hey, there, we're live at the nasdaq site. the guys are getting ready behind me. here's what's coming up on the show. >> we're out again. >> that's what some are saying about the banks and one name in particular looks vulnerable. p plus, how would you like to play sprint for a takeout and not have to pay? >> it's my idea of sticking it to the man. and suddenly, nike shares are hot again. >> is it the shoes? >> no, it's not the shoes. it's the charts. there's something in them that suggest nike shares are going higher. the action begins right now. ♪

>> let's get right to it. despite the random rate hike, the financials were the worst performing sector as goldman sachs, citi saw red across the board. is this the beginning of a bank break down? >> i'm going to piggyback on "fast money" where there was the relative performance of the bank stocks and the broader market and it got me thinking and -- >> a total shout-out on that. >> total shout-out. this group has paused. we know the reasons why they ran up. the hope of deregulation and higher interest rates. i'll let like mike talk about the net interest margins and one of the issues that i think is really first and foremost as the new administration is bog dound with th -- bogged down with the obamacare, i think there's a move towards mid size and

smaller banks to kind of get things going again in that capacity. but the money center banks, the jpmorg jpmorgan, bank of america and citibank they may have a lot of the good news in the near term. i want to look at citigroup. these are the year to date -- citi is up 2%. and jpmorgan is up 12%. that's the one i want to focus on. but i need your take. >> for this particular week, we can't ignore the fact that there was a real bid higher in bonds, sending rates lower. >> well, i mean, as dan was pointing out, one of the issues of course for a bank is how they make their money. what rate do you lend at, what rate do you borrow at. that's what the net interest margin is trying to figure out and the yield curve has flattened since december. it had steepened, and lately it's flattened since that time, not so good for banks. the other thing is that the st. louis fed has been coming out with lending data. we aren't seeing commercial lending growth. we are seeing some distress in the auto lending space.

the one bright spot for citi is costco. because american express lost their exclusive with costco. they have a million new customers from that. but there are plenty of things that can create pressure for the financials right now. >> all of the things that we have just sort of covered are kind of the problem. in the sense that you -- the first thing that -- the expectations were too high. in coming to the beginning of the year, crude was going higher and banks were going to hire because interest rates are going higher. the interest rates have gone nowhere and it's put the three numbers into the perspective. s&p 500 up 6.5%, xfl is up 5.5% and this is a higher area of the market. it's just not doing well in the -- and the presumption is what's going to change that. >> so you have to trade on citi? >> i want to look at citi because of the underperformance to the other big money centers. thai report on april 14th, it's probably about 4.5% moving in

either direction. i actually want to target -- we have a one year chart real quickly. 60 has been the kind of support level here. i suspect as carter's call makes it around the street, i think you will see some downside here. maybe testing that 2016 low back in february near 55.5 or so. so today i want to look out to april's expiration. you can buy the april 60, 55 put spread paying $1 for that. buying one of the april 60, selling one of the puts at 55 cents. you break it down at 55, make up to $4 between 59 and 55. 55 may be a little bit of an aggressive target between now and then. but my play is pretty simple. when these banks go to guide for q2 they're not going to have a whole heck of a lot of color as far as deregulation is concerned and won't have too much color about what's gorge -- going on

with the net interest margins. after the fed meeting you had a dovish rate. for all intends and purposes. i like the risk/reward of this. >> it's been a laggard and it has the problem that it has the biggest global foot print. it's in a lot of areas that are struggling and areas that are closing down. not great. >> mike, do you like the trade? >> yeah, i do like the trade. you know, dan's point about regulations obviously a very good one too. ed to -- dodd/frank, everything that trump has been doing has been pushed out. and obviously if people were baking in the good news, now they don't get it that limits the potential upside if the market rolls over. that's potential weakness for financials as well. >> the one outliers the ceos can say they -- they can go on the conference call and talk about the animal spirits that are happening between businesses. they're creating more businesses. >> i'm a bit spectacle of that. i don't see this administration,

progrowth, they don't look that way by their actions. if they can't get policy instituted over the next few months i think the business leaders which have kissed the ring may think twice about how they're going to deploy the resources. >> let's go the stock that's gone from worst to first. nike surging up this year, making it one of the best performing stocks in 2017. this after they dropped 20 percentage points making it the worst of the dow last year. earnings are next week. there could be more gains ahead. carter, what do you see? >> all this flip-flopping, health care was so bad then it's good this year. energy so good last year and now it's so bad. often there is something to say for mean versus aversion. nike sets up well to my eyes so let's just see at least if i can draw the lines that my eye sees. so i -- here's the 2011 and 2017. the first thing that comes to mind is this. and the second thing that comes

