hi there, live at the nasdaq markets on this snowy friday afternoon. the guys getting ready behind me. here is what is coming up on the show. >> they're here. >> yes, they are. snap options are finally here. we'll show you how to use them to get some of your money back on the snap ipo. plus -- ♪ >> but coke investors haven't had had much to smile about in the past year, but there's something in the charts that suggests that might change. we'll explain. and -- ♪ >> the gold is on its worst losing streak in two years. we'll tell you why there could be even more pain in store.

the action begins right now. let's get to it because while everyone was focused on oil and rates quietly, tech stocks are breaking out. the tech secretarior surging to highest level in nearly 17 years, driven by microsoft, facebook, and amazon. is tech your best bet and what are some of the names you can still buy right now. let's get in the money. dan. >> it is a tough one. at this point those four names you just mentioned and throw apple in there with a $730 billion market cap, you have 2.5 trillion in tech. that's more than a third of the nasdaq 100. this has been a concern of mine. it seems to be that the world seems very comfortable with these stocks and they're obviously executing very well and there are stories that will be around for a long time. the fact they don't even budge tells me that it is a pretty crowded trade. that's been a good trade, especially when you see apple up 20% on the book, the others up

8%, 9%, in line with the nasdaq. i don't think you want to buy the stocks at the highs. >> 100%. we know the best performing sector on the year, also the largest cap in term of weighting in the market. we know if you look at a long-term chart of this sector from highs and lows, lows to now, for the first time in eight years it is through the upper band of that channel. bull outs through the top are end stage kind of things, not a time to be chasing something. >> but, mike, i mean if i want growth don't i have to be in technology? i'm sure a lot of people are thinking that. i don't want to buy bank stocks, i don't want to buy lag ards in energy hoping for a catchup. >> a lot of these stocks have done well, that includes financials. the valuations on the financial might be better than in tech. consider apple which is really a hardware company. valuations might look relatively inex pensionive compared to the rest of the group but it is hard

to imagine it as a growth story. google and facebook are stibl growth stories. facebook is pretty heady at this point. i think as dan pointed out chasing the stock is kind of a dangerous air and. >> what do the stocks look like? >> if you were to look at each of the four stocks that make up that acronym, not one made a relative high to the level. you are talking obviously facebook and amazon, google. the best performing of them all not only from inception, if you will, is netflix and the day-to-day it is the best performing. of these big large names that seems to be the best one i would say. >> all right. >> let's talk netflix for a second. one of the things that's interesting to me is last year in 2016 they saw an acceleration in hef knew growth. they had been growing sales 21, 23%, they saw percent year over year growth. they are obviously doing good things in the individual -- or

in the original content business. here is the thing. you try to short netflix at any moment at any point over the last fiech years based on valuation and it's been a loser. if you look back ten years, we just had the anniversary of this bull market. >> eight years. >> from march 2009, and this thing is up 6,000 purse, the nasdaq up 350%. the question here is what can you still buy? the story here is still intact until it is not. i know there's probably some takeover spec, seems there's a new one every year. it has a $60 billion cap. for him to sell the company it has to go for 0 billion and few can to it. if you want to stay in the game, maybe you have gains or thinking about playing into and out of earning season. they've they've not confirmed the date, likely to be in last week of april, you may want to use your options to find your risk can. look at this chart of implied

volatility. it is trading at 52 -- it is trady at multi-year low. look out to may. we know it is going to capture may expiration. when the stock was trading 141, think about it as a stock replacement, defined risk strategy to participate between now and may expiration. buy may 145, 165 call spread, buying one of the may 45 calls for about 660, selling one of the may 165 calls for 1.60 so there's your $5. that's about 4% of the underlying stock price and you make up to 10%. this is just in earnings trade. usually on earnings it averages about a 10% move in either direction. so i think it is a good way, risk can five, maybe make 15 if you get the move to the upside. >> and it has acted well the last two quarters which is not the case for google, not necessarily for microsoft. you have two gaps, often you get a third. >> mike, what do you like about the trade or don't you like? >> i definitely would prefer

