>> hey there, we are liveing still at the nasdaq markets on this busy quadruple expiration friday guy is getting ready behind us while they're doing that, whatever they're doing, here's what's coming up on the show. >> cleanup in aisle three. >> that's what investors and grocery stocks are saying today. traders are betting that one may have found a bottom. we'll tell you how to profit plus, how would you like to buy oracle for less than a buck? >> i'd buy that for a dollar. >> we'll show you how to do it for 65 cents. and one of our traders is getting short tesla. >> he's crazy. >> well, after you see the carts, you pay change your mind.

the action begins right now. [ music playing all right, now let's start with the big story of the day, amazon, you might have we heard this, buying whole foods for nearly $14 billion >> that news sending both stocks higher this sex. amazon up about 2% whom foods you might imagine surging 30% to the buffet takeover price a. lot of shortage as well 42 bucks a share was that bid. some suggestings we could see a bidding war. options activity exploding whole foods off the charts get the, the stocks saw more than 70 times its daily average volume options super hot as well, pretty much all centered right around that $42 mark but the nature of the volume might suggest traders are betting against the notion of a bidding war. of course, very complicated. so let's break it down here.

mike ko, not only options expert also based, you know, next door to whole food. you live in austin. >> i do. >> that's where they're based. have you the insiders there locally. what do the options take >> let's talk about something fundamentally first. it's interesting to me, whole foods is a company everybody was wondering if they're ggetting those mojo back, now now that amazon comes out, they say they under bid. what was really going on, though it's conventional to see this kind of activity in takeover situations what happens is, risk our players, they come and try to squeeze the last bit of big out of the trade they buy the stock they typically will sell calls against it they get into buy rights the back stuff, stock will not go a whole lot lower, because there is at outstanding bid.

so they don't need to look for really high returns, because they view these a very low trades. >> very high level stuff there so back it up a little bit, if i can ask you, not everybody is a pro out there. when you say the risk -- are you talkingistic arbitrage -- talking about the arc tragedy in layman's deals what are they doing with the price and the options? >> usually you will see the stock trading below the takeout price. that's not the case here let's say they were trading a couple dollars over, you get that last dollar is out. you have calls at or around. >> stocks trade a little below there is always a slight chance something doesn't improve. >> a $40 deal will often trade. >> 41.70. >> it's a slight chance the deal will break when you see it trade over, bake amy the markets tell you there is a lower chance it will break. >> originally a trade will sell 30 cents below it's here, there is something going on, obviously, there are some investors who think there the a greater potential for a deem it's my view the only buyer will be amazon.

if it ends up higher that sort of thing i suspect you came in lot, the stock, it's been down a whole heck of a lot unless you bought it recently, you don't have profits, all of a sudden you have this stock trading at 42 on the on you see those calls still. >> amazon can pay 10% more for the company. it's accretive that's how much they gained on this news. >> who is happy about this this the a $65 stock back if '13 '14, still at this price down. who wasn't want to be bailed out? is it going back to 65 >> let's be clear, carter, at 42.68 where whole foods is on a $42 bid. barclays and oppenheimer had a note saying they thought another deal could come in if you go out there and buy whole foods, are you guessing. that's what you are doing. >> well, you are playing odds. >> you are playing with another

bitter. >> you are kind of stopped. >> you don't have a whole heck of a lot of down side t. other thing you will see in deal situations leak this you can have another bidder come in, just to make amazon pay more. >> if the other deal doesn't go through. >> i don't think amazon will walk away from it. i think they're fairly committed to it. i think they've laid out their strategy here. they will buy this company so if someone comes in to make them pay 46 or 47, they will pay higher than that to get this deal done. >> as we were saying before, for them to increase the bid, even a nominal amount for them could be material in keeping anybody else away i'm not sure somebody else will come in i don't think this deal breaks i think there is almost no chance of that so this is, look, the rick arbitrage play is professionals, the deep end of the pool kind of a trade and i would invest with those guys, if that's the kind of thing you want to speculate rather than picking this one deal where it's already trading over the upper price to do it yourself >> deal is or no deal. you said shares of other grocers