to mind is this. well, guess what? we're popping out of the top of that formation. that's a nice set-up. it's a period of massive underperformance for a large cap asset. a mature growth company, but still a growth company. let's drill in on this what's gone on here. here's the day to day. and there's the line. meaning what's gone on here, we have moved above an important down trend line. so the here and now chart shows that. now, the question is of course where to, how much higher? i think ultimately you have the prospects of moving up towards 65 or about 56 now. i want to show you a few other things that are worth, looi loo. the opportunity, how bad this was, so this really tells you the story. this is the consumer discretionary sector of which nike is a big part. this is nike. i mean, that's a massive spread. talking about 1100 basis points

up and 900 basis points. so 2,000 basis points spread. you'd see how do we know you'll catch up? it's already started. here's the proof. let's take those two areas. one week, nike versus its better. one month. two months. three months. meaning you've got a situation that yeah, it was a laggard. that's the opportunity. now this part here is better than this part here. so you're starting to get the very thing you want which is outperformance. i like nike higher. >> mike, you have got a simple trade tonight on nike. >> yeah. i mean, here's the thing. options are exceptionally cheap on nike right now. i was looking out to june. you can buy the 55 1/2 calls. these are in the money for $2.45 so you're spending $2.15 in extrinsic premium. you know under 4% of the current

stock price. that's with them announcing earnings next week. this typically moves about 5% on earnings. right now they're implying a move of 3.7%. you know, this is a situation where you're buying a stock that's trading at a market multiple. that's had very good top line growth. they're facing competition here in the shoe business in north america. so we are anticipating some margin impression. but 6% top line revenue growth, that's faster than s&p earnings are growing. for me, this is the way to make a cautious but optimistic bullish bet on nike. >> we have a ceo, adidas on earlier this week, dan. he made it clear he'd go aggressively after the north american market and compete against the likes of nike around the world. do you think this at least for a trade works? >> i think adidas is clearly on fire. i think the big issue is about the toks reform and the border adjustment tax. when i look at that technical set-up i see what carter sees and mike's trade makes a lot of

sense. when you think of the 4% move in either direction when you think of how much the at the money calls are out to june that makes a lot of sense to define your risk. i'll tell you this, if the earnings or the guidance disappoints the stock is is not breaking 50. if you're looking at this trade and you want to kind of back in a bit, don't make -- >> the adidas thing, the key thing there, a great performer. up several hundred percent but that's not new news anymore. they have gotten their share back so to speak. i think nike is just fine. >> all right. go ahead, last word, quick. >> i was going to say very quickly. the street is expecting a small earnings decline sequentially versus last year. even a match at this point would probably be viewed very favorably. >> got a question out there, send us a tweet and check out our website, optionsaction.com. check out our super cool news

letter. don't be the last one. in the meantime, here's what's coming up. when you want to make a call, always be sure you have the right number. >> when playing sprint for a sale be sure not to spend any money. we'll show you how. plus -- >> when the money is coming your way you don't ask any questions. >> there's one question we want to ask. how is dan planning on making money on the netflix long trade? we'll explain when "options action" returns. "options action" is sponsored by thinkorswim by td ameritrade. 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." there could be a spree of deal making. we have the story in los angeles. hi, julia. >> the new fcc chair has a more relaxed attitude than the predecessor. he decided not to review the at&t and time warner cable and we could see other deals. we could see consolidation as wireless companies struggle with price wars and rising costs. >> the marketplace right now is extremely competitive. it is delivering unparalleled value to the american consumers. if you look at the last couple of weeks the national carriers are competing against each other to give new or expanded data plans, something that's good for consumers.

>> what's next? verizon's mcadam is looking for deals saying a at the communications conference in december, quote, we'll look for opportunities and put the money fine the area -- into the area we think we can scale. your cost structure is critical to long term success. mcadam has talked about the value his telco can see in combining verizon with charter. we could see t-mobile look at the potential deal with dish again. we could see the long discussed t-mobile/sprint merger emerge as an option again. craig moffett says, quote, the fcc will not pretend to know more than the market. it will take a much more hands off role as a result. melissa? >> thank you very much, julia. well, that potential merger has been t-mobile and sprint has been a hot topic and both stocks are surging. how should you play it? dan has this call to action. dan? >> so both of these -- like you said, there's a lot of rumors and the stocks have performed well because of the thought they -- maybe they would be

acquired by a different sort of -- maybe a cable company or that sort of thing. clearly these stocks are in play at the moment. i'm not so certain let's just look at sprint right now that you want to chase a stock that's up 170% from its 52 week lows. but we can use options to construct a trade strategy that would let you participate on a move to the upside and give you a little room on the downside if your long entry isn't great. i want to talk about using a call spread risk reversal and that's selling a put to help finance a call or a call spread. we'll buy a call spread or sell a put. you're looking to basically have an alternative to stock. that's really for the risk management sort of purpose. the other reason i would say, this finance of the put sale what i'm trying to do is create a scenario where i'm not paying premium out right now. if the stock goes lower towards the short put sale, then i'm going to have mark to market losses. if the stock rallies up to the