this trade over buying the stock. as dan pointed out the options are reasonably price. he selected strikes that give you enough upside to justify it and obviously the amount you are spending on this relative to the stock's current price makes a lot of sense. you know, he mentioned before valuation wasn't really a good reason to try to short the stock before, but i think competition might be one of the concerns netflix actually faces now they haven't historically. i think increasingly amazon is obviously going to be a competitive player in this space, and google now will as well. that's really the thing that could potentially keep a lid on it. if they get traction, the attractiveness of netflix as potential takeover, that's going to have to decline. >> i would add one more point on the competition front. i mean if apple will ever gets their act together and puts together some streaming rid yo thing, it will be a very difficult, you know, massive head wind fournette fliks. that's one that has to be a 2017 thing. >> from hot stocks to a name that's been fizzling.

chart master thinks the beaten down name can make a comeback. >> talk about dogs that die, it is a little early. it is the worst performing stock in the dow jones industrial average. what we know and this is important is that consumer staples as a group have started to come back to the life and are out performing the market. coke of course is perhaps the preeminent consumer staple stock there is and i want to put it in context. take a look it a these stats. these are some of the biggest movers. these are killing the market year-to-date. obviously you got smokes here, diapers here, bleach here, big numbers. proctor and then down here right -- i mean lagging in a big kind of way. every one of those stocks i showed you killing the market. in a way this is maybe the most important in the longest pedigree of all. i want to look at coke and talk about it as a catch-up trade. okay. so before i do that, let's talk about the dividends.

now, this goes in reverse. coke's dividend is actually the second highest, because the others have all moved they're starting to get down to market or below market. that's part of the opportunity. all right. three lines, three colors. you have the s&p, you've got the sector, consumer staples of which coke is a part, and then you've got coke. so the orange line is a part of the blue line and the blue line is part of the green line, sub sets of the whole. a dig dry. yes, sir, 20% versus down 7. here it is since the absolute of the bear market. same story. market, consumer staples, coca-cola. half of the market. all right. here is our chart. how do you want to draw the lines? i think you could say it is a double bottom. there it is. i think you could say we kind of

broken above the down trend line. this is now busted and the next price objective is not only to this line but to fill this gap. so what i'm thinking is we're going to here back and fill and ultimately get back to the high. it is about a 10% move for coke. i like it a lot. i think it is catching up with a group that is starting to outperform the market. get along, coke. >> how are you trading it, mike? >> yeah, i mean i'm looking out to may and buying the 42 calls. they were trading around 95 cents so probably be a little cheaper on monday because the stock goes ex dividend that waythat's an inexpensive way to make a bullish bet without purchasing the stock. this is what you want to do because coke is very much a turn around story at this point. they're trying to reduties the high capital base they have to operate their business, divesting the bottling. they're selling sugar water and that's falling out of favor. diaper and bleach don't fall out of flavor but sugar water has

been and that's their challenge. they're trying to turn things around. they have a new ceo coming in in may. i'm willing to play for a turn around story but not necessarily because it is a staple stock. >> you're not a staple kind of guy, man. >> so mike's point about being on the wrong side of history as far as what they sell i think is important one and a head wind for years to come but not something that should hit investors like a ton of bricks. this is kpekted to be the fifth decline year over year. it has 3.5% dividend deal. no real growth but trades like -- i see what carter sees and i see no reason it shouldn't play catchup. you have the chart of the xlp. >> out performing that. >> if you get that move and that thing breaks out, i feel like a lot of the industries, we've seen a lot of industry etfs come back to the prior highs. in this market you would rather own strength than weakness. you say it to me all the time.

