life at the nasdaq market and for the first time in weeks, the gang's finally back together. while the guys are getting ready, here's what's coming up on the show. >> it's a bird, it's a plane. >> no, it's just shares of amazon but if you missed the move, relax. we have a way to buy it for just 20 bucks. plus, talk about a bank job. >> this is a robbery. >> after a run, financials have underperformed the market this year and there could be even more pain next week. we'll tell you how to profit. and, chip stocks are on fire

but there's something in the charts that's indicating the run might be done and we'll tell you how to cash in. the action begins right now. let's get right to it because the banks have gone from hot to not. financials, the worst first of alling sector in the last month, down more than 4% and the selloff comes as jpmorgan, citi, wells fargo kick off big bank earnings next week. so could there be more trouble ahead in the space. dan? >> what's interesting to me is bank stocks massively outperform since is election the s kpp 500. it's nearly double that performance year to date, though, the s&p is up 5%. i guess more importantly the s&p is near all-time highs yet the bank stocks are sold off 5% or o6 r 6%. their showing poor relative performance. we speak about it on this desk almost every night this year. what is driving the market, what are the things that are going to

continue the strike and obviously it has a lot to do with this legislative agenda that's perceived to be p pro-growth. one thing that is really driving the banks, though, i believe, is deregulation that that doesn't have to be legislative. that could come from executive order and we've seen the president do that in a couple of occasions but i guess the main point here is one of the reasons why i think going into bank earnings next week is that we're going to have a lot of, you know, bank ceos who are not particularly clear on what's going on in the near term and therefore we may see guidance that may reflect that. >> you know, one of the things i would point out is that, you know, these stocks if you look at them just on any kind of historical metric are pretty inexpensive. certainly they're inexpensive relative not market. most of these are trading in the very low double digits, somewhere between 12 and 14 times relative earning. return on equity is pretty good but the fact is that they've been cheap for quite a while and this boost has made them more

expensive than they have historically been and it seems unlikely that whatever's happened in the past because it is largely legislative, regulatory-based trading going on in the financials, that it's going to have a huge impact what thenz on earnings unless they address that issue specifically. >> the other thing just specifically about financials is that while they might be cheaper than historical measures, they're in principle not going to achieve the high roes that they achieved in other market cycles. they have business lines that will never return. it really is this. we know it's been a year of defense, everything that's beat, energy, industrials, all underperforms. financials peaked on december 8 and when they broke out and there was a lot of high fiving like i'm winning owning banks, no, you were losing, the banks were underperforming the market and it doesn't look like they're getting better. we made a new intermedial low today in rates. it's a bad place to be. >> look at all the disappointing

economic data we've had talking about gdp, autosales, look at what, you know, so to me, the jobs data today, there's a lot of things that actually could go very wrong for the banks a couple things that could go right but the biggest issue is, if he decides to do deregulation by executive order i think that betrays a lot of that pop list message that was in the campaign and i'm not sure he's going to let a couple goldman-sachs guys do that. >> 50% of the slf is going to report and to me, when i look at option prices they're relatively cheap here. if you have some big gains in some of these names and you want to hold on to them, you think we could see some volatility to me i think it makes sense to look @xlf as a hedging product or use options to make a defined risk. so to me, today when the xlf was trading 23.60, you could look at april expiration, buy the 23.5, paying 27 cents, it's a little bit more than 1% of the

underlying stock price now i know that it's just for two weeks but when you think about all those events, everything that we're talking about on a daily basis coming out of washington, this looks like a very dollar cheap way to hedge at least a portfolio of bank stocks or make a near-term bearish bet and i'll mention this. 1%, that's what you're risking, 1%. i think there's a good chance you're going to have a 1 % down day. >> it's very narrow bearish view so would you make that a longer bet since you're negative on the group. >> well generally speaking i do favor if you're going to be long options being longer dated options definitely makes a lot of sense because the decay is less but the differences that he's identified a specific catalyst and it's likely if you're going to get some movement that earnings are -- the movement that you're going to get so to me, i can see why you would do that. >> you talk about longer term and there are people making the case that we've got lows in finance but that's to be determined for now we know that it was a trap.

