>> hey there, we are live on the nasdaq markets the guys here getting ready behind me, while they're doing that, here's what's coming up on the show. >> yeah, that's what happened to retail stocks this week. one of them might just be flashing a bye sign. we'll explain. plus, miss the move in nvidia. >> darn, darn, darn. >> relax. we have a way to get long in this stock for under $10 bucks.

we'll explain. one young stock has gone parabolic. there is something to suggest the run might be done. here's a hint. the action begins right now! ♪ >> let's get right to it. retail is on pace for its worst month since january last year t. retail atf thanks in part to a deluge of disappointing earnings like macy's, dick's nordstrom's, j.c. penney falling double digits. wal-mart is up 5%. could these names like these be bargain basement buys? >> i think they could. you mention wal-mart. their performance up 14% of the year is double that of the s&p 500. it's obviously pretty impressive, especially relative to the xrt down 7%, though, target, to me, i think there is a couple seismic shifts going on in retail. i think it's important to

remember that last year in 2016. they had 5.5 trillion in retail sales. you say it's a wrecking ball. there are other things going on there, too. amazon had probably less than $100 billion in u.s. retail sales. amazon up so much, obviously, wal-mart's participating. target could be one of these names. i think a lot of other stocks, department stores, retailers, they're down an awful lot. it's a tough trade. i think there is probably good fundamental ideas out there. >> the biggest distinction between the targets and the wal-marts of the world versus some of the department stores you are talking about, whether tapele purchases or discretionary purchases, wal-mart and target are selling among other things, groceries. they're selling household cleaners, things like. that also you have a different demographic and i think both of those things suggest that, you know, amazon is not necessarily going to sell all of the toilet paper and milk and things like that, that these guys are now

selling. nevertheless, at some point in the future, you hope that they're going to adapt their businesses as well. >> in terms of spending, not just specifically those futures, but the sector overall. the consumers had a good year up 9.5%. it's so skewed to some names. it's up only 2.5. i think that's real story. while there might be little bounces along the way, that might be what you are looking for. i don't think it changes the structure backing it better. i mean, like it's a target. target had i guess earnings a couple days ago. it flared up. buying was 22 million. >> i guess what i want to take on is this narrative that all retailers are dead. i think a lot will have a difficult time. it's fundamental. i want to look back at wal-mart in late 2015. the company guided down for 2016. they talked about major investments that they were going to do. it was going to weigh on earnings per share. what happened is they were trying to match amazon.

a lot of shipping options, pricing options. they were invest income that e-commerce. they made a lot of acquisitions. >> right. >> here's the thing about target. i think this is their year. back in late february, they guided down the full year this quarter they just reported, there was a big beat on the eps front here. they will get active in acquisitions. they committed to spending $17 billion over three years. we could be near a big discount at wal-mart and the markets. here's the thing. look at that trade, it has that chart right there. it has a lot of support, near term. they hold 55. think of a pongs for a late-year rally. i want to use a call calendar to do this. a short call and buying a longer dated call. in this instance, i want to look to by the july. this is when the stock was trading 56 today. you can buy the july 56. october, excuse me the july 60, october 60 call calendar paying $1. selling one of the july calls,

you are buying one of the july, excuse me, okay calls for $1.55. what you want this thing to do between now and expiration is move towards that 60 strike. >> that july call is worthless. you end that october. which is out of the money for a dollar. >> that is your max risk. what you want to do here is have that stock move up towards that strike. then you want to look to sell something higher and catch to fill in those gaps. >> obviously, the 66 and the 65. >> you actually have a decent amount of room, though, even if it runs through that strike. you will be all right. >> that calm may end up in the money. the one that you are long will appreciate by at least as much. you have a ban that's bigger than you think. it's not just the 55 where we are up to the $60 strike. between 55 and 65, now and expla preparation the total premium is less than 2% of the stock price. >> some plus, if have you any later in the year volatility, september, an uptick involved. you own that. >> you studied price action. a lot of things you described

were all said on the call, they're going to spend, get online going, so forth and so on. smaller stores, all this good stuff. what did you think of the price actually on the day of all of that news, that flaring up euphoria, closing on the absolute low, that itself not a good thing. >> i guess the important point is, you know, wal-mart has lower low, after they got you down. they needed to recycle out of it. i think what will come around, the sentiment has gone so one way on retail. i think there will be winners. if you think past some of the near term devastation, i can make a bet that target will be a winner. >> a lot of retail stocks move on earnings, big jumps. >> are you saying it looks back for target. >> dennis is at a specified level. we're a gap down, you will apply the options trade and spend less and sort of. is this really a stock that's as we look at, is this going to be something up and off to the

right? i don't think so. >> this trade also isn't up, up and to the right. this is not a bet they will win, not in the short term. a bet they will survive, they're not betting them. it's not going to, the trade actually does make some sense. >> every last word. >> what we don't want to do, put the call, this trade strategy helps you finance a longer-dated call. forget the technic also, you are thinking about some fundamental things. you are being a bit contaxpayerian, i like the trade strategy to do that. >> a group of stocks that are sizzling, that's fast food. shake shack up 15%, dominos mcdonald's up 12%. mcdonald's and yum hit all time highs today t. chart masters says one of those names versus come too far too fast. >> look at mcdonald's, the big guy in the room. a lot of restaurants have traded

