not unheard of. we've had a handful over the last ten years. it often has a 30% check back after those moves. one reason again why you might

consider a collar. here's the one-year chart. this is that 50% move that we are right here. to my eye, this 240 level is an important resistance technical support level that you may want to keep an eye on around the event. this simplied volatility, the price of options in te s is in below the 52-week highs. it has been creeping up. tim applied move is 6.5% often moved 3 t.25%. i might like the short date it. look to the 290 call. very equal to the prior high. you could sell one of those, equal to 100 shares, i would use the shares and look down. i would buy the march 245 put for $4.75. that cost me nothing. this is how this trade helps you out and how you make money. between the 270 and up to 290, you can have up to $20 in gains.

above that you can always kcove that call if the stock were up there before march expiration. down here, your protection below 245. that's down 25 dollars. the likelihood of it being down there is not fantastic, but talking about low levels of volatility, complacent broad market. the potential for retracement bigger than what we've seen in tesla due to a capital raise. maybe look for some disaster protection, not pay a whole lot for it. that's what a collar is for. >> do you like this trade, mike, for this stock? >> for this stock and in this situation, i do like it. we have to think about going into their results what could they be telling us that would get us excited to the upside and is enough to overcome the dilutive effects that capital raising will have on this. the series 3 car has not been distributed yet. when i look at this thing, not tremendous profitability

numbers. options are a potential here. some big holders were acquired when the stock dipped. i don't know that they'll be reaching for the stock here. for all of those reasons i think a collar makes sense. >> spending a lot of time on the charts for a reason. a stock that moves from a 52-week high straight up to a 52-week high is not a stock in position to exceed a prior high, it's in position to contend with the prior high. that's what happened this week. it got to that level, backed away. the presumption is you've seen your goalposts. your lows of december, 1.80 -- >> so you're saying you like my lines. >> you know how to draw a line, that's a good thing. he's the chart master, that's a big thing. >> i think this is really important. remember when you're using a collar, you are giving up potential. the best case scenario is the stock is within the range of the long put and the short call.

that's okay. >> just think about this. 55%. a lot of stocks that can do that in three months. not stocks that are 50 billion market cap this is one of the biggest movers on the place. up next, cisco shares surging to a near ten-year high this week, that's great news for dan who made a bullish bet. now he has a way to make more money. we'll explain when "options action" returns. hey nicole, this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on 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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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." time to look back at some of our open trades and how they're doing. last friday dan said cisco could see a bounce on earnings. >> if you look at the long term chart. we have one going back to 2000. there's just room. you can guy june 32-36 call spread. paying about a dollar for that. that's your max risk. break even is at 33. you can make between $3 between 33 and 36. >> since then, cisco has rallied close to a ten-year high. dan, what do you do? >> here's the deal. we identified the fact that in 2007 the stock topped out at 34.25, we got up to about $34. i expected it to hold $32. the trade is worth a double here. we have a lot to of time until

expiration. i don't like it is right in the middle of the call spread. i might take profits and to look roll it out a little. kind of play with the house's money a bit. use the profit to roll it out a bit. maybe something short dated. the stock could consolidate a little. >> to the sense you can fill a gap, sometimes you get a gap and you can fill that before going higher. >> to energy stocks. last month cohen carter worth said the stock was stuck in a range. this is going nowhere. right call, subputs do something, if you're long, don't expect much. >> selling the march 70 puts, also selling the march 78 calls. collecting 30 cents for though. that's net 85 cents. >> the xle is actually down. >> just for those who are interested, i think energy is the trap that keeps on trapping. it is not delivering any results for anyone. there's no sign that that will continue in any positive way. we would stay neutral the space. >> yeah.

one thing is we are approaching a strike of a put that we're short. we have small profits here. if this thing ticks up mildly on monday -- >> so you don't -- >> i don't feel like being put the stock here. i don't want to put anything right here if i'm going to do anything, i would be inclipped to sell call spreinclined to se spreads. >> up next, your tweets and the final call from the options pits. >> up next, your tweets an final call from the options pits. 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.

♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. time for tweets. robert asks, saw a huge call spread on sunp 70k of the january 2018. 130/150 strikes. are you bullish?

>> spent $2 for that trade. it could be worth as much as 20 and it has a long way to go. it is a very interesting trade. and actually, this is one i would consider putting up. >> one of the few stocks that's not back to all time highs. that's something to keep in mind. >> next is a question for dan here. how would you protect any gains in apple? >> let's think about what's coming next. we know samsung will release a galaxy. that's make or break. that's coming next week. apple has a shareholder meeting where they will talk about capital return, and then the next quarter earnings. i suspect the guidance will be weak in front of the next iphone cycle in september. if you have $30 gains in the last six months, look to may expirations to cover that. the 135 puts a $5. that looks like reasonable hedge. >> time for the final call. last word from the option pits. carder? >> get some home depot. >> mike? >> i don't think i would buy the stock, trading at all-time highs, look out to april, buy the 145 calls or the 142s if you're looking at weekly.

>> come play sant investors, check yourself before you wreck yourself. the spy puts -- >> great trade. >> it is. >> i'm melissa lee. thank you very much for watching. we'll see you back here on tuesday. have a fantastic long holiday weekend. "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for nutribullet lean, a breakthrough weight-loss system for total-body transformation, brought to you by nutribullet lean, llc. ♪ >> you go up a size, another size, and before you know it, everything has an elastic waist. >> no matter how much i work out, it's never enough. >> i look at skinny people and think, "what am i doing wrong?" >> i feel like a failure. [ record scratches ] >> male announcer: it's not your fault! >> female announcer: the problem isn't you or your lack of willpower. the truth is there's a real