it out performed for a bit but anyone who's in it now is not liking what they're seeing. >> and i'll just mention this. the xlf's trading 23.60, bank of america is trading like 23.20. if you look out two weeks, the bank of america put options are much more expensive than that of the xlf ones and that is for very good reason. there's a lot of idiosyncratic risks, bank america could go down and it may not have the same effect. >> wells fargo also has idiosyncratic risk and anyone who has exposure to investment banking, you're talking about businesses that are going away. >> you've got asset managers in the xlf which are struggling, fairly extended insurance names not a good place to be. >> group of stocks that have been on fire, we're talking about the trips, the sem conductor surging more than 40% in just 12 months and trading just penny was. the run's been led by names like invideo up 183%, micron, applied

materials has rallied more than 85% and the options market has been sizzling for one of these names, nvidia's open interests surging 25% this week alone. the chart master thinks the record runs could be coming to an end. >> this is the leading, obviously, tech name in terms of performance. but what we have is a situation where if you look at the sub industry groups, the active sub industry groups in the s&p 500, 135 plus or minus, semis were number one in 2016. they're in the top ten again this year and nvidia has had an incredible run but there are a couple things i would keep in mind if one is thinking this could continue and the first would be this. if we know that up trends and down trends are characterized by countertrend moves, the up trend in the semiconductor index has not had a check back to trend, it has not had a check back in ten months. since the beginning of data, for

the semiconductor index, there's only been one instance where it has not checked back to trend in a 12-month period so we are now on our tenth month and if one is making the bet that this somehow will break yet another record, then one stays with it. but the question is, do you trim a great winner like this? so at this point, i'm thinking it's a bit too far, too fast, there's all the news that you could want which is that there's a lot of m&a coming, individual securities are not only going to do well on their own but the self-driving car is changing the way things are going and at some point, everyone's in and trade is crowded and there isn't a lot of upside so it's my judgment that one would want to reduce exposure to semis in general and then nvidia in particular has all the look and feel of a topping out formation. >> you know, i mean, pretty simply from a fundamental perspective, i mean, he's right and the reason everybody's in this nvidia which makes gpus,

there's a future for these things and this is a company that's had phenomenal top line growth, phenomenal eps growth and they're in a business that's going to be likely successful in the future but from a fatechnic perspective, i can see where he's talking about it being stretched and the valuation has gotten a little bit ahead of where it's historically traded. i think what you can do is look out to june and buy the 180 spread, sell the 80s against it for 80 cents, that will give you protection out until june that's going to capture earnings which are going to be reporting in may. and obviously, there's a lot of other things here, the market has had quite a run since trump was elected and we keep talking about whether or if there's going to be some kind of a pull back, earnings could provide that for this name or provide it for the market generally. >> wall street sentiment has sort of soured in recent days with nvidia. >> those are the things to watch. late last year there was a

couple downgrades when the stock was up and that's kind of going like this in the air. this is a little different now. there is a lot of competition, a lot of m&a and when you think about that double top that was made december and then in february. >> it's a little minor head and shoulders top. >> making lower -- >> you've got the gap underneath. >> listen, i said this on fast money the other night and i got so much hate mail, i couldn't believe it on twitter. i said it's going back to the 82. >> all of the fundamental strengths that the company does possess are some point in the future. self-driving cars, we know they're coming but it's not going to be next week or next quarter or next year. so basically that growth opportunity is quite a ways away and if investors look and don't see those returns coming in quarter after quarter after quarter, that would be a reason why they might lose patience and say, you know what, we're going to take your profits here. >> got a question out there, send us a tweet. check out our website

optionsactions cnbc..com. check out the super cool newsletter. in the meantime, here's coming up next. i ain't paying no 150 cents for no coke. >> that's too bad because quietly shares of coke have been on a rally. plus it's amazon's world and we're just living in it. but if you missed the move in the stock, we've got a way to buy it for less and we'll explain how 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.

si'm happy for the distraction. i'll be right there. and the butchery begins. what am i gonna wear? this party is super fancy. are you my uber? [ horn honks ] hold on. [ upbeat music playing ] the biggest week in tv is back. [ doorbell rings ] who's that? show me watchathon. xfinity watchathon week now until april 9. get unlimited access to all of netflix and more, free with xfinity on demand. what?pony neighing] hey gary. oh.

what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. welcome back to "options action." probably one of the single biggest stock stories of the week had to be what happened with amazon.com. now, that stock ended in eight-day winning streak yesterday on a week where we saw three new record highs in succession, which means that amazon stock has now made 11 record intraday highs in 2017. now, despite the momentum pause over the last couple of days, the total market cap of the company has increased by around

$6 billion just this week alone. to put that in perspective, that's nearly as much market cap in a week at all of ralph lauren as a company is worth or it's about as much as the total market cap of kohl's as well and if you think that's impressive, try the near 20% gain in the stock just in this year. that translates into a whopping $71 billion in added market value or like roughly adding the size of american express. but can that run last? according to fact set, 89% of analyst haves a buy rating on the stock and the remainder 11% have a hold. the average target price is just 8% above where we are now, so after a blistering run like this, there are at least a few traders who are feeling more cautious about more potential upside. melissa, this stock has reached what some call over bought levels or upside in a relatively short amount of time. that doesn't happen very often, statistically speaking, so amazon perhaps one of those trades for debate going forward, guys. back to you.

