>> 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, auto stocks have been on the left. there is something in the charts that suggest even more pain to come. we'll explain. ♪ it's a good time for the great taste of mcdonald's ♪ >> 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 with amazon, 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 for alphabet or intel. meantime, amazon and microsoft could see 4% in each dwex e direction combined. should you bet big on tech ahead of earnings? dan. >> that's a tough one. when you look at the consol dals days ago -- consolidations, we talk about these applied moves oftentimes we have been can canceling each other out.

next thursday, you think about, i'm focusing on amazon, microsoft and google, that's about a trillion and a half in market cap. there's a good chance they cancel 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. concentration in the nasdaq 100, that's the most concerning thing. that consolidation is pretty healthy. >> one of the things that'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. about 1% to 2%. 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. >> the market has basically frozen. we know the 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's definitely different setups. if you look at gookal, they beekd over a year ago. apple has a different problem. it's too steep. so my favorite of the 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 mega companies the biggest in the world. they're dominating. 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.

if you own these stocks, apple up more than 20%, facebook 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 have obviously outperformed. 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 have 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. you can put a wide put spread on today. you could buy the july 132, 120 put spread, pay about $2.50 for that. 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 120. 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 mega cap ones are leading the way here starting to turn lower, we could be at 122 very quickly. the vixx did tick up. you are offsetting some of the costs of purchasing it. we had volatility very low. just buying the outright put made a lot of sense. this gives you protection to the downside. one interesting point is, while we were talking about the fact that the options on those individual stocks are relatively low, the fact that index options premiums have increased speaks to what you're talking about, is it a set up potentially for the market to break one way or the other 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. in a way, this is a control mechanism. >> can i ask one important question? i know you usually ask a question. >> you can ask a question. >> when you think about it, 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 any other 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 sinking, the autos. ford and general motors trading at near year to date lows as auto sales drop across the globe.

this is the single worst area to be invested in the consumer discretionary 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 first and 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. however you want to draw the lines, you can say something about topping out. again, i want to point out where this is happening in the 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. hundreds of thousands of people work in the auto industry. so if you were to net out those spikes, we essentially return to the 2000 prsk. 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&p, 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 point being that even as we've

gone higher, you duly are making new five-year lows to the market. it's really bad. okay. how many stocks? 33 stocks, 900 billion. it's the bellwethers. everyone probably drives one of these, ford, gm, honda, daimler. volkswagen, big names, so a big index. 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 break to the down side as least to there, if not 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 looking for a move to these lows at 30. >> all right. gm reports 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 like it should be pressed. ford is down almost 10% in the last month. i think the long-term trend line that you drew, that gm, it had a bounce earlier in the year. it's come back. 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

four times cash flow or 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 very good one. >> check out options action.cnbc.com. check out our newsletter. more than 100,000 of you have signed up. here is what's coming up next. ♪ >> we are not going to do that, but we will show you how to buy shares of mcdonald's for less than the cost of a big mac. reach in your pocket.

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. whoa,i just had to push one button to join. it's like i'm in the office with you, even though i'm here. it's almost like the virtual reality of business communications. no, it's reality. intuitive one touch video conferencing is a reality.

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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". a big week for stocks, a number of names from mcdonald's to wendy's rallying off analyst upgrades. breaking down the booty and appropriately named dom chu. hey, dom. dom?

dom? >> all right. all right. i'm here, i'm here. you caught me because they got mcdonald's and a big mac in one hand and the starbucks unicorn thing in the other. the reason why we're talking about these in particular the mcdonald's shares hit a record high today. also, about a slew of these quick service restaurants, a different, domino's pizza as well and starbucks earlier in the week, all these finiinitiat of coverages, upgrades in stocks, put this industry front and center. the reason i'm holding these guys here, next week both of these companies report, mcdonald's, record high, and starbucks as well. who knows how far these unicorn drinks will take them. however, when it comes to the options market, we are seeing some fire woshs.