>> sure. and as techniques go it is the most proven of all, stay with relative strength and momentum. >> right. but mike's trade is good. like if you're bullish and you agree with him -- >> one thing we have seen, huge lag ards like ibm, came back to life. disney, lag ards. it is in that category. >> sent us a tweet @optionsactions.com. there's nothing like curling up to our newsletter on a cold day like today. what are you waiting for? here is what is coming up next. ♪ >> what is a ute? >> it is what dan got short last week, and so far it is working out. and he now has a way to make even more money. he'll explain. plus, missed out on the snap ipo? we have a way to buy snap at the ipo price at no cost. >> surely you can't be serious. >> we are serious, and don't call us shirley and we'll show you hoe when "options action"

returns. "options action" is sponsored by -- 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.

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xfinity. the future of awesome. 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 the "options action." snaps first official full week of trading is in the books and a it was a volatile one. initially surged on the ipo but has since fallen roughly 6%. now the action started trading today and the activity was mixed, roughly 110,000 snap contracts exchanged hands in

today's session. half in the form of puts, compared to twitter which saw 123 options in its debut. facebook saw more than 365,000 contracts trade. the put buy comes as wall street has been cautious on the stocks sky high valuation. but if you like snap and not sure how to get in, dan has a way to do it at no cost. tan is over at the smart found with the call back. >> that sounds great, right? the stock has been trading about eight day, it has been volatile. it was up about 30% from its ipo price of $17, it is down about 24% from the post ipo high. so the stock is moving around a lot and there's a lot of situation as far as the stock is concerned that are very similar to the options that were listed today. you know, one of the reasons i think you want to be very careful when trading options of newly listed hot stocks like snapchat, one, they will be illiquid, it will be hard as far as pricing and trading them. the other one is because of that

you're not going to have great pricing, you know, the bid ask will be pretty wide. because of that you're also going to have -- and there's a bunch of other technical factors. option prices will start high. for market makers to sell options to you they have to hedge it, they have to take other things into consideration here. so for the time being option prices will be high and it will be hard to make money just being long options. any time we recommend or talk about trades that are long premium, you have to get a lot of things right just to make money or just to break even. you have to get the direction right, the timing right, the magnitude of the move. with the situation in snapchat it is that much harder in the near term. here is one of the things i think some strategies to kind can of think about when you want to make a directional bet in, like, say snap. you want to sell an option to finance the purchase of another option on that directional bet, here is the chart since it went ipo here. this side ways action could be really good. it could have some of that premium come out of the options, make it more attractive for people who want to buy 'em.

tiger spreads, that sort of thing. in the near term, let's say you're not sure about how to enter a long position in snap. today when the stock was trading around $23 i looked out to july expiration. i could look down to the 17 strike. that was the ipo price. you could sell the july 17 put at 85 cents. okay. you can use the proceeds to look up, and the stock got up to about 28.5. if you look up in july expiration use the to buy the july 30 call. that trade cost you knowing at the outset. market to market as the trike moves higher between now and july expiration you will show gains and as it moves toward the lower put strike you will have losses. on the july expiration worst case scenario is if the stock is 17 or lower you would be put in stock. so this is called a risk reversal. one of the idea ises is we want pinpoint where the good entry is. it is not a high probability bet but the sort of trade if you

think a stock is volatile and unsure about entry, it makes sense to have placeholder either if you're willing to buy it down at 17 or you think the thing could have tremendous momentum and start to move forward. >> mike, what do you think of the stock, a, and what do you think of the trade? >> actually, i'm interested in starting out talking about the trade first because what dan is talking about here parallels a lot of what we saw institutional traders doing today. the most active options were the april 18 puts and many were in fact sold. that's being willing to buy the stock down near the ipo price if you didn't have a chance to do it by selling that put, that's what you're committing to do. it might make a lot of sense. i will say the high premiums he alluded to in a lot of the cases with ipo like facebook, like twitter and like we're seeing with snap sometimes is justified because the stocks have moved around historically quite a lot in the first 60 days of trading and i expect it to be similar. i like the fact he has chosen

the ipo price at the level to get long. >> i think only question is how quickly it gets the ipo price, whether it will be monday at the open. we know it was a bad week for the stock. the stock flared up as often as the case with this kind of thing. closed almost at the low on monday, gapped down on tuesday, closed on the low today. i mean the down side risk seems to be 10-to-1 in terms of potential. >> why is 17 the price? >> think there's a lot of people that would be willing to average in. if you got a big allocation, if you are a large mutual fund -- >> but if you're not? >> i think the lot of volatility was retail chasing it after the deal, and getting it nervous seeing it come down so hard. the way i think about this, we have a few examples you could compare it to. when twitter went public, facebook went public, both of those stocks had very bad reactions to the first earnings out of the gate. these probably won't report until may.