>> thanks, dom. you got gains in the stock are looking to buy, mike's got a way to do that for less. he's at the plaza with his call to action. >> yeah, sure thing. to this is still a bullish strategy but it's a more conservative one. number one, we're trying to look for situations where we're trying to protect recent gains. obviously, amazon qualifies. secondly, this is something where you don't have as much of a margin of safety, stocks that might have a high valuation. and finally, situations where you might have capital constraints. amazon is a very high-dollar stock, owning 100 shares of it is going to cost you about $90,000 so maybe there's a cheaper way to take a long bet. taking a look here, we're basically trying to identify where we think the stock could go, number one, where it's come from, so the risk we're trying to avoid so right here we can see the stock closed around $900. you know, what we can see, by the way, this is trading right on the highs so we can talk to -- we can talk to carter about this, but i was looking at the 925 level because i think if it's going to break out, that's the number your going to have to

look for so just looking at the trade, i think you can buy the 925 call, spend $26.10 for that, sell the 1,000 strike call, that's going to give you more than 10% to the up side. obviously, the net price here just over 18 bucks you're going to be risking a relatively small amount of the current stock price so you get to commit less capital to the trade. if it does happen to pull back, you're obviously not going to suffer those same losses but you still get to participate to the upside. >> you like these levels? >> i do. let's talk about the levels. what we know is what? the stock just broke out to new highs. if the stock was trading at 850 in october and it is now trading at 895, up 5% in five months, that's not extended, meaning it's a classic breakout, and put it in context, the market is up 7%, 8% so you have a stock that's underperformed in the s&p over the last five months so how's that extended? all-time highs is an irrelevant thing. amazon looks great, there are extended stocks, the way nvidia

got extended. i like amazon and i like the. >> the stock is up 85%. >> and what are their earnings and revenues up since then? >> not up 85%. that's a fact. i'm just telling you. >> it's not about that. >> i know but i guess my point is -- >> when you have a stock that's 080 p, it's not about valuation. if you get into charts, there's not a steep angle. >> i understand, but can i tell you what is steep? gaining a couple hundred billion dollars in 15 months in market cap. >> i get that. >> we're actually witnessing things that we've never seen before in this market and i remember what it was like in '99 and 2000. >> and there's never been a large cap stock growing like this. u.s. steel at its height, general motors, there's never been an asset this large growing at this rate. >> people recognize this not as a business but all businesses. so when we look at the weakness in retail it's because amazon's taking over. when we think about the risk that something like netflix might potentially face, amazon's one of the places you're going

to look at. when you're dealing with microsoft and oracle and alphabet and their cloud business, we're concerned about aws. >> so hold on. >> let's do this first, though. because dan is a big respecter of trucks. do you think the chart looks extended? >> i guess my point is this. a lot of very smart people think this is going to be the first trillion dollar company, not apple because of what you guys are saying. it's all things to everybody. but it's important to note that when everybody was saying apple was going to be a trillion dollar company, it also had two 40% peak to trough declines. >> do you not like mike's strategy? would bother participating in amazon? >> it's fine. >> it's a $50 decline from where the stock is, we're going to be risking one fifth of that amount, basically. >> it's a classic oa trade. >> a classic oa trade. >> doing something that no one -- >> put it on the real. all right. up next, call it a soda pop. shares of coke have been bubbling higher and that's

create news for cohen carter. we'll tell you why when "options action" returns. hey gary, what'd you got here? mobile "options action" is sponsored by sink or swim. 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 hi, i'm frank. i take movantik for oic, opioid-induced constipation. had a bad back injury, my doctor prescribed opioids which helped with the chronic pain, but backed me up big-time. tried prunes, laxatives, still constipated... had to talk to my doctor.