tanking under concerns they're already a low margin industry, could see lower margins. what if they sister to invest to upgrade their stores farmer's mark sinking 6% him super value, also a big distributor down 13%, kroger, wow, guy, another hit, for the kr croaker down 30% in a week here's the question, dan, nathan, if you are a bargain hunter or a risk taker, any of else to names worth their money? >> first things first, this croaker or excuse me the whole foods amazon deal will not happen until the second half it will take a while to be implemented and take its toll. in the meantime, like you said, kroger was down 18th%. they guided down the balance of the year down 10% from an etf stand point t. stock was down 18th% and today down 11-and-a-half. so there you go, you got about 30% decline in a few days here, this thing trades 11 times they're expected to grow sales, this company has $120 billion if

sales. they're buying whole foods that had about $15 billion in sales look at that cart right there. i think this thing got a little overdone, especially if you see other retailers poking around, thinking how they can do a 23. >> it's interesting, the top line revenue growth, we'll foods does not have top line growth. they have margin compression there are other things they can do do expands their apron. it's a higher margin way to sell. >> be i the way, maybe playing an ipo. >> is there a trade, though, guys is there a spec way to make money? >> do you want me to do it >> i would let this thing kind of set him in, it's trading at 52-week lows i was looking at october expiration, next week, september eggs preparation will be listed. it will be the nice cat q2 earnings coming the morning of september 8th. that's what i want to target here some of the commentary yesterday from the ceo on cnbc is the quarter would start and get

better so they just kitchen sinked the year you have the possibility to get down to that break down leefl. when it was trading at 2170 today, you can buy the october 22, 29 call spread $1.50 for that buying one of the october 29 calls for at 20 cents. it costs you 1.50. breaks at 23-and-a-half. you make up that up to 29. i like the rick reward on this trade. i know that's kind of an easy call spreads $1.50 but i'm making more than three times in i get it all the way back. >> i think it gives yourself a long time to play out. much of the damage may be done s people will have an opportunity to digest that still. if it doesn't isn't, you will be stopped up. >> i think you will need owl that time. you will need it all i mean, by my work, you can fill the first gap 24.50 to get to 29, i would say the chances are

as close to zero as you will find. >> all right now, to another very prominent group of stocks that have been taken to the wood shed recently. that is big cap tech nasdaq 100 etf is down 4%, hitting an all time high since last thursday. a number of high flyers got hit hard, facebook down, alphabet and nvidia down. then there's tesla floating above the fray, off around 1% since thursday's close, however, chart master carter worth, you say that tesla could be the next stock to join the tech wreck walk us through it. >> well, let's go look at the terms. if the option of buying something that's broken, like that supermarket is selling something that's strong. so you take your chances, but let's talk about it. what we have here is a five-year chart. and i think optically it's quite clear the following is what

happened right. we have a nice breakout above. that but i want to sort of zero in on the here and now and try to put this current mover in one we had our breakout. it's quite remarkable how precise, right, it go etc. to the top. it gets to the top it gets to the top backs away and then whips through the high okay, so, now, breakouts can continue and that will be the risk with shorting this, but i think possibly we got the chance for a little of a give back. all right, here's the current move right we've gone from essentially 200 to 380 and can you draw the lines anyway you want. but i think a goods way to draw them would be something along these lines. what we do know is is that all uptrends have check backs and you have a possibility or some sort of odd that we're getting due for that kind of thing and so, that's what i'm playing for, some give back in the stock that's obviously broken out about five-year highs. just for fun, let's just stare at this. now, these are the top five performing stocks in the s&p and you can, well, can you see them you can see the numbers. it's not in the s&p. if it were in the s&p, it doesn't matter, tesla is up

