hey, there, we're live at the nasdaq markets on a snowy afternoon. here's what's coming up on the show. they're here! >> yes, they are. snap options are finally here, and we'll show you how to use them to get some of your money back on the snap ipo. plus. >> have a coke and a smile. >> but coke investors haven't 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 -- ♪ disco, disco, disco >> gold is on the worst losing streak in two years, and 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 focus the on oil and rates quietly, tech stocks are breaking out. the tech sector surging to the highest level in nearly 17 years, driven by names like facebook, microsoft and amazon. >> the names you just mentioned, and throw apple in there, with a $730 million market cap. it's more than a third of the nasdaq 100. it's been a concern of mine. it seems to me that the world seems very comfortable with these stocks, and they're obviously executing very well and stories that are going to be around for a long time. butt fact that they don't budge tells me that's a crowded trade, but it's a good trade when you see apple up 20% on the year, facebook up 20%.

to me, i don't think you want to be buying these stocks at the tippy, tippy high. >> 100%. the best-performing sector on the year, the largest cap in terms of the weighting. if you look at a long-time chart of this sector, for the first time in eight years, it is through the upper band of that channel. and blowouts through a 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 that's what a lot of people out there are thinking. i don't want to buy bank stocks right now. they've run up massively. certainly not going to buy into energy hoping to catch up. >> the valuations on the financials might be better than they are than in tech. consider apple, valuations there might look relatively inexpensive compared to the rest of the group. but it's hard to imagine that being a growth story.

google is a growth story, facebook is a growth story, but facebook is one of those things that is pretty heavy at this point. as dan pointed out, chasing the stock right here is a dangerous errand. >> what dot charts lo the chart? >> not one has made a new relative high to the market. you're talking about facebook and amazon. google. the best performing of them all, not only from the inception is netflix. and the day to day is the best performing. so 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 interesting things, least year in 2016, they saw acceleration in revenue growth. they'd been growing sales in 21, 22, 23%. obviously, international expansion's been good for them. we saw that in their subgrowth. they've obviously been doing

some good things. but here's the thing. you could try the short or netflix at any moment at any point over the last five years based on valuation and it's been a dead-bang loser. we just thad the anniversary of the bull march kit. and th so the question is what can you still buy? the story here is still in tact until it's not, i know there's probably takeover spec. this is the biggest problem. it's got a $60 billion market cap. for them to sell this company it would have to go for at least $80 billion, and there's very few people who could do that. if you want to stay in the game, maybe you are thinking about playing into and out of earnings season, it's likely to be in the last week of april, you may want to use options to define your risk. options premiums low. look at this chart of implied

volatility. it's trading at 52, certainly at multi-year lows. here's the trade that you want to look out to may. we know that's going to capture. think about this as a stock replacement. as a fine risk strategy between now and may expiration, you could buy the 165, buy one of the may 155 calls. there's your $5. that is your max risk, about 4% of the underlying stock price and you make up to 15 dollars between 150 and 165. that's up to 10%. usually it averages 10% in either direction. risk five, maybe make 15. >> it's lasted well, two quarters, which is not necessarily the case for microsoft. you've got two gaps, often you get a third. >> mike, what do you like about the trade or what don't you like? >> i definitely would prefer

this trade over buying the stock. as dan pointed out, the options are very reasonably priced. he's got enough upside to justify it and obviously the amount that you're spending relative to the stock's current price makes a lot of sense. he mentioned before that valuation wasn't a good reason to short the stock. but i think competition might be one of the concerns netflix faces now that they haven't historically. increasingly, amazon is going to be a competitive player and google will as well. if they get traction, the attractiveness of netflix as a potential takeover is going to have to decline. >> i would have to add one more point, the competition front. if apple ever gets together their act and puts together some streaming video thing, it's going to be a very difficult, massi massive head wind for netflix. from hot stocks to one that's been fizzling. coke is the worst-performing chart stock.

