>> hey there, we will light up the nasdaq markets on expiration friday. we hope you didn't miss us too much. here's what's coming up on the show. >> well, it comes down to a few moments. >> next week is one of them from megacap tech. we'll tell you how to profit. plus, all those stocks on the left. there is something in the charts that suggest even more pain to come. we'll explain. and --

[ music playing ] >> indeed it is, mcdonald shares all time highs. if you miss the move, we'll tell you how you can buy shares for less than five bucks. the action begins right now. >> let's get to it. next week is one of the busiest weeks for earnings in the last five years. it could be make or break, intel and microsoft reporting on thursday. they represent more than 35% of the nasdaq 100. the options market implies big moves for these names. traders expect 3 % move higher or lower. meantime, amazon and microsoft could see 4% in each dwex e direction combined. >> that can represent a shift in market cap. sho should you bet big on cap ahead of earnings? dan. >> that's a tough one. when you look at the consol dals days a days ago -- consolidations, we

talk about these applied moves oftentimes we have been can selling each other out. next thursday, you physical out, i'm focused on amazon, microsoft and google. that's about a trillion-and-a-half dollars in market cap. there is a food chance they can sell each other out. those businesses are different enough they won't give you a real clear picture on direction one way or another as it relates to technology. a big point. i make this a lot t. concentration in the nasdaq 100. >> that itself the most concerning thing. >> that consolidation is pretty healthy. >> one of the things, i think it's interesting. those moves are big given earnings are typically one of the most important data points an investor can have is the surge, these are actually smaller than the average moves that these stocks typically see. in all of the cases we talk about. i think what that's telling you is the options think good or

bad, these stocks won't move that much. it's not these earnings numbers that will di fine how the stock will behave the rest of the quarter. >> in that market, we know that tight ranges are the setup for a reset up or down. they are the setup for more of the same. which is you don't break out or break down. but within those top big ones, there is definitely big setups f. you look at the performance of google, they peaked over a year ago. they have apple has a different problem. it's too steep. so my favorite of the bin i big ones is microsoft. >> isn't that the problem? when you think about it, to me, i read something the other day. as of quarters end, apple, amazon and facebook have made a third of the s&p's gains, year-to-date. when you think about that, you have megacompanies the biggest in the world.

they're dominatindominating. they literally are dominating the industry. it seems they're crowded trades. that's what i want to get to in a way. >> so what is your trade? >> here's the thing. few own stock, apple is up, facebook is up more than 20% this year. the idea of putting on some protection in the qqqs to help you hold on to these things that are obviously out performed. over the next couple months i think makes a lot of sense. we know we have a french election this month. it could also be next month. we have a fed meeting next month. in june, we earnings, we have things going on in you can walk. at some point there will be more than that 3% sell-off. to me i think it makes sense to look at the qqq. options prices are relatively low. i want to look out to july. can you put a wide put spread on. they were happy by the july 132, 120 put spread, paying about $2 pin 50. that's less than 2% of the

underlying stock price. just a couple bucks away, it gives you protection up to $9.50 all the way down to one trade. we had a chart up there before. 120 was the breakout level. >> that looks like a good level. i'm not saying we debt there between now an december. if things go haywire, the many cap ones are leading the way here starting to turn lower, we could be at 122 very quickly. >> the vix did put up. you are offsetting some of the costs of purchasing it. we had volatility very low. this gives you a nice level of protection. one other interesting point. we talked about the stocks are relatively low. the fact that index options premiums have increased a bit, is eight setup potentially for

the mark to break one way or another instead of these individual stocks? so i like this right here. >> over the years, the most held stocks, it's things like that, these have become the darlings, ge are not as important there are troubled darlings and trouble in the market. this is a control mechanism. >> one question i know you usually ask the questions here. >> you can ask the questions. when you think about it, though the concentration is something we have never seen before. do you think there's a chance that these stocks could all start to feed on each other and snowball in a way? >> sure. when something has worked for a long time, people are reluctant to give it up. because if they give it up at aniologist time, it's wrong. it's okay. if it actually goes further than i believe it can start to become quite a snowball effect. >> now to a group of stocks that have been thinking. ford and general motors, trade

year-to-dade lows as auto sales barraclough across the globe. this is the single worst area to be invested in the consumer congressary space. why, carter? >> consumer discretion is performing inequities in general for years. autos within the consumer discretion is a real mess. let's do a little funny mental spurs, then talk about the actual price chart. this is still a chart. it is used vehicle sales what we see here, what my eye sees is something of a rolling or topping out formation. in many ways, you could say it's a trend and it's a break in trend. you can say something of a topping out. again, i want to point out where this is happening t. context of a long-term chart. 18 million units, plus or minus. no, take a look at this. >> that rolling over action is

exactly happening when we were back at all time highs. i'm going to call those the all time highs. here's why. because those spikes, this is cash for clunkers. this spike is zero percent financing and/or employee incentives. so if you were to net out those spikes. we essentially return to the 2,000 feet. it started to roll. that's not a good setup. >> report. so, this is a good index. it has an etf. nasdaq global auto index. what i got here is the index, itself. here is the better part. it's relative performance the s&pment so what we know is, even as the index has tried to, not tried to, has gone up absolute, as a pick. it's a disaster meaning if one could have picked something else, one would have done better.

