those four stocks alone represent 35% of the nasdaq 500 and the options market is implying big moves. traders are expecting a more than 3% move higher or lower for intel and alphabet, meanwhile, amazon and microsoft could see a 4% move. combined, that could represent a $64 billion shift. let's get to dan. >> it's a tough one. when you look at the consolidation, specifically in the nasdaq 100 in the last two months, it's traded at a 2% range. when we talk about the events around the big-cap tech names, oftentimes they've been canceling each other out. next thursday, i'm just focused

on amazon, microsoft and google. that's about $1.5 trillion in market cap and there's probably a good chance that they just cancel each other out. and those businesses are different enough that they're not going to actually give you a real clear picture on direction one way or another as it relates to technology. but my big point is that concentration within the nasdaq 100 is the most concerning thing. technically, i'm sure carter will talk about it, that consolidation is pretty healthy. >> one of the things i think is interesting, those moves obviously are big in market cap terms, but in percentage terms for the stock price, given that earnings specifically one of the most important data points an investor can have about potential future movements in the stock price, is that on a percentage basis, these are actually smaller than the average moves that these stocks typically see by about 1% to 2%. in all of the cases we just talked about. and i think what that's telling you is that the options market things good or bad, they're not going to move that much. it's not really these earnings numbers that will define how the stock will behave over the rest of the quarter.

>> what you described, what you're talking about, the market has basically frozen, and we often know that tight ranges are the setup for some sort of reset up or down, but they are also the setup sometimes for just more of the same, which is you actually don't break out or break down. but within those top big ones, there is definitely different setups. if you looked at the performance of google, its relative performance on the s&p peaked over a year ago and it's had heavy volume drops, whereas apple has a different problem, it's too steep. so it's case by case. my favorite of the big ones is microsoft. >> but isn't that the problem? when you think about it, i read something the other day that as of quarter end or i think in mid-april, 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, literally dominating their industry, and it seems like they're very crowded trades. that's really what i kind of want to get to in a way. >> so what is your trade? >> here's the thing, if you own these stocks, i mean, apple's up

more than 20%, amazon's up more than 20%, facebook is up more than 20% this year. the idea of putting on some protection in the qqqs to kind of help you hold on to these things that have obviously outperformed over the next couple months i think makes a lot of sense. we have a lot going on in the world, we have the french elections this month. it could also be next month. we have a fed meeting next month and another one in june. we have all these earnings, a lot of stuff going on in washington. you know, at some point, there's going to be more than that 3% orderly sell-off that we had over the last few weeks. so to me, i think it makes sense to look at the qqq, option prices are relatively low. i want to look out to july. you could put a pretty wide put spread on today. when the etf was trading 1.32 half, you could buy the july 1.32-1.20 put spread, pay about $1.50 for that, breaking even at $129.50, a couple bucks away, giving you protection of $9.50 down to $120.

$120 was the breakout level in december and that looks like a really good support level. i'm not saying we could get there between now and december, but if things got a little haywire in the big-cap names, the mega cap ones that are leading the way here, starting to turn lower, we could be at $122 very quickly. >> you know, the vix did tick up slightly, of course, over the course of the last several trading days, and that's one of the reasons why a put spread like this makes sense. you're offsetting some of the cost of purchasing it. before when we saw implied volatility very low, just buying outright put made a lot of sense, but this gives you a level of protection to the down side. one other interesting point is while we talked about how the options on those individual stocks are relatively low going into earnings, the fact that index options premiums have increased a little bit speaks more to what you're talking about -- is it a setup potentially for the market to break one way or the other instead of just one of these individual stocks? so i like this trade here. >> and then over the years, if you just look at the "wall street journal" most-held stocks, it's always proctor & g.

