hey there, we're live at the that nasdaq market site here's what's coming up on the show. >> ranking the market, relax there's one dow stock setting up for the perfect catch-up trade we'll give you the name. plus, nike set to report earnings and do you know which way the stock is going to go >> do you know. >> we don't know for certain but there are interesting options trades that might shed in light. we'll break it down. and -- talk about hot, in the last two weeks, carter predicted the surge in oracle and amgen and now he's got a bolder call

to make. the action begins right now. ♪ >> let's get right to it everything that is old is suddenly new again two of the four horsemen of the 90s are surging this year, oracle and microsoft trading near their all time high well below the tech bubble levels, 10% lower than the 5 2-week high. let's get in the money right now. >> i think they can. you just mentioned microsoft and oracle outperforming microsoft up 13% this year and oracle is playing quick catch up new all time high, 33% on the year a name i want to look at is ciscoe, that could be a potential catalyst out aways.

one of the things is really important, cisco reported down 7% last month, there was a revenue miss for the guidance of this current quarter but when you think about that and have a big gap, the company knows they have this analyst meeting in a few weeks here they don't generally like to leave -- nothing to talk about what you get there we have a couple of charts i think there's going to be good news they held out we also have a 10-year chart which i think is really interesting as we talk about the other tech leaders making new all time highs look at that one, it failed last month below the 10-month high and let's go back to the 20-year, if you can get above those levels, there's a lot of room to run. this is stock that trades 13 times earnings, 42% of the market cap and 20% net of debt pays a 3.6% dividend it's cheap and there are catalysts. >> on the upside here, if you take a look back, we're talking

about microsoft performance this year, that was a stale stock stuck in the mud goes back and both companies have a place in the new economy, new technology cisco hasn't provided answers to that yet to its credit and your point trades at the big discount to the market. it's generating a lot of free cash flow, likely to rise. if you're going to make a bullish bet, wouldn't you rather do it on a company trading 13 times. >> let's start with -- what dan is talking about look at the long-term chart, either that is the biggest set up you can possibly have, you've been in a massive range after the dot com run-up and collapse and get out and get unstuck and free and clear, and that is quite a setup but the daily chart has a defect there was a heavy volume drop in gap on last quarterly results. when you drop and gap on your results, you often get a second

gap in the same direction as a stock would gap once and gap twice. they come in twos and threes and the most recent gap was a down gap. you've got a great long-term setup, but the day to day is maybe a bit of an issue. >> i want to mention two points. one of the things that got investors excited was their move to the cloud and their transition and it's a very high margin business i think they will talk about a recurring revenue model associated with maybe 10% of their business, sostd wear related. that could be a catalyst and fill in the gap. you want to target these two events and look to august expiration which will catch the earnings announcement. when the stock is trading at 32.10, option premiums are very low. the august 33 calls were offered at 45 cents, that's 1.5% of the stock price and breaks even, up

4% i think you gap fill in the next few weeks and the earnings announcement is the catalyst to make it break out from those long term resistance levels. >> i think this sets up nicely from a risk reward perspective, consider whether it moved 4% in either direction, if you're going to make a bullish better, you'll be better off doing it with this. you'll commit much less capital but in the event -- 1% is all you're risking. >> any bullish bet for a trade is too early. >> no one knows the future we know the most recent quarter was lousy and stock has been a underperformer that's the burden for the bull call. >> i'll say we're at a point in the bull market where stocks can only go up we have a lot of multihundred billion dollar tech stocks up 33% on the year. i think value is attractive

especially with a story associated with the strength in other names. you have a combination of cheap valuation and option prices and catalyst like mike said and you want to make bets in the market. >> it's flash back friday with another group of stocks as well. a handful of classic dow stocks surging boeing and mcdonald's up 30%. johnson & johnson up 18% with united tech rallying 10% one of these names has come too far too fast carter will tell us which of the dow classics will be a downer. >> more than a couple have gone too far but today we would look 3m i want to start with an overlay of industrials as a theme and then maybe try to get over -- i have a two panel chart and this is the s&p 500 industrials, utx and ge and

caterpillar and honeywell and the one we'll talk about 3m. the first thing that's important is this. we know that since december it is up. but it's relative performance, which is everything to the market, is down. and that's a defect. let's go to a longer term chart. this is industrials again. we know we have broken out to all-time highs but the relative performance got right back to its prior high and has been stuck there three times. i think it's going to remain stuck. industrials are light. ge is a big part of this but hold that as a concept and let's go to what is either a chicken cyclical or dow component. you have the stock 3m which has taken off. what we know, year to date, big out performer, a few more time frames, here is five years and it speaks for itself you've got massive outperformance on the part of 3m

and here is ten years. circles draw themselves and numbers speak for themselves and here is basically back to the early 1990s, right again, what i'm thinking at this point is that 3am has gone a little too far let's look at 3m five-year chart. i think you could draw the lines this way and what we know is that you've busted out -- there's a lot of tension but the angle is to steep. often when you do that, you'll actually fall back to the point from which you broke out, a slight pivot that would be about an 8% correction down to the 1.95 level. keep that level in mind and here is just the one-year chart were we to simply check back as we've done several times already, that would be exactly 1.95 that's what we're looking for. if you're a short seller, go after this one. >> mike, what's your trade

