hey there, another busy week at the markets, guy prepares behind me, and while they are doing that, this is what's coming up on the show. ♪ >> we'll do ya one better, how to protect your portfolio for a couple bucks. >> you can hear the sounds of nature. >> tesla shares have sailed off nearing all-time highs, but there's something in the charts that suggest the run might be done. we'll explain. and -- >> there is 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 $5. the action begins right now. ♪ let's get right to it, another record week for the markets, but there's a catch. check out this chart. the s&p 500 has now gone 45 consecutive trading days for a 1% move in either direction, third longest streak since 1970. is this the calm before the storm in is now the time to buy protection? dan? >> yeah, i think this is a matter of time. at this point, you know, listen, the 49 days from that chart less than a 1% move could be extended. saw that period, longest period in the last few years was 60 days. it does not mean a lot. we know the vix, if you talk about spot six, it can only go so low and happens to go up sharply quickly when we start to have a little bit of a sell off. to me, listen, in my 20 years in

the business, never seen such a level of complacency given the uncertainty, and it doesn't make sense. could go longer than we think, but i'm getting increasingly nervous. >> one of the reasons we see complacency, one of the reason the price of options is low is the people who trade them, you need the market to move basically to get prices of options elevated. it's not that zostocks are not moving, but they are moving in opposite directions, right? >> masked. >> exactly right. what's happening is stocks were highly correlated, and since it dropped and dropped, now this earnings season, there's winners and losers, some going up and down, the index is study in that case. >> markets and individual stocks, commodities, currencies are characterized by pullbacks. look at the s&p 500 from 1927 to present, there's 216 5% plus

giveback, an they have a frequency to them. coming on average about every 65 to 70 sessions, so every three-plus months, it's been 70 sessions now, it's perfectly normal to have some sort of giveback or abatement after this strength. >> so you think social security a matter of time. you have a way to protect your portfolio for $3? >> yes. i love this trade. we have not mentioned the two meetings, you know, one in mid-march, one in early may. i think you look out to may because, again, we can't time when it happens. the s&p 500 is up about 5% of the year. it's a 3% this month, and people scratch their heads. they were scratching other things listening to the president speak, and i'm sure shocked that people were not reaching for protection, so the way i think about this is if you have nice gains, getting nervous, or get a bearish bet, option indexes, they look

attractive for outright purchases. that chart, first is 2200, late november and early december, that air pocket down to 2100 in the spx. usie inine ining the spy, may e buy when the stock was trading 34.70, may put spread costs $2.75, mask risk, breaking even at 227.25, down 3% from the recent stock price. make up to 17.25. with a low period of volatility, if there was a shock, i think you'd be disappointed with too tight a spread here. i like the risk-reward relationship. i'm risking 2.75 to make on a 10% pullback between now and may. >> using spy for proxy is interesting. spending 1% of the level.

it pays a $1 dividend. you could use those to fund a purchase like this to buy insurance, and it's pretty cheap. >> very precise level. not just round numbers, 2100200, but they are numbers that matters. 2200 was the low before rerallied post-trump victory, and there's the breakout juncture. precise levels that pay out at 6:1. >> yeah. saying this, when we talk about protection, you need to be tactical about it. the stock market is at an all-time high. there's volatility levels, and something is out of whack here. do this tactically and sit on my hands over the last couple months not to push this so the timing is simple. moving on, a big week for retale. a number of names reporting. there's big moves in the space, breaking it down is our fashionista dom chu.

>> happy friday, guys, it's a pocket square. we have 47 s&p companies reporting next week, a dozen in the consumer discretionary space. the calendar figure, get plans of attack in place. big box stuff, tuesday overall, walmart, home depot there. tjx on wednesday and nordstrom on thursday, and foot locker friday. jcpenney could have fireworks, although it's not in the s&p 500 still. speaking of fireworks, the options market overall and what's priced in for moves after earnings. nordstrom could move up or down by 9.5% according to option prices now. macy's around 6.5% now up or down. walmart and depot still volatile. 2.9% for home depot.

consumer discretionary is the fourth biggest in the s&p, so we could see another read on the market direction given what's happening next week with the retail earnings. they have been a focus the past couple weeks. back to you. >> no one rocked the pocket square like you do. carter, there's a name you say in particular is uninsurable or close to it. >> it's a big name. take a look. home depot. the biggest in the country is walmart. costco, then kruger. fourth largest retailer in the united states, setting it up this way. looking at a chart from q4, 2015-present. what you have here, despite volatility in home depot is both home tdepot are up 22.5%. now, hold that as a thought. let's pull them apart individually. here's the same time frame. home depot with the earnings,

again, versus earnings. price per share, earnings per share, leading, and now the s&p. same thing. up 23, earnings one. put it all together. here's the two stocksment up exactly the same amount. 22 plus or minus percent. earnings up to 31. earnings for the s&p 1. meaning this superior name is simply tracking the s&p, but it's, of course, doing better in terms of results. let's go to a few charts of home depot and figure it out together. you can draw this many ways. you know, say this is something of a head and shoulders bottom, the final thing, go that way, and you could also do this. the breakout is kind of underway. we think the earnings will carry the breakout further. get long, home depot, if you're not already into earnings. >> all right. you have a trade mike. >> absolutely. the april 145 call, spend over