to your point, these have become the darlings. where ge is not as possible. when there's trouble with the darlings, there's trouble with the market, so in one way, it's a control mechanism. >> can i ask a question? i know you usually ask the questions here. >> you can ask a question. >> when you think about it, the concentration is something that we've never seen before, and do you think there's a chance that these stocks could all start to feed on each other and start to snowball in a way? >> sure. when something has worked for a long time, people are reluctant to give it up, right? that's just the human -- because you're like, well, if i had given it up at any other time, it was wrong. so, initial trouble isn't always embraced. it can actually go further than a belief, it can become a snowball effect. now to a group of stocks that have been sinking, autos. ford and general motors both trading near year-to-date lows as auto sales slow across the globe. this is sacarter says this is t

worst place to be invested, why? >> well, consumer discretion has been underperforming equities in general over the past year, but autos within consumer discretion is a real mess. let's do a little fundamentals and then talk about the price charts. this is fundamentals, but it is still a chart, u.s. vehicle sales. what we see, what my eyes see is it's something of a rolling or topping out formation. i mean, in many ways, you could say that it's a trend, and it's a break in trend. however you want to draw the lines. you could say something of a topping out. but again, i want to point out where this is happening in the context of long-term chart. so, 18.5 million units, plus or minus. now, take a look at this. that rolling over action is exactly happening when we were back at all-time highs. now, i'm going to call those the all-time highs, and here's why, because those spikes -- this is

cash for clunkers. this spike is 0% 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 right to the 2000 peak and have started to roll. that's not a good setup. all right. so, this is a good index. it's actually got an etf called carz, but this is the nasdaq global auto index. what i've got is the index itself, and then here is the better part. it's relative performance to the s&p. so, what we know is that even as the index has tried to -- well, 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. so, relative performance is poor. okay. now, there's the actual what i did on the last chart, the point being that even as we've gone higher, you actually are making

new five-year relative lows to the market. it's really bad. okay. how many stocks? it's 33 stocks, it's $900 billion. let me go through the bellwethers. everyone knows these, everyone probably drives one of these. ford, gm, toyota, honda, daimler. it goes on and on. volkswagen, subaru, renault peugeot, big names, a big index. up more, mazda, porsche, kia. now, here is the etf. i think you could draw the lines like this. and i think ultimately we're going to break to the down side, at least to there, if not more. let's pick a stock. gm. one way you can draw the lines. here's another way you can draw the lines. let's put them together. i think you get a break here. gm, 10% down. i'm looking for a move to these

lows at 30. >> and gm reports earnings next week, so mike, what's your trade? >> i'm looking at the june $33-$30 put spread. you could spend 80 cents for that. the catalyst takes us out to june. this is a technical trade more than based on the historical fundamentals, because based on those, many of these stocks look cheap, but we're talking about a big secular shift going on. >> and this is a short that feels like it should be pressed. look at ford, down 10% almost in the last month. i think the long-term trend line that you drew, gm had that little bounce earlier in the year. it's come back to that. a bit of fundamental news is going to take it right through there. >> and you've got trouble spilling over. so, aap has been bad, carmax has had trouble, great winners like autozone, meaning there is something going on and the notion of cheaper expense. we saw this trade at 2% -- >> and you definitely want to use options to make a short, though. looking at stocks trading about four times free cash flow or six

times forward earnings. this is one of those situations where you could, just based on those cheap valuations, get some kind of a spike. but obviously, the long-term story isn't a very good one. >> for everything "options action," check out optionsaction.cnbc.com and check out our super-cool newsletter. more than 100,000 of you have signed up so far, so what are you waiting for? here's what's coming up next. ♪ lettuce, cheese, pickles, onions on a sesame seed bun ♪ >> say that again! >> we're 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. plus, calling all "options action" fans. reach into your pocket, grab your phone, and tweet us your question @optionsaction. if it's nice, we'll answer it on air, when "options action" returns. >> logically. get tomorrow's news today with the "futures now" newsletter. you'll get the latest news, realtime trade updates and a sneak peek at our biggest interviews. stay ahead of the headlines and

make today's events tomorrow's profits. sign up now at cnbc.com/futuresnowemail. 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 actio action". a big week for stocks with a number of names from mcdonald's to wendy's rallying off analyst upgrades. breaking is down, dom chu and resident foodie.