here yes. number one performing stock bar none i think at this point you take profits or you go short. >> good stuff, carter, thank you. >> i don't need to talk the fundamental also that's been talked to death. we will settle the july 375, 395 call spread, basically leaving the stock to stay, you will check the $8 in premium you will get for selling them and obviously, even if it does continue to rally. we debate there is a risk. there is a technical trade t. most you will risk is $12, only if it does that all the way through expiration, you were to hold it. so i think this is basically the way to take a short bet on the stock. >> i think it's important to remember, mike is in july here, he is playing for a consolidation or a slight move lower, if you thought this thing can go all the way back to that breakouts level to 320 or something like that, you would be looking to schmidt some premium and buy a put or a put spread or something like that. >> to me if you want to do that,

you'd look to august >> that will catch the q2 earnings, we need to hear an update on the model 3. that's what's driving. >> that would cost you t. premiums are put calendars. >> so what i would do, listen people, maybe next week we will do it. i would look to buyer longer put in august and sell a shorter one. just remember, if carter thinks this thing will go down 15% or something like that, then mike's trade is a high probability they will make a little money it's not a high probability they will make a lot of main. >> $8 is what what you will make one quick point about the calendar, if you did play a calendar, you are long dated option short the rick profile the risk reward is going to be similar to this. right.

you will be short premium and if it makes a big move, it's not a win. >> it gives you more optionality if are you in a situation where you have a move, you can cover that short put and turn it into a put spread, that sort of thing. listen, mike is playing the odds here >> that makes a lot of sense have you as to look at the fundamental view how bearish are you. look at the technical view how much do you believe in carter's charts? if you do -- >> carter don't you like them talking about you? >> i can sit right here. i will end with there one you started w. either this is the worst part of the trade or the best part t. fact that it isn't succumb at all suggests there is a buying base there that is not worried about anything that's the complacency that's the vix as to make the trade work actually, this is idiosyncratic stock taking over the world. >> i hate to call it a cult stock. people are fanatical about it. >> clanging the world, changing automotive, changing technology. >> speaking of change, we have much more "options action" still ahead. here's what's coming up. ♪ i'm free >> that's what's been happening to tech stocks lately. but there's one name the chart

master says you should buy on the dip. we'll break it down. plus, calling all "options action" fans, reach into your pockets, not your phone and tweet us your question at optionsaction. if it's nice, we'll answer it on air when "options action" returns. >> logical. >> more "options action" after the break. [ music playing hey gary, 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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well, tech stocks have been hit hard the last couple weeks, there can be more volatility when one name reports its earnings next week >> that is or cam t. options market is implying the stock could move 4% in either direction when those numbers come out wednesday after the bell carter, you have a move which is more likely to go. what is it >> well, i think i have a clue who knows? maybe it's the wrong clue. let's figure it out. lines to colors, to securities and what we've got, of course, is here, oracle versus the tech sector over the last two years the numbers speak for itself, having lag is an opportunity for catch up or oracle has a problem. i will make the bet it's an opportunity. keep going all right, longer term, a five-year chart, same general circumstance have you this out performance of a sector versus one of the big stocks in the sector let's go back to '09 of june general proposition here again him. right?

so the question is, is oracle set up to break out absolute and/or to out performance for the sector all right. all time chart you can see the lines. you can see where we are it's not random we are right back to the dot-com era. but this in. for those that care about the ahmed also, i thought i'd draw some lines here, march of 200040 cents, earnings now 2.19 cents, that gives you a pe of 116 then a pe of 20 now if that matters to you, go that price. another line is like this, right at the top i think this is a good setup i will play for the presumption of a breakout two highs. let's look at the daily chart t. setup. you could draw it this way head-to-shoulders bottom, play it again we will breakout. do it another way, a cup and handle like this and apply for the presumption that you will breakout still the here and now you can look at it that way.