40 plus the russell 2,000. mcdonald's specifically, if you are long to take profit and a sort seller maybe you can make a buck here. so as always a comparative chart. what i have in orange is, the s&p. and you know your eyes are working. you can see there is a difference. at some point how much is tooch? let's go to the next chart. now i want to introduce all restaurants and while some have been quite good, all restaurants, if you look at chipotle and red robin and restaurants are really quite poor compared to mcdonald's and compared to the market. so let's zero in on mcdonald's a little bit. this is a little detail, this perceived long chart, i will move on from that. here we go. now i will draw some lines.

so the first thing i would say you could do is the following. 114 sessions down on exactly the same 115 sessions back up. that's symmetry. let's look at it another way. now drawing the lines. let's look at it again. i'm drawing those lines. so you have a symmetrical 15 to 17% decline. right back to the high. then you get your breakout. you get a textbook breakout. there is something called a pressured move, how far can a breakout go? all right. here's a head and shoulders bottom. can you draw it this way. the one way you can say how far something can go, you see this huge move. it broke out on its earnings. take a look at the next chart. so again, we have 114 seconds down, remarkably symmetry, 115

back up. what you do, you measure, these are written in 1930s and '40s. the width of the range is 130 to 110. yes, that at 20-point range. if you add to the high of 130. you get 150. it's almost made its price of jacket. i want to take profits. >> mike, what's your trade? >> i am looking out to july. i am selling the 150, 155 call spreads. you can sell them for $2.20. net credit of $1.49 we bought calls before. this is a company doing a lot of things right t. valuations now are probably getting pretty he'dy i think for a company that isn't going to see a lot of growth outside of those operational things they are doing right. >> listen, the trait strategy makes sense. when you got bullish. i was skeptical. it made sense for technical

reasons, momentum in the market. i like what you are doing in the call spread, selling it. you are defining your risk, if you continue the momentum higher. i like the risk reward potentially taking in 145. it's one to two? >> yeah, basically, that's exactly right. if you can, when you are selling call spreads, if you can get between 30, 40% of the distance between the strikes, that's a good risk-reward relationship. this is a trade that will make money if it levels off here. i have to leave it to the technicians whether or not that's what we expect to happen. no me, it looks like it's taking off to the moon. maybe we reached the apex. >> i think so. >> got a question, send us a tweet to "options action"s. check out our website optionsaction.com. rumor has it they may turn it into a movie next year. in the meantime, here's what else is coming up on the show. here's what shares of

nvidia are doing. if you missed the move, we will tell you how you can still buy it for less than $10 bucks. plus, calling all "options action"s fans, grab your phone, tweet us your question at "options action." if it's nice, we'll answer it on air. when "options action"s returns. i'm here at the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock

expecting earnings. impressive... what's up, tim. see options data like never before. 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". some have been up over 7% this month. there is one game that has been a standout. cnbc's domenic clu. >> mellissa, nvidia stock is as hot as the new york fire. i feel like the back burner these days, it's the top ten best performing 500 stocks this week, a volatile one at that. we are talking 7% in terms of performance. 30-plus% gains over the last year-to-date period and 211% over the last 12 months. if that wasn't impressive enough, try this market cap comparison. so far year-to-date, nvidia has gained $24 billion in value. that's just like adding on a company the size of united continental airlines in less than five months and six, count them, six record highs so far in 2017. yeah, last year's best performing stocks still

definitely all about the bulls, but are they due for a cooling off period? at this point the stock is already 10% above the analyst's target price as tracked. 53% of analysts say buy. 34 say hold and 13% had a sell rating. so mellissa, either analysts up their targets or we see down grades based on valuations. back to you. >> if you are still looking to get into nvidia, we have ways you can do that for less. take it away. >> you are talking a sell spread, when might you want to buy one? one is when you are moderately bullish. i don't know if you are very bullish or moderately bullish, this has had quite a run. number two, if you want to commit less capital to the trade. finally, this is probably the most important thing, you want to mitigate that downside risk. this stock, we take a look at

the chart, it has been quite volatile. you can see here, we had this sharp move up here, in fact, if you take a look, this drop that we just had this week stock was more than $7 lower than it is right now, which is one of the reasons why i'm taking a look out to september and specifically i'm looking at the 140, 165 call spread. can you spread $7 for that. i was looking at this earlier today, again pointing out $7 not a lot when you consider how sharply the stock has been moving. it presents appreciation from where it is right now. this is a way to get in, spend less, risk considerably less. >> what do you think of this streak? >> i think if you do it here, that is a way to do it to find your risk. you paid 8 and change. >> that is your max risk. to me, i think you have to think about it this way. if you could have said it over the last year, this is short. you have these massive gaps. this is important, though, at