hey, dom? dom? >> all right, all right, all right, i'm here. i'm here. you caught me, because i've got mcdonald's and a big mac in one hand and this starbucks unicorn thing in the other hand, but there's a reason why i'm holding them. more on that in a second. the reason why we're talking about these in particular is because mcdonald's shares hit a record high today. also, guys, we're talking about a slew of these quick-service restaurant different upgrades and initiations of coverages throughout the course of the week. we had big ones from mcdonald's and also wendy's today, also earlier in the week a couple more mcdonald's upgrades. domino's pizza as well and starbucks earlier in the week. all of these initiations of coverages, upgrades in stocks and price targets, all of that really putting this kind of industry front and center. now, the reason why i'm holding these guys here is because next week both 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 at least perhaps maybe some

fireworks. when it comes to starbucks shares, the options market already pricing in what could be a 3.5% move up or down on the heels of earnings. with mcdonald's, with shares already near record high, it's more around 2.25%-2.5% up or down. so, as we talk about fast food, guys, big macs, unicorns, and everything in between, it's going to come down to whether or not this momentum can sustain itself for some of these bigger premium-type brand names. back to you. >> thanks, dom. save me some fries. today also marks the 52nd anniversary of the mcdonald's ipo. if you had bought the stock back then, you'd be up nearly 72,000%, but 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 has his "call to action." >> and maybe 100 big macs since each represents 100 share to stock. number one, buy when you're bullish. it's right to buy the stock. secondly, outright call purchases, do that when options are fairly cheap. and finally, one of the reasons you might be looking to buy a

call rather than the shares is because you want to commit a small amount of capital, smaller than if you had just gone ahead and bought the stock. so, i'm looking at mcdonald's out to september. you can buy the $135 calls for $3.40. now, one of the things you want to make sure you do is give yourself enough time for your thesis to play out. also, don't get something that's too far out of the money, that's a pie in the sky. so, i think this is an inexpensive way to make a bullish bet on mcdonald's going into earnings and it's going to last you for six months. >> so what do we all think of mike's trade, dan? >> you know, an out of the money call purchase with the stock at an all-time high, the stock is starting to trade at a pretty premium valuation. obviously, they've executed very well. to me, i just don't get it. i think the burger space is very crowded. that has nothing to too with your call purchase. if you were asking would i rather buy the stock here or buy my call later on, i would rather do that. >> but if it was an open-ended question, you would not touch

mcdonald's. >> it's come a long way, which is true. what we know is some of the best eating in market is -- semis is working, groups are working. banks are working, so is energy. we have a lot of movement in this space, right? great moves out of wendy's, cheesecake, panera being bought out, starbucks has come to life and it goes on and on, even red robin, i think chipotle. the idea is that mcdonald's relative strength in the market is very impressive. the market has been impervious and mcdonald's is privy to that, more to come. >> i see what you're saying, 22% earnings for a company with sequential revenue decline the last three years seems troubling, but they are well positioned if they move into delivery, for example. they've got locations everywhere. they have benefits in terms of cost relative to a lot of the competitors coming on the scene. and i think that's one of the reasons that people are inclined to pay up, essentially, for the

company. they are actually believing that there is a promise of potential cost savings and new businesses for them and also they're trying to compete with some of the people that have been going in and eating some of their lunch -- >> that's fantastic, considering this is a company with $28 billion in sales in 2013 and they're expecting to have less than $20 billion next year. i mean, to me, i think you're on the wrong side of history if you think that the next 30 years for mcdonald's are going to be like the last 30. and i just want to make a point about that starbucks unicorn drink? >> that looks like a stomach ache in a cup. >> i'll tell you, they must be pretty confident about what they're going to report and guide next week to actually put that product out the week before earnings. i'm just saying, because, can you imagine what the research reports will say if they miss and guide down and that thing had just come out? >> the unicorn drink? still ahead, one of the hottest trades of the last month is set to get hotter next week. what it is and how to profit. dig deep into your pockets and pull out your phones because we are taking your tweets! they'd 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, looking back at winning trades.