i wouldn't expect something fantastic, a change in the fundamentals so quickly. to me it is a story you have to think out longer. . i'm not suggesting to buy the stock but i would probably take a shot if it was down at 17. >> up next, gold posted its longest losing streak in two years and the charts are pointing to more pain. we'll tell you how bad it could get which "options action" returns. ♪ "options action" is sponsored by think or swim by td ameritrade. 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

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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. . well dumb back to "options action." time for the outside call where we look back on our winning trades. last week carter and coe saw trouble ahead for gold. >> this is the beginning of a period of further weakness. >> i think the way to play this is to look out to may. give yourself a little bit of time. that's a little over 70 days until expiration if you put it out on monday. by the 116, 107 put spread, you can spend just over $2 for that. >> the yellow medal is in its worst losing streak since july 2015. carter, what do the charts say now. >> of course, it was proceeded by the big up move so to some extent it means you get over done one way and come back the other way.

at this point you had had a two-week sell off of 5%. it is not going to keep declining at this rate but it definitely looks as though it is going to keep declining. >> mike, what do you do? >> i think what you can do is take the in the money puts you have here, 116 and roll those down. take a little bit of the money off the table. you will be committing about the same amount to press a bearish bet but you will have booked a little of the profits. >> all right. let's move on to utilities now, also last week dan warned that the classic safety trade was headed lower. >> i want to look out to april expiration when the xlu is trading about 51.55. you could look to buy the april 51. 51.47 put spread paying $1 for that, buying one of the 51 puts for 1.20. >> so utilities fell more than a% in the past week. what do you do now? >> think you want to wait for the fed meeting last week.

i think it is fairly telegraphed, we're starting the see yields move thigher. if they're a bit more hawkish than people expect, back to the 2013 high which is about 10%, then i think utilities get hard. i would like to take the trade-off, if it got below 49. i wouldn't be piggish for holding off. >> reads got murdered. there was a little disparity in the rate markets. >> up next, final call from the options pit. ♪ >> "options action" is sponsored by think or swim by td ameritrade. 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. 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 ♪

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 time for some tweets. first one from farmer john who says, why are you guys so great? another super friday. thank you, farmer john. it is just how we roll around here. next up, red griffin asks as twitter neers all time low woo you sell puts or buy calls to play for a bounce.

>> you're asking the wrong guy. this has been the wrong way for me on this one more than a year or so but you have the right idea, sell puts, buy calls if you're bullish. this has been a slow grind. >> next is a question from amsten. what do you think of a condor spread with ib297, sell april 305/310 calls to open, sell 290/285 puts for a net credit for $3. has to go to mike. mike. >> i like selling condors in general. it is a good way to try to collect premium with defined risk. it is one of the groups not trading at all-time high for it so it is probably a good place. >> time for the final call. carter, what do you say? >> buy some coca-cola. >> mike coe in san francisco. >> yeah, i would use calls in coke if i was going to make bullish calls. >> with premiums where they are,

there's good opportunities to the replace stock. i like netflix. >> looks like our time is expired. i'm melissa lee. for more "options action" check out the website. meantime, "mad money" with jim cramer starts right now. >> the following is a paid presentation by range mate professional microwave cookware, the amazing microwave grill. finally, there's a better way to cook in the microwave, with cookware designed specifically for your microwave so that you can grill, cook fast one pot meals, bake, steam, and go from frozen to hot and crunchy in minutes. introducing range mate professional microwave grills and cookware. now you can perfectly grill steak in your microwave in just 6 minutes. >> why heat up the grill when-- honestly, what did it take us? a minute? to cook this steak? >> perfect