relative performance is poor. okay. now, there's the actual what i just did on the last chart, the pointing that even as we've gone higher, you duly are making new five-year lows to the market. it's really that. . >> okay. how many stocks? >> it's 33 stocks. 900 become t. bellwhethers. everyone knows, everyone probably drives won of these things, ford, gm, tobacco, it goes on and on. big names a big index. all right. up more, mazda, porsche, kia. here's the etf. i think you can draw the lines like this but i think ultimately we're going to brick to the down side as least to there, if not mor more. >> let's peck a stock. gm, one way to draw the lines.

here's another way to draw the lines. let's put them together. i'm moving to these lowings at 30. >> all right. gm reportings earnings next week. what's your trade? >> i'm looking at the june 33 put spread. you can spend 80 cents with that. we have that catalyst. it takes us out to june. this is a technical trade. because on any of those. many of these stocks are cheap. we are talking about a big secular shift that's going on here. >> this is a short that feels leak it should be pressed. look at ford, it's down ten percent. i think that long term trend line that gm, it had that bounce earlier in the year. it's come back to. that a bit of fundamental news will take it through there. >> deteriorate winners like auto zone, the notion of cheaper,

expense. >> you want to use options to make it short when you look at six times forward earnings. this is one of those situations where you could based on those cheap valuations get some kind of a spike. obviously the long-term story isn't a long one. >> check out our optionsactions do .com. check out our newsletter when you are there we are not going to do that. we will show you shares of mcdonald's for the less of a cost of a minute ago mac. reach in your pocket. not your phone an tweet us your question at "options action." if it's nice, when options

actions returns.

>> welcome back to "options action". a big week for stocks, a number of names from mcdonald's rallying off analysts upgrade. breaking down the booty and appropriately named dom chu. hey, dom. dom? dom? >> all right. all right. okay. i'm here, i'm here. you caught me because they got

mcdonald's and a big mack in one around and a storebucks unicorn in one hand. the reason why we're talking about these in particular the shares hit a record high today. also, guy, with etalk about a slew of these quick service restaurants, a different initiations and coverages throughout the course of the week. we had big ones from mcdonald's and wendy's, early in the week, a couple more upgrades, dominos and starbucks, early in the week. all of these initiations and coverages, all of that putting this kind of industry front and center. now the reason why i'm holding these guys here, is next tweak both these companies report. mcdonald's, record high and starbucks as well. who knows how far these unicorn drinks will take them. when it comes to the options mark, we are perhaps seeing some fireworks. when it comes to starbucks shares the guys are pricing what could be a 3.5% move up or down.

with mcdonald's, with shares near record high, it's around two and a quarter, 2.5% up or down. when we talk about fast food, guys, minute ago backbig macs, comes down to whether they can sustain themselves. back over to you. >> thanks, dom, save me some fries. today also marks the 52nd anniversary of the mcdonald's ipo. if you bought the stock then, you'd be up nearly 72,000%. if you missed the move, it's less than a cost of a big mac. he has the call to action. >> maybe 100 big macs, each calm represents 100 shares of stock. will you buy a call when it's bullish. it's ripe to buy the stock. 2ndly, outright purchases, you want to do that when options are fairly cheap. finally, you want to commit a small amount of capital, smaller than few had gone ahead and

bought the stocks. so i'm taking a look at mcdonald's, all the way out to september. you can buy the 1.25 call to $3.45. one thing you want to do is give yourself enough time for your thee sis to play out. don't get something that's too far on the money. this is an inexpensive bullish move on mcdonald's going into earnings. it will last you for six months. >> what do you think of that, dan? >> you can call with the stock at all time highs. the stock is starting to trade a pretty premium execution. to me i don't get it. i think the burger space is very crowded. nothing to do with your call purchase. if you asked me, if we were playing would you rather? would i rather buy a call here and define my risk, i'd much rather do that. >> if it was an open ended question, you would fought touch mcdonald's. >> you don't like it, because it's come along? which is true. >> one thing we know is some of the best in markets agree a