$2 on those, make a bullish play going into earnings. options, again, they are cheap. stock actually looks exceptionally good other than one thing. propelled by the housing market propelled by housing formation and rates and retail. put it together, and you could potentially have a disappointment next week by using a call to make your bullish bet, you're mitigating risk, but, look, talking about something that's growing 15-20% earnings for seven years, trading 20 time earnings, discount in the broad market. you don't get that growth for that multiple. >> the amazon problem, you can't get a chain saw, i mean, not yet. >> that's -- they have tremendous growth actually in the online sales. >> okay. >> 5.6%, and 40% of online purchases are picked up in store. if you have something to be picked up with a forklift, not

going to have ups dropping it off. >> right. >> there is any wimper or sneak of border adjustment tax and that could hurt home depot. sits in a nexus of retail and housing. >> you're not arguing with the technical setup. it's a beautiful looking breakout. 140 is the level where you want to find risk rejected. may spend time below that, which is why i don't like the idea of reaching too far out of the money for a call because if you get earnings wrong, and the thing goes back to 140, then you own way out of the money call not likely -- >> that's a great point. earlier this week, we saw a lot of activity in the march 150 as we talked about on "fast." the 145, first out of the money strike in april. if you need a tighter strike, move to a weekly or something like that with dollar strikes, buy the 142s or something like that. buy a regular option, the 145. they rally. if the stock is up 4-5%, you

will -- >> earlier in the week, there was call buying in lowe's, a company that performed poorly on a relative basis to home depot, but bought april 80 calls, reports early next month a couple weeks after home depot. that could be one to watch. if trends are so good, maybe lowe's catches up. >> their sales per average, you know, retail square foot are significantly lower than lowe's. lowe's has been going after the professional customer representing taurepresent ing 40 practice of the sales. >> this is important whether you're bearish or bullish and what it says about the consumer. we think you make the bet that it does well. >> got a question? tweet us, and check out our website, optionactions.cnbc.com. check out our news letter. don't miss it. in the meantime, this is what's coming up next.

♪ tesla shares are flying, be if you're worried about a pullback, weal tell you how to protect profits for free. plus -- ♪ that's what energy stocks have done this year, and 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, tesla shares

surging to multiyear highs this week as company gears to report wednesday and could have a big move from the report. options market expecting a move of more than 6% up our down, double average move in four quarters. how do you trade ahead of earnings? stan has the call action. >> the 7% already on the year. earlier, it was up p 16% from the lows, up 50%, so you had gains in a short period of time. we know what the prior quarter's deliveries were. that's not a big surprise, but we want to see about profitability, margins, and see any commentary about progress in the mass market preview, all things investors are focused on. last thing is capital readings, something we see -- so, you know, if you have gains in the stock, and they are short term gains and fantastic, consider trade strategy called a collar

using options to basically protect your stock holding, and when would you use a collar? use if you don't want to sell the stock, but worried about some short term risk and protect to the downside but willing to give up upside to do that. that would be the first thing. you know, again, it's about short term protection. we have an event, use this sort of thing. tacktically, but the most important thing and why we detail a zero cost collar because you don't want to pay anything for it. here's the five-year chart of tesla. it's been rejected at the level of $290. earlier in the week, it was 287, fell, one point today close to 264, 265, a decent pullback here, but that 50% rally is not unheard of. there's been a handful over the last four years. the important thing is there's a 30% checkback after those moves, which is one reason, again, why you might consider a a collarment one year chart, the

50% move we are right here. to my eye, this 240 level is just an important resistance technical support resistance levels to watch especially around the event. this is implied volatility, the price of options in tesla, well below 52-week highs, but creeping up expensive, like mel said, 65% in either direction, moving 3.25 in four quarters. talk about using a collar when the stock trade 270 today. short date the march expiration and look up to the 290 call, equal to the prior high, and you could sell one of those, 100 shares at 4.75. use the proceeds and look down to that support level down near 240 and buy the march 245 put for $4.75. that costs me nothing. here's how the trade helps you out and make money. between the current price, 270, up to 290, $20 in gains, cover

the call if the stock were up there before march expiration. keep the long position in placement down here, your protection below 245, down $25. in the likelihood of it being down there is not fantastic, but complacent market, potential for some retracement bigger than seen with tesla due to a capital raise or something like that. look for a disaster protection, not play a lot for it, but that's what you can use a collar for. >> do you like this trade, mike, for this sort of stock? >> for this sort of stock in this situation, i absolutely like. it first of all, think about going into the results, what could they be telling us that's going to get a excited to the juch side? that's enough to overcome the effects we know additional capital raising has on this. you know, the series three car has not been distributed yet. look at this thing, not getting tremendous profit numbers. options are exceptive here.