again, draw your lines anyway you want there is a lot of tension here remember, we're back to the 2000 high so this is the key you see this gap here? that was the last earning. >> that gap. that was a big beef and i think you will get another one right here and the stock will gap up on its own you want to apply for that, new highs on oracle, old line tech that didn't come to light. >> first, talk about how your trading is, it's weird, you used to talk about oracle all the time, it's become this quiet giant. you talk 16% in 12 months. we barely talk about it, which is a good thing. how are you trading oracle the. >> when you see a catalyst like earnings, options prices will tend to be elevated. if they're too high to reach out and buy them, one of the things is to spread it in a way where

you are selling more options than you are buying. this is a trade dan used many times to great effect. i'm looking at the august 41, 45, 48 call-risk reversal. you pay $1.45 and sell up with of the 48 calls and one of the 41 puts against it 35 cents each. you are only spending 65 cents those options will decline in value fairly significantly after earnings come out. i am looking at the 41 level, it seems to me that would be a good level of support in case we get this one wrong. >> i like the trade idea i like playing for the breakout. it makes sense, last quarter the stock had a huge gap they had a really strong fourth quarter. this is a company that's known to have really strong fourth quarters they see it drop off an q1s. so the only question i have about the trade is i think we're in a period and i think last friday the action in tech stocks show these are dangerous times

to start selling puts in sort of complacent stories so to me, i'd rather commit the capital on the call spread to make a bet on that if they were to actually miss this q1 or guide down, i think they have a situation where probably it fills in that gap. >> that's a fair point but this has not been tracking all the other trade stocks, the second thing is it's trading a lot cheaper than actually the market overall. >> here's something that's become clear in 2016, 2017, investors are willing to pay for salesforce that's growing 20% a year versus oracle that only buys multi-million acquisitions takes cost out to get a few percentage of growth on the etf line to me oracle is a classic rollup they think they're in a dead

heat with cloud seams. they got there about the same time. >> it's a database >> a quick point effective romups can be effective investments. we seen that. >> we're switch i switching from technology, up next, we will talk about food. mcdonald's making a run back towards all time highs, there is a little something in the charts for mickey ds. cell phones, big nice thoughts we're talking some of your tweets, much more options action still ahead. 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 opioid my doctor prescribed for my chronic back pain backed me up-big time. before movantik, i tried to treat it myself. spent time, money. no go. but i didn't back down. i talked to my doctor. she said: one, movantik was specifically designed for opioid-induced constipation-oic- and can help you go more often. number two? with my savings card, i can get movantik for about the same price as the other things i tried. 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. don't back down from oic. talk to your doctor about movantik. remember mo-van-tik. if you can't afford your medication, astrazeneca may be able to help.

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 too "options action." it's time to look back on our open trades, a few weeks ago, mike and carter said pittsburgh donald's was due for a pull back take a listen. >> if you add 20s points to the high of 130 remember you get 150. it's almost met its price objective. i want to take profits. >> i'm selling the 155 call spread, when i was looking at this, you could sell them for $2.20. net credit to you of $1.45. >> the stock did sell first but

did recover. carter. >> it's all off the recovery you want to stick with the pieces >> take it with you. >> yeah. >> we can stick with this trade as well. because we're going to be checking more premium on the calm we're short than we are paying >> okay. sticking with it doubling down to golden arches we like it >> some of your tweets america the final call from the options pits n 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.

hi i'm joan 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 according to janet yellen. so should you by tlt put strikes in december or january >> i think you want to wait.

there is one more high coming. i think you want to go to 122s it's not right to be in the money. >> quickly, final call. >> buy oracle, sell tesla. >> no call spreads in tesla. >> a fine risk in kroger >> kroger call spreads. >> yeah. >> we have 20 seconds shot segment. you did an 8 so i can sit here and look at the camera two seconds we'll see you in a week for more ""options action." >> two minutes, mr. van dyke! >> oh, hi! i'm dick van dyke. you know, back when i was doing "the dick van dyke show," audiences would laugh every week when i'd come in and tumble over the ottoman. today, that wouldn't be so funny. a fall like that can mean broken bones, loss of mobility, loss of your independence, or even worse. so, if the aches, pains and, you know, that funny balance thing are slowing you down, keep watching this show because i've discovered an incredible program that's going to help everything.