but they think it can make a come back. >> talk about dogs for dow. this is the worst-performing stock in the dow jones average. what we do know is the consumer staples as a group have started to come back to life and have actually outperformed the market. coca-cola is perhaps the preeminent staple stock there is. and i want to put this in context. take a look at these stats. these are some of the biggest movers. these are killing the market year-to-date, obviously, we've got smokes here, diapers here, bleach here. big numbers. procter and then down here, lagging in a big kind of way, every one of those stocks i just showed you, killing the market. in a way, this is maybe the most important in the longest sort of 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 difficuvidends. this goes in reverse. coke's dividend is actually the second highest. because the others have all moved, they're all 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. then you've got coke. so the orange line is a part of the blue line, and the blue line is a part of the green line. subsets of the whole. a big drag, yes, 20% versus down 7. here it is since the absolute nater of the bear market. same story, market. consumer staples, coca-cola. half of the market. all right. here's our chart. how do you want to draw the lines? i think you could kind of say it's a double bottom. there it is. i think you can kind of say we've 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 hear back and fill, and it's about a 10% move for coke. i like it a lot. i think it's catching up with a group that is starting to outperform the market. get along coke. >> mike, how are you trading it? >> i'm looking out to may and buying the 42 calls, they were trading around 95 cents. they'll probably go a little cheaper. that's an inexpensive way to make a bullish bet. coke is really very much a turn around story at this point. they're trying to basically reduce, basically. the high-capital base. they have to operate their business, divest some of the bottling operations. they're selling sugar water, and that's falling out of favor. diapers don't fall out of favor, but sugar water has been, and

that's really their challenge, and they are trying to turn things around. they have a new ceo coming in in may. but not on a valuation, not necessarily because if's a staple stock. >> you're not a staply kind of guy. >> to mike's point about being on the wrong side of, you know, history as far as what they sell, i think is a really important one. this is going to be a headwind for years to come, but it's not something that should hit investors like a ton of bricks this. is their fifth decline. it's got a 3.5% dividend yield. but, i see what carter sees, and i see no reason why it shouldn't play catch up. you have a kpart of the xlp. yeah, i mean, if you get that move and that thing breaks out, i guess i feel like a lot of those industries. we've seen a lot of those industry etfs come back to the prior highs. i'm expecting a failure at some point. in this market, you'd rather own

strength than weakness. >> as techniques go, if it is the strength. >> mike's good, if you're bullish and you're with him. >> huge laggers like ibm, guess what, coming back to life, disney. this is in that category. >> send us a tweet kpat optionsapgs. and while you're there, check out our super cool newsletter. there's nothing like curling up to it on a cold day like today. what are you waiting for? here's what's coming up next. >> it's what dan got short last week and so far it's working out. and now he 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. >> sure lly you are can't be serious? >> we are serious, and don't call us shirley. we'll tell you how, when options

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.

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." snap's first official full week of trading is in the books. and it was a volatile one. it has fallen roughly 6%, now options start trading today, and the activity was mixed, roughly 110 snap contracts closed hands in today's session, about 75% of that was in the form of puts. compare that to twitter which

saw 123,000. and then facebook which saw more than 365,000 contracts trade. the put has been cautious and the sky high valuation. if you like snap and you're not sure how to get in, dan has got a way to do it at no cost. >> yeah, that sounds great, stock's been trading about eight days, pretty volatile, up 30% from the $17. the stock's 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. one thing i want to be careful of newly-listed hot stocks like snapchat, they're going to be i iliquid. because of that, you're not

going to have great pricing, the big asset's going to be pretty wide. there's a bunch of technical factors, for market makers to sell options to you, they have to take other things into consideration here, so for the time being, option prices are going to be high, and it's going to be hard to make money with long options. anytime we recommend or talk about trades that are long premium you've got to get a lot of things right to make money or break even. like the situation here in snapchat, it's that much harder in the near term. here are some strategies to kind of think about when you want to to make a directional bet in say snap. you want to sell an option to finance the purchase of another option. on that directional bet. here's the chart since it went ipo here. this sort of sideways action could be really good. it could have some of that premium come out of the actions, make it more attractive for

people who want to buy them. but in the near term, let's just say you're not sure about how to enter a long position in snap. today when the stock was trading around $23, i looked to july expiration, i could look down to the 17 strike, the ipo price. you could sell the july put as 85 cents. the stock got up to about 28.5. you look up to july, and you could use that to buy the call. that trade costs you nothing at the outset. market to market as it moves to the july expiration, you will show low gains, but on july expiration, the worst-case scenario is that if the stock was 17 or lower you'd be put the stock. if it's 30 or higher you're low in the stock. we can't pinpoint where the good entry is. this is not a high probability bet, but it's the sort of trade that if you think a stock is going to be volatile and you're