>> this is an interesting one because 3m has grown for a lengthy periods, one of those rock star stocks you could have had had in your portfolio but it is trading rich at this juncture when you consider the top line isn't really growing and we've had obviously a strong rally here i'm looking at past earnings, which are going to be reporting in july. the think the play you can make is to buy the august put spread and 3.75, sell the 200s against it for 130, less than 25% of the distance between the strikes it is because options premiums will be slightly elevated if they do capture catalyst even so they are extremely cheap. i don't see this pulling a costco, falling out of bed as sharply as it did. i don't know if you think that's the possibility. targeting 200 level. >> that's right. it's not going to have some amazon news that will do it. but it is -- industrials have been a problem because growth is a problem and

people who have to be long, managers who have to be exposed to industrials will cluster a crowd into a name like this. it has characteristics that aren't so volatile, low beta stock and the angle seems steep and i think it's time to take profits. >> it's a low beta stock not a place where a lot of fast money plays. if you look at the biggest holders, it is about the sloiest big money you can have but what we're really talking about is a check back basically. i'm thinking early june, late ma. >> i think that's exactly right. >> that breakout level back to 200. i like the trade, risking 245 to make 755 the top line is expected to grow 2% you have maybe double digit eps growth seems kind of rich when you have a straight up move of 17% since it broke out in february to me, i like the idea of targeting a really intelligence

range. you have catalysts there i believe there's going to be one of these complacent industrial names that will wake people up to the fact that they are crowded into these stories because a decent dividend yield, that sort of thing to me i think this makes sense check out our website, options action.cnbc.com. what are you waiting for here's what's coming up next ♪ >> that may be the case, but ideas how to make money on nike when it reports earnings next week he'll break it down. 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 on air when "options action" returns. >> logical

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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the most on demand, your entire dvr, top networks, and live sports on the go. included with xfinity tv. xfinity the future of awesome. i'm here at the td ameritrade steve, other than making me move stuff, trader offices. 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. welcome back finish line surging 7% after the earnings report and taking other sneaker stocks higher with it. the group will be in focus when the biggest sports retailer of them all reports, that would be

nike here's a look what we can expect. >> dom >> the shadows are getting long and that means we're near the tail end of earnings season. that tael also includes the biggest athletic apparel maker of them all, nike. what should investors expect when it reports earnings next thursday after the closing bell? let's get the headline numbers out of the way according to estimates from thompson reuters, nike is expected to report 50 cents a share, of course there's going to be a lot of attention being made about future sales orders from a trading perspective, the options mark market currently pricing a move 5.5% up or down on the longer term it is up or down 5%. now according to facts set, nike stock finished lower out of six of them but the average move has been 2 .5 up or down.

options traders think possibly more volatility, recent history says maybe less volatility we're going to find out on thursday after the bell and regular session trading on the following friday back over to you folks. >> thank you, have a good weekend. if you're worried nike could run into hurdles, don't. mike has a way to play the stock. >> we'll look at selling and call spread. you're going to get some sense of the sentiment i have on this, you sell call spreads generally speaking when you're neutral to bearish. one nice thing about calling call spread like options in general, you're raidsing the probability of profit of your trade. unlike selling calls naked which is something we don't necessarily advocate for people, when you sell a call spread you can do this whether or not you happen to own the stock. so, specifically the trade i'm looking at is i'm looking out to july, i wanted to basically target this level where it had fallen out of bed basically. you can sell the 53.5, 54.5 put

spread and collect 35 cents for that we want to look what carter has to say about it technically but you're basically collecting 35% of the total maximum value dom just said the options market is implying a larger than average move but lately hasn't been moving that much and that's one of the reasons a short premium trade might be the way to play this one. >> we go to carter let's check in with carter on that. >> so technically it doesn't look very good the reality is, this is a marquis stock, a stock markets and marquis stocks making all time highs and this thing is down 20% off the all time high and acting poorly. two heavy volume drops in gaps over the last several months and thoz often associated with news and often earnings news. something is not right. >> so two gaps, not one gap. they usually come in two or three. then it announced this deal maybe selling things directly through amazon. >> i think that's the most