we are, basically, at the all-time highs, and some of the big holders recently acquired when the stock dipped. i don't know they are reaching for stock herement all the republicans, i think a collar makes speense. >> spending time on the charts for a reason. a stock from a 52 week low to a high is not a zok that's in the position to exceed a prior, but in a position to contend with the prior high. that's what happened this week. got to the level, backed away from the level, and the presumption is you've seen your goalpost, your lows of december at 180, and then here we are at 290. >> you like my lines. >> yo know how to draw lines. >> chart master, that's a big thing. >> again, i think this is really important. remember when you use a collar, you have gains, giving up potential upside for, you know, protection at a certain level. the likelihood, case scenario it's within the range of the short call. that's okay.

that's why we're not paying a lot for it. >> 55%. a lot of stocks can do that, not stocks that are $50 billion. >> all right. fiscal shares surging to a ten-year high this week, great news for dan who made a bullish bet. now how to make more money. we'll ex-plain when "options action returns." "options action" sponsored by -- 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, a look back on the open trades and how they are doing. last friday, dan said cisco could see a bounce on earnings. >> if you look at a long term chart, one going back to 2000, there's just room as far as the eye can see to the upside to buy the june 32 call spread paying about a dollar for that. mask risk, break even up at 33 between $3. >> since then, cisco rallied close to a ten year high. dan, what do you do? >> here's the deal. we identified the fact that 2007, the stock topped out, and it broke out, and we expect it to hold $32 downside. trade is worth a double here, went we have a lot of time until expiration.

it's right in the middle of the width of the spread. take profits and look to roll it out a little bit, you know, play with the house's money a little bit. use the profit to roll it out a little bit. maybe something a bit short dated, but the stock could consolidate. >> in the sempnse you have breakout earnings sometimes there a gap before going higher. >> energy stocks, last month, carter said the sector was stuck in a ring. >> this is going nowhere. right calls, puts do something, but if long, don't expect much. >> selling the puts, collecting 55 cents for those and selling market 78 calls, collecting 38 cents for those, that's net 55 cents. >> it's down since then, so the charts? >> i think just for those who are interested in energy is not bad. energy's the trap that keeps on trapping. it's not delivering results for anyone. there's no sign that's going to continue in a positive way. neutral in the space.

>> yeah. you know, one of the things is we are approaching a strike of a put we're short. we have very small profits here. this sing, you know, ticked up mildly monday, i might cover and sell call spreads. i don't really feel like being put the stock herement i don't want to be put anything here to be honest. if i'm doinged anything, sell call spreads. that's the way i adjust the trade. up next, your tweets and 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 huge call spread in unp, are you bullish? mike? >> you know, this is an interesting trade. spent $2 for that trade, could be worth 20, and there's a reasoning time to go in the lower strike, 10% out of the money from here.

it's an interesting trade. it's one i consider putting up. >> one the few stocks of this caliber that's not back it all-time highs. that's something to keep in mind . >> next, how would you protect any gains in apple? >> yeah. think about what's nextment samsung is releasing galaxy next month. apple is having a meeting to talk about capital return, and there's the next quarter earnings, expect guidance weak in front of the next iphone cycle in september. to any, if you have $30 in the last six months, may expiration covers that, 135 puts are $5. reasonable hedge right now in the near term. >> all right. time now for the final call. carter? >> final call, home depot, if you don't own it going into earnings. >> mike? >> you know, i don't think i'd buy the stock here trading as it is, but look out to april, the 145 calls. >> so complacent investors, just

you're before you wreck yourself. spy puts, spreads, do whatever -- >> great trade. >> yeah. >> looks like the time expired. i'm melissa lee, thank you so much for watching. see you back here on tuesday, have a fantastic long holiday weekend, and "mad money" starts right now. >> announcer: the following is a paid presentation for conture, a radical breakthrough in younger-looking skin. science will soon give you total control over the way you look. we will be able to grow older only to look younger. in the future, aging will become a thing of the past. until then, there is conture, the revolutionary new non-surgical, anti-aging, skin-toning system you can use at home to help tone, lift, and perfect the look of your skin. conture is clinically proven to