achieved when you have group rules. banks aren't working, so forth, energy. we have a lot of momentum in this space. right? you seen great moves out of wendy's cheeseskak, panera bought out. starbucks comes back to life. it goes on and on. if you never we heard hoff a red robin garden burger or a clip ottley burger. the issue is mcdonald's impressive. it's been impervious. that typically means that there is more to come. >> i hear what you are saying. 22 times earnings for a company that's seen sequential revenue decline the last three years. >> that seems troubling. but they are well positioned if they move into the delivery space. >> that i have locations everywhere. they have benefits in terms of costs, relative to competitors coming on the scene, i think that's one of the reasons people are inclined to pay up essentially. their company believing that there is a promise of potential cost savings and new businesses

for them. also, that i are trying to compete with the people coming in and eating. >> the fact that this is a company with $28 billion in sales. they are expected to have 20 billion next year. to me, are you on the wrong side of history, if you think the next ten years will be like the last 30 i want to make one more thing, a unicorn drink. they must be confident? what they will report to guy to put that product out the week before earnings, just saying. can you imagine what the research reports say if they miss and guy down? >> still ahead, one of the hottest trades of the last month about to get hotter, what it is and how to profit? later, dig deep into your pocket. pull out those phones, we are taking your tweets. they better be nice. much more "options action" right after this. hey gary, what'd you got here?

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welcome back to "options action". it's time for the upside call. we look back at our winning trades, last month, they said a better reit value was ahead. >> utilities are paying at 3.1. that's not nothing. i want to be wrong reits. >> you can look out to september by the 79 calls, you can spend $2.40 for that. >> real estate etf bouncing almost 2% since then. carter what do you see the calls now? >> rates are going higher, in fact, they've come lower, likely to go lower still. they want to stay long, real estate. >> mike. >> i think the only thing we need to do the adjust the strike here, we can go up two, take some profits a off the table. can you buy the 81s for less than we paid for these 79s originally. >> gold is not the only winner, two weeks ago, dan bet against financials, ahead of earnings, here's what he said.

>> when the etf was trading, you can look out at april expiration and pay 27 cents. it's a little more than 1% of the underlying stock puts. >> they are falling more than a percent since then, dan, what are you doing now? >> it's been a volatile couple weeks. this was bill as a hedging strategy. they looked dollar cheap, especially given the event. at one point the position was a double. today in the double. it needed to be managed so you can close it or roll it out? i was in favor of rolling it out. can you take the same premium you had and bought a $2 wide put spread out in may. that's kind of what i would have done here. i think this group, while ago it's kind of showed a little stability. i think the loss of the leadership to goldman sachs is stability. >> carter. >> it's a straight, the banks are under pressure. not only because some of the earnings have been pulled. it's good. if rates are going lower, presumptively banks don't have a

lot of upside potential. >> one of the other things, of course, is some of the premiums built into options come out. because we had that big rash of financial earnings. so at this point being long and outright put in xlf doesn't seem as bad. i would go auto and give myself an opportunity to spread off of that trade. >> is there one financial that looks better than the rest chart wise or no? >> i had u.s. bank, usb. probably the way it acted. it came apart like that. >> up next, tweets a and the final call from the actions desk. [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.

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hey gary, what'd you got here? this 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 >> the fertilizatiirst is a que blair -- one of the things you don't want

to do is roll out of the puts. most of the damage isn't done day one. secondly, they can demonstrate they can move. if you want to make a bullish bet. you can buy calls to make money there. next question, can you guys suggest a good way to play square to the upside in the earnings in a few weeks, dan? >> this is one the stock has built a lot of momentum. the fundament also are getting better. the company seems confident in the business. to me, i would look out to may expiration, that targets the may 3rd report date. be i the 1820 call spread probably offer about 55 cents with the stock at 7.5 cents or so. >> time for the final call. carter. >> you want to be very wary of automobiles in general. the whole group, gm in particular. looking for 10% line. >> if you do that, put spread earnings. >> can i make a point. it's a nice consolidation. it can break out. to me qqq strategy is impressive

if you have massive performers. >> it looks like our time has expired. for more "options action," we'll see you back here next week at 5:30. meantime, have a great weekend. "mad money" is up next. my mission is simple, to make you money. i'm here to level the playing field for all investors. hey, i'm cramer, welcome to "mad money," welcome to cramerica. other people want to make friends, i just want to make you money. my job is not just to entertain you but to educate and teach you as well. tweet me @jimcramer. maybe you can't smell it yet, but panic, it's in the air. panic that comesro