last month, carter bet that the reits would be ahead. >> utilities are paying you 1.01, reits 1.08. that's not nothing. i'm long reits and ior. >> you can spend $2.40 for the long-term calls. >> real estate etf bouncing almost 2% since then. carter, what do you see in the charts now? >> well, it's rousely the rate trade. i'm in the camp they're going lower and likely to go lower still, so i'm going to stay long real estate. >> mike? >> i think the only thing we need to do adjust the strike here. we can go up two, take some of our profits off the table. you can buy right now the 81s for less than we paid for the 79s originally. >> all right, well, mike is not the only winner. two weeks ago, dan bet against financials ahead of big bank earnings. here's what he said. >> when the xlf was trading $23.60, you could look at april expiration and buy the $23.50 puts paying 27 cents, a little more than 1% of the underlying

stock price. >> the sector falling more than a percent since then. dan, what's next? >> this was billed as a hedging tragedy. the options look dollar cheap and in vol terms, especially given the events. at one point, this position was a double. today it's in the money. it needed to be managed, so you could have closed it or rolled it out. i was in favor of rolling it out. looking out a month, you can 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 because i think this group, while it's kind of showed a little stability, i think the fact that the losses of leadership at goldman sachs is a real problem. >> what does the group look like, carter, and are you strong -- >> the trade of ior, right? this is the banks under pressure not only because some of the earnings, but it's a rate -- if rates are going lower, presumptively banks don't have a lot of upside. >> one of the other things of course is that some of the premium that was built into options like this come out because we had the big rash of financial earnings.

and so, at this point, even being long an outright put in xlf doesn't seem as bad, but i would just go out for a little bit of time, giving myself an opportunity to spread off of that trade. >> is there one financial among the big ones that reported, carter, that looks better than the rest chartwise or no? >> my favorite, i like u.s. bancorp, usb, probably worse because of the way it acted is goldman. just to come apart like that is not good. >> up next, tweets and the final call from the options 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 let's take some tweets. the first is a question from blair, asking "i am short mat april 25 puts. rolled to may today to buy some time. any advice to minimize the damage?" >> ouch! that hurts. one of the things you don't want to do is roll out these short puts. first of all, i don't think all

the damage is necessarily done on day one. secondly, this stock has demonstrated obviously it can move. take your position off. later if you want to make a bullish bet, you can buy some calls to try to even that. "can you guys suggest a good way to play square to the up side going into earnings in a few weeks?" ? >> yes, they have momentum and the company seems confident in their business. look out to may expiration that targets their may 3rd report date and buy the $18-$20 call spread, probably offered about 15 cents with the stock at $17.50 or so. time for the "final call" from the options pits, carter. >> beware of auto groups, the whole group, gm in particular looking for a 10% decline. >> mike khouw? >> can i make a point that mdx is a nice consolidation. it could break out, but to me, qqq strategy is really a

connection if you own the outperformers. >> our time has expired for "options action." i'm melissa lee. check out optionsaction.cnbc.com. see you next week at 5:30 for more "options action." "mad money" is next. >> announcer: the following is a paid presentation for luminess air. take a look at this blemish. now you see it. now you don't. >> it is amazing. >> announcer: do you see this age spot? don't blink. it's gone like magic. >> luminess is stupendous. >> announcer: watch this redness disappear at the touch of a button. >> people have said to me, "you look amazing. what have you done?" >> people ask me if i've had a face-lift. >> people asked if i got botox. >> announcer: these women all switched to a new foundation. >> people come up to me and say, "your skin is beautiful."