important point. i think expectations are very low despite it trading at a premium, down 20% from the all time highs of two years ago, 10% from the 2017 highs, that tells me sentiment is not rosie on the name you have a setup if it held that $50 level, a big level a few years back, to me you could probably buy the stock because there are katd licatalysts. we know athleisure is in a tough spot this stock is still up on the year believe it or not but if you can get through the earnings report and investors aren't spooked by guidance -- >> they just announced this big thing, something you've -- >> haven't announced it yet. >> this is what we think will happen it creates a back stop to the degree that people think, that's a forward looking thing investors will think about and could mute the move whether the

news is good, bad or somewhat indifferent why you might be inclined to sell premium into the catalyst because it is implying a larger move and plenty of reasons why it might not be so great. >> i'm not in the why buzz but what business. what is the problem? >> i think there's a lot of things going on right here we talk about retail almost every night on this desk i think they are probably one of the best retailers out there when you think of the bricks and mortar retail experience they control, it's phenomenal they have a problem on the lower end with the foot locker and look at the performance there. i think a deal with amazon makes front and center, it puts, it gives them the proper ownership that they need on the web and do a great job on their own site and bricks and mortar -- >> their operating business is nothing to suggest there's big upside it's a catalyst driven things.

>> premium brand traded at the premium multiple in the year term or last year adidas has been eating -- >> i think premium brands and especially those that are trading at premium multiples are probably the area most at risk when you're looking -- >> what about starbucks? we were talking about starbucks in the same light of nike, it has since come back -- >> different chart though. >> they looked pretty similar at one point. >> it has to stop going down first. in this ca nike is still going down, starbucks started to turn. >> you don't have to come out with a new version of coffee people go back for it every day. >> carter has a hot hand blowing it out of the water with calls on oracle and amgen. pull out your phones and think nice thoughts, we're taking your tweets later in the show much more "options action" coming up.

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 we rbut we are not victims.ack. we are survivors. we are survivors. we are survivors. and now we take brilinta. for people who've been hospitalized for a heart attack. we take brilinta with a baby aspirin. no more than one hundred milligrams... ...as it affects how well brilinta works. brilinta helps keep platelets from sticking together and forming a clot. in a clinical study brilinta worked better than plavix®. brilinta reduced the chance of another heart attack. or dying from one. don't stop taking brilinta

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at where instead of payinging a befor middlemen,em. we work directly with family farms to deliver higher quality ingredients for less than you pay at the store. get $30 off at blueapron.com/cook 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. it's time to look back at our open trades. just last week carter said

oracle could break out on earnings. >> that gap, that was a big beat and i think you'll get another one right here and the stock will cap up on earnings. i want to play for that new all time highs on oracle. >> i'm looking at the august 41, 48 call spread risk reversal pay 1.45 and then sell one of the 48 calls and one of the 41 puts against it. 35 cents each. >> the stock was up 14% this week what a call, carter, what's next >> it's nice when they cooperate. we know what happens when they don't. it is sort of in line with the presumption that it would be news related gap you have two we're at all time highs and you have to buck this and move onto the next. >> there's only a little over 30 cents in profit potentially remaining because it well through the 48 strike call and quik a victory, could have been a better one if i believed it would gap as sharp as you did

but it's win we're taking the money and running. >> you move on, but if you're increasingly bullish in the story, here's a scenario, you look at the gap out level, the breakout level and you can sell puts at those levels and premiums have come in a little bit but that's where you want to buy the stock back there's no reason to think this thing should fill in the whole gap. that's a good trade going forward. so the breakout to my eye about 47 bucks. >> didn't you say not to sell puts in this one >> this particular last week >> now it's a good time. >> listen, breakout all time high on massive volume >> you like the puts underneath. >> on to another winning call here, almost a month ago, bet on a bill amgen surge. >> this two-year con solid dags is likely to set up the next powerful advance. >> i'm looking out to september, september 1.60, 1.75 call

spread you could buy the september calls for $5.85. sell the 1.75 against it for 1 at the ti1.20%. >> i think we stick with this one. this has a lot of time left in terms of what it could do. >> stick with it >> we do stick with it but we adjust, we roll up. >> up next, your tweets and the final call stay tuned 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.

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 >> welcome back, time to take your tweets, our first viewer asks, why do traders sell calls instead of buying puts. >> the answer is simple, if you think the move is sharp, buy puts and if you think it's going to sit there, sell calls >> carter? >> 3m, i'm a seller. >> mike? >> nike call spread seller in

earnings. >> analyst meeting next week, upside calls make sense. >> looks like our time has expired. i'm melissa lee. thanks for watching. check out the website, optionsactions.cnbc.com. we'll you you back here monday >> announcer: the following program is a paid advertisement for the hd mirrorcam, brought to you by inventel products, llc. yep, they're out there, driving recklessly, causing accidents, and driving up your insurance rates! this is a show about car accidents... ...classic cars... ...and the hd mirrorcam, the personal security camera for your car. this is... "accidents caught on camera" with the hd mirrorcam. today, we're going to hear from people who have been in accidents and used the hd mirrorcam to prov