one point last year, it was thought to be a takeout candidate. now it's a $80 billion market cap. that's the same as texas instrument u instrument itself. they will do $14 billion in sales. nvidia will do $18 billion. i can't tell you if you own it, define risk strategies for both makes sense. >> it's not just nvidia, the semis, the stock endeck, the stocks has nod had any sort of immediate give back in about 11 months. if you look at all data, the stock doesn't go back much more than 20 years. this is one of the longest stretch stretches, 11 months. >> definitely the reason why if you are long in stock, you might consider doing it or do this instead. you obviously have some significant risks to the downside. okay, nvidia is a different story as well. isn't it? it used to be thought of as game stock. now you have game center business. there is a lot of other things. >> still ahead, silver staging a

comeback this week. carter says there is something in the charts that suggests even more gains, he'll tell us what that is. dig deep into your phones, we are taping your tweets. much more "options action" right after this. [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. [ that's a good thing, eligible for medicare? but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan,

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and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at td ameritrade. >> welcome back to "options action." time for the outside call, we take a look at our winning trades, a few weeks ago, they thought silver looked oversold. >> the bear would say, wait a minute, if this is all going to be this symmetrical, we have this much more to go. i think it's overplayed because of the 14 day down, four downs, independent of the long-term picture. >> i'm looking out to august buying the 15-and-a-half, 17 call spread. can you spend 50 cents for that. >> the metal bouncing 1% today. what do you do with this trade? >> i think you can roll the calls up to the 16s.

you will take half the amount of capital you initially committed to the trade and still have upside up to that 17 strike we sold. you did that? >> i'm good there. this is early going. so let's play them more. >> what did the dollar trail look like? >> this obviously, commodities, we had a huge rebounding in oil today and this week. in fact, commodities in general, this is the most important, you have gold up 8.5 thursday this week. s&p is up 1.5%. that's the biggest message t. crude is not real. silver we think higher, commodities is all over. zinc is rolling. silver is the best place to be. >> from silver to social. last week dan thought it could nap back after disappointing earnings. >> i think the stocks will pop, get back towards $24. that was the level it broke down, that should be resistance, there is not a whole leg of a lot of history to this thing.

i want to target back to the high 20s. so bu one of the august 24 calls for 60 cents and sell two of the august 27 calls for 30 cents each, cost you 60 cents. >> snap has now regained half its losses since earnings. so, dan, what's next? >> importantly, that was an overlay against a long stock position. if you long 100 shares, you would sell two of the 27. the most important thing is 27. that's the important thing to think of, the stock is 20. >> that position could have been put on for even money. it's the same after a $2 move. for me, this was a levered override sort of thing. so 27 is where you would get called away. >> you do these trades when the stock is down, volatility is up. it was and remains high the structure remains a food one. >> just what you started your thing last week, insufficient price history. no pattern. >> all right. up next, we got your tweets on the final call on the options.

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.

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only at td ameritrade. >> welcome back to "options action". we'll take your tweet t. first is from edwin who asked is buying vix calls a safe way to profit from washington turmoil? i don't know if vix and safe go in the same -- >> i don't think that buying option on the vix would be classified as safe. first of all, you need to understand that with vix options, those are actually options on individual futures contracts. so the first thing you need to do if you think about that is familiarize yourself a little with futures trading and what a futures term structure looks like. >> how about all those vix etfs stan? >> i would stay away from those. here's a popular trade, one thing that's interesting about vix options is they almost trade mid-markets. they're very, very liquid. so one thing when people are bullish on vix or they think it's going to spike, they sell in the money put. they use the proceeds to buy an out of the money call spread. they look to do it for even

money, it's cash settled. when you get a pop, you look to take that put off quickly. >> then you have that call spread. that's what happens in the vix. >> you watch that fear index. >> that hit an all time high this week. what is that implying? is it because premiums are actually lower on the calls or is it -- >> so the fear, the big process is a function of two things. it's a function of the implied volatility on the option and the s&p or the 30-day duration, the other thing is where the s&p is. if it drops, you are going to lower strike options, which typically have higher implied volatility. there is a sensitivity in there as well. >> no vix etfs? >> it's a sure thing. you don't want to hold on, that is not in the investment right now. >> all right, time for the final call. last word from the options pit. >> if you are long profits for mcdonald's, sell short. >> selling short is risky, sell shorts. >> we have a debate of the

target. not tieing to pick, the call counter is setting up for events, i look it. >> it looks like our time has expired. thank you so much for watching. check out the website optionsactions.cnbc. meantime, see my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm just trying to make you some money. my job is not just to entertain you, but to educate and teach you. call me or tweet me @jimcramer. every day we try to get a read on the economy, and