unsure about entry, it makes some sense to have a little bit of a placeholder, if you're willing to buy it down at 17 or you think the thing could have tremendous volume and start to move higher. >> what do you thif the stonk o stock and what do you think of the trade? >> i'm interested in talking about the trade first. what dan's talking about parallels about what we saw institutional traders doing today. the most options were the april puts. that's basically being willing to buy the stock down near the ipo price if you didn't have a chance to do that by selling that put, that's what you're committing to do, and that might make a lot of sense. i will say that the had high premiums that he alluded to, and you have like facebook and twitter and snap, sometimes they're justified because these stocks have moved around historically in the first 60 days of trading, and i expect this one to be similar. i like that he's placing the ipo

rates to get long. >> i'd be interested in how quickly he gets the ipo price. it was a bad week for the stock. it flared up. had a high of 2944. gap down on tuesday, closed on the low today i mean, the down side risk seems to be 10-1 in terms of upside potential. >> why is 17 the price? >> i think there are a lot of people who are willing to average in. if you're a large mutual fund. >> but if you're not. >> i think a lot of the volatility we've seen over the last week was retail chasing it right after the deal and getting nervous, sighieeing it come dow hard. we have a few examples to compare it to when twitter went public, facebook went public. both had very, very bad reactions. i wouldn't expect something fantastic, any change in the

fundamentals so quickly. so to me, this is a story you have to think much longer. i'm not suggesting to buy the stock, but i'd probably take a shot at $17, if it was back down there, a lot of them will be averaging the whole way. up next, gold just posted the longest losing streak in nearly two years, it could mean more pain, weel talk about that when "options action"s returns. "options action" is sponsored by sink 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 and the wolf huffed like you do sometimes, grandpa?

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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 for the upside call where we take a look back at some of our winning trades. last week carter saw trouble ahead for gold. >> this is just the beginning of a period of further weakness. it's been good, i would book gains, make call, do something. >> i would look out to may, give yourself a little time, that's a little over 70 days till expiration, by the 116-107 put spread, can you spend just over $2 for that. >> the metal is in its worst month since july 2015. >> it was preceded by this big up. you get overdone one way and then back the other way. you've had a two-week selloff of

about 5%. it could keep declining at this rate, but it doesn't look as if it's going to keep declining. >> mike, what do you do? >> i think you can do is take the in the money puts and roll those down and take a little bit of money off the table. you're going to be committing about the same amount for a bearish bet, but you'll obviously have booked a little of the profits as well. that's a way to make the bearish bet but not keep the same amount of capital committed. >> let's move to utilities. dan warned that it was headed lower. >> i want to look at april expiration at 51.5. you could look to buy the april 51.47 put spread, paying $1 for that, buying one of the april 51 puts for $1.20, selling one of the 47 puts at 20 cents. >> so utilities fell more than a percent in the past week, dan, what do you do now? >> i think you want to wait for that fed meeting next week.

it's been telegraphed, but we've seen yields move higher. it's probably going to make a run run. if they're hawkish, i could look to make this trade-off if the thing got buy low 49. i wouldn't be piggish. >> there was a little disparity between these rate sensitive areas of the market. >> up next, final kpaul frcall 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. 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 mo says why are you guys so great, another super friday. thank you, farmer john, it's just how we roll around here. next up, red griffin asks, would you sell puts or buy calls to

play for a bounce? >> you're asking the wrong guy. but i think you have the right idea. sell puts buy calls if you're bullish. i expect 14 to be good support. >> next is a question from anston. what do you think of a condor spread. to open and sell 290/285 puts to open for a net credit of $3. that has to go to mike. mike? >> i like selling condors in general. it's a good way to collect premium with defined risk. and this is one of the groups that isn't trading at an all time high right now, so it's probably a good place for it. >> time now for the final call. carter what do you say? >> buy some coca-cola. >> mycohike cohen. >> i like dan's netflix call. >> with premiums where they are, there's a lot of opportunities to replace stocks.

so netflix. >> thanks so much for watching. for more "options action" check out the website. for the meantime, "mad money" with jim cramer 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