long calls then i'll have gains on the mark to market basis. i'm not paying anything for it. the last one is to get leverage for a sharp upside move so that put sale is helping me buy these calls, not do it for a big premium outlay and that's giving me leverage to the upside. i want to give you an example with sprint. the stock today was trading about -- i think it was about 860 or so. you could actually sell a downside put. i want to look at this 7 level. this was the breakout level from november. the stock had a big turn around right after the election as obviously i think a lot of traders thought this think was in play. that's the 200 day moving average where they meet. so when sprint was trading 860 look down to january, 2018 expiration and sell the seven put at 80 cents and use that to buy the january 10, 15 call spread for 80 cents. costs you nothing. the stock is above 10 and between 15, make up to $5.

your max game is $5 over $15. the stock is seven or below, you put the stock there, 100 shares per one contract sold short and you have losses. i'm giving myself some wiggle room on that january expiration, but i have a ton of leverage up to the upside. that's a huge percentage of where the stock is. that would only make sense if there was a deal and the stock exploded higher. >> all right. so mike, what do you think of the trades? >> yeah, it makes a lot of sense. right now, we have a situation where generally speaking options are very xeecheap. we want to be better buyers of them, but that's not the case in sprint. if you're trying to make a bullish bet by buying the premium you'll sell the two options and he's taking care of it. that seven strike where he'll put the stock if it does decline does represent a 20% discount on the price. it's actually true that a lot of the risk guys like to be short

upside calls when there's a deal in the works. this is actually a play that's consistent with that as well. >> how does the sprint chart looks? >> it looks good. is this one of the things that was left for dead, and things that are thought to be zeros end up not being zeros often are some of the greatest winners because everyone has capitulated and has an out. it's been back and filling and it looks quite rested to my eye. i would say that ultimately there's more upside. then there's this. things like t-mobile act well. in a consumer type area where everything is bad, can retail -- think of how media acts. whether it's viacom and disney. this is a good place to be in. >> up shares of boeing slipping from the all time high and things point to more pain ahead. we'll tell you about that when "options action" returns. >> "options action" is sponsored

by thinkorswim. 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. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol.

medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more.

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 look back on the winning trades. coen carter made a bearish bet on boeing and it looks like mike's trade is about to pay

off. on pokem"options action," that't carter did with the bearish get on boeing. carter thought shares had run too far, too fast. >> to my eye, that's your next move. too far, too fast, do something. sell, bye. >> hmm, maybe carter is on to something. but shorting the stock that could lead to infinite losses. >> he's crazy. >> so to make a bearish bet mike instead sold the april 180 strike call for 630. now to keep all that money, mike needs boeing shares to stay below the 180 strike price. but mike won't see losses until boeing rises more than the 630 he collected or above 186.30 by april expiration. but remember, there is a tradeoff. because above 18630, mike could see infinite losses. >> surely you can't be serious. >> we are serious. and don't call me shirley.

to define the risk, mike bought the 190 call for $2 and created his fair call spread. now between the 630 he collected by selling that lower strike call, and the $2 he spent buying that higher strike call, mike still pocketed $4.30. that $4.30 is the most that mike can make on the trade. to keep it, mike needs shares of boeing to stay below $184.30. he starts to see losses, but they're limited to the difference between the strike for the call that he sold and the strike of the call he bought. w minus the credit. let me make it simple here. mike can make money whether boeing drops, stays flats or goes slightly higher. since the time of the trade, the shares have fallen 2% meaning they're right in the sweet spot. now we want to know what one thing, what will they do now?

mike, what do you do? >> this is working out just fine. as long as carter is along with -- with me on that one. these are going to expire before earnings. so we're continuing to collect premium. i think we should collect premium. i don't see the stock going significantly higher from here. >> yeah, not much has happened. the stock hit a low of 177, back to 180. but the beginning of more trouble. >> up next your tweets and the final call from the option pits. >> "options action" is sponsored by -- 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.

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 welcome back to "options action." time for some tweets. the first comes from our very own brian kelly, is dan's hair real? and is it as spectacular in real life as it looks on tv? mike, what do you say? >> it is real and it is

spectacul spectacular. i'm very envious. >> really spectacular? >> are you serious? here is your opportunity to rag on him. >> i understand. but this is coming from a guy who probably needs implants himself and he doesn't. so, you know? >> your hair is spectacular too, mike. our next tweet comes from our old friend in france. long time viewer. he says happy quadruple witching day. with ackman exiting vrx, how do you play it? sounds like a question for mike. >> yeah, the short interest is so high, that elevates the price of puts and decreases the value of calls. i feel like it's a no touch to be honest as much as i don't like the stock. >> all right. thank you. time now for the final call. carter? >> i want to get long on nike -- or add to it if you're already long. >> mr. mike?

>> mr. mike? >> nike is the way to play >> 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