when it comes to starbucks shares, the options market already pricing what could be a 3.5% move up or down on the ooels of earnings. with mcdonald's with shares already near a record high, more near 2.25, 2.50. as we talk about fast food, big macs, unicorns, everything in between, it will come down to whether or not this momentum can sustain itself for some of these premium type brand names. >> today marks the 352nd anniversary of the mcdonald's ipo. if you bought the stock back then, you would be up nearly 72,000%. if you missed out on the move, mike has a way to buy the stock for less than a cost of the big mac. he's over at the plaza with his call to action. >> mib maybe a hundred big macs. number one, buy a call when you're bullish. secondly, outright call purchases, you want to do that when options are fairly cheap.

one of the reasons you might be wanting to buy a call, commit a small amount of capital, smaller than when you bought the stock. taking mcdonald's out to september, you can buy the 135 calls for $3.40. one of the things you want to make sure you do, give yourself enough time for your thesis to play out. also, don't get something too far out of the money that's a pie in the sky. this is an inexpensive way to make a bullish bet on mcdonald's going into earnings. it's going to last you for six months. >> what do we all think of mike's trade. dan? >> stock at an all-time high, starting to trade at a premium valuation here. to me, i don't get it. i think the burger space is crowded. that has nothing to do with your call purchase. if you ask would i rather buy the stock here or a call in a few months and define my risk, i'd much rather do that. >> an open-ended question, you would not touch mcdonald's?

>> it's come a long way. that's true. one thing we know, some of the best eating in the market, semis are working, food is working. we have a lot of momentum in this space, we've seen great moves out of wendy's, out of cheesecake, panera being bought out, starbucks has come back to life. even ones at the bottom, like red robin, chipotle. the issue is this. mcdonald's relative strength in the market is very impressive. it typically means there's more to come. >> i hear what you're saying, 22 times earnings for a company that has seen sequential revenue decline for the last three years, that seems a little troubling, but they are well positioned if they move into the delivery space, for example. they've got locations everywhere. benefits in terms of costs relative to the competitors coming on the scene. i think that's one of the reasons that people are inclined to pay up, essentially, with the

company actually believing there is a promise of potential cost savings and new businesses for them. also, they're trying to compete with some of the people that have been eating -- >> this is a company that had $28 billion in sales for 2007 and expecting less than $20 billion next year. i think you're on the wrong side of history if you think the next 30 years will be like the last 30. a point about the starbucks unicorn drink. >> stomach ache in a cup. >> they must be confident to put that product out the week before earnings. i'm just saying. can you imagine what the research reports are going to say if they miss and guide down? >> still ahead, one of the hottest trades of the last month is about to get hotter next week. we'll tell you what it is and how to profit. later, dig deep into your pockets and pull out the phones because we're taking your tweets. they better be nice. much more "options action" right after this.

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

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. we look back at our winning

last month, collin bet a weak rally 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 not going higher, in fact, they're going lower, likely to go lower still. i 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 big bank earnings. here is 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. we had the earnings. that's what we were targeting. this was built as a hedging strategy. they looked dollar cheap, especially given the event. at one point the position was a double. today it's in the money. 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 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 has come out

because of the 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 chartwise or no? >> i had u.s. bank, usb. probably the way it acted. it came apart like that. >> up next, tweets 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. 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 let's take some tweets. the first is a question from blair. short mat april 25 puts. any advice to minimize the damage? >> one of the things you don't want to do is roll out the short

puts. i don't think all the damage is necessarily done on day one. secondly this stock demonstrated it could move. take your position off. if you later decide you want to make a bullish bet, then you can buy some calls to make some of the money back. >> can you guys suggest a good way to play square to the upside going into the next weeks. >> the fundamentals keep getting better here. to me i would look out to may expiration that targets their may 3rd report date and buy the 1820 call spret, probably offered about 55 cents with the stock at about 17.5. >> time for the final call from the pits from carter. >> were have wary of automobiles in general, the whole group, gm in particular, 10% decline. >> mike. >> if you're going to do that, put spreads in gm -- >> ndx is a nice consolidation. to me that qqq strategy is protection if you own some of

the massive outperformers. >> i'm melissa lee. we'll see you back here next week at 5:30. have a great weekend. "mad money" is up next. >> 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