she said, "how long you been holding this in?" (laughs) that was my movantik moment. my doctor told me that movantik is specifically designed for oic and can help you go more often. don't take movantik if you have a bowel blockage or a history of them. movantik may cause serious side effects, including symptoms of opioid withdrawal, severe stomach pain and/or diarrhea, and tears in the stomach or intestine. tell your doctor about any side effects and about medicines you take. movantik may interact with them causing side effects. why hold it in? have your movantik moment. talk to your doctor about opioid-induced constipation. if you can't afford your medication, astrazeneca may be able to help. at crowne plaza we know business travel isn't just business. there's this. 'a bit of this.

why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. 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." it's time for the upside call

where we take a look back at some of our winning trades. last month, cohen carter played coke for a breakout. >> so, what i'm thinking is we're going to hear back in fill and ultimately get back to the high, 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. >> i'm looking out to may and buying the 42 calls they were trading around 95 so probably be a little bit cheaper on monday because the stock goes x dividend that day. >> coke shares are up 2% since then so carter, what do you see in the charts now. >> that's pretty modest. what do we know? we know that since march 1, staples are outperforming the market. coke is outperforming staples. stick with it. >> mike. >> yeah, i think one of the things you probably want to think about doing, though, is stretching the trade out a little bit if you're going to do that and you know, we're up but we're up 15% on an option. honestly, we're probably looking for returns a little bit better than that but you can give it a little bit more time.

options are cheap on coke. you could probably go out a couple months. >> we can't all be winners and it's stan's turn to get cold out. dan said the run in johnson and johnson was over back in february. >> when the stock was trading 122 today, you could buy the april 120 put paying $1.5 for that. that breaks down at 118.5, that is down 3% so risking less than 1% of the underlying stock price, break even down 3%, you have a stock that's just rallied 10% in a straight line. >> what shares have risen 3% since that call. >> they were up a lot more. this is one i think we updated at least online. in long premium directional trades when you're out about 50% of your premium that you originally expected you got to cut it. the probability of it getting absolutely worthless is very good at that point. here's the thing. they're going to report earnings on april 18. if you haven't, the options are worth about 33 cents, at this point, you have to make a decision, do you want to just keep a lotto ticket for earnings but i don't suspect this is going to move a whole lot.

>> i understand why it might make sense to sit there and say you want to cut your losers, that's obviously good trading advice but where options are concerned because they do decay, you do really, instead, i think, need to reassess the situation because to your point, an inexpensive option can get a lot cheaper and if the catalyst still lies ahead of you, that doesn't necessarily mean you want to get rid of it. >> coming up next, your tweets and the final call from the auctions pits. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on 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 to take your tweets. first one is from peter who says there was heavy volume in calls on baba may 15 and july 120s, what's your take on this. >> the first thing is the price of these call options is as low as they have ever been and we're trading right at the all-time highs. >> i think it's a great-looking chart. it's toying with a breakout right at a former high at 110,

its october high, same set-up that amazon. i'm a buyer. >> i would just say that breakout above 110, it's going straight to 120 which was the prior all-time high. >> next up, can you ask carter what he thinks of the gold chart. carter? >> gold chart is improving. in fact, i think i was sitting here maybe three weeks ago saying that the gold was under some pressure and that's just wrong. gold's turn again, and whether it's because missiles are flying or whatever but gold looks headed higher and i would abandon shorts. i'd be on the long side. >> would you, mike. >> look, it's a flight to safety, typically, when you see geopolitical issues going on and we are basically in a bull market so you don't have a lot of other places to reach so it makes sense for that reason. typically, though, i'm not much of a gold bug. >> time for the final call. last word from the auctions pits. >> well, semis have come a long way. i think you want to take profits and i would be particularly mindful nvidia. >> to make your bullish bets in amazon here, i think you should look out to june, 925.

>> dan. >> so xlf short dated options are dollar cheap, they look interesting to me as a hedge or outright bearish bet. >> i'm melissa lee. thanks so much for watching. for more "options action," we'll see you back here next friday. meanwhile, "mad money" starts right now. >> announcer: you're watching a paid presentation for veggie bullet, brought to you by veggie bullet, llc. from the makers of the world-famous nutribullet comes the next innovation in whole-food nutrition extraction. introducing the veggie bullet, the world's first cyclonic spiralizer and lightning-fast food prep accelerator. now you can spiralize nutrient-rich whole foods in seconds for incredible pasta recipes, like zucchini spaghetti and meatballs or ribbon spirals for great lasagnas, even the family favorite -- curly fries. the secret is the veggie bullet's cyclonic-action spiralizer and high-torque motor with razor-sharp stainless-steel