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

make the action begins right now. everything that is old is suddenly new again two of the four horsemen of the '90s are surging this year oracle and microsoft up double digits trading near all-time highs. cisco not far behind well below the tech bubble levels, 10% lower than -- intel is down on the year, but could any of these names actually play catchup to the rest? let's get in the money right now. dan, what do you think >> you mentioned microsoft and oracle outperforming microsoft had a good year last year oracle is playing quick catchup. you made a great call last week. it got to all-time highs after results yesterday. it's up 33% on the year. cisco, they're going to have a meeting next week. that could be a potential catalyst followed by the q4 earnings falling on august 16th. out a ways

one of the things that's really important here is that cisco had a really bad day when they reported their fiscal q3 it was down 7% there was a revenue miss for the guidance of the current quarter. when you think about that, you have a big gap, the company knows that they have this analyst meeting in a few weeks here they don't generally like to leave, you know, something -- nothing to talk about when you get there. we have a couple charts here i think there's going to be a little good news that they held out. that's the one-year chart. it got about 32 today. we also have a ten-year chart especially as we talk about the other tech leaders making all-time highs look at that one it failed last month just bee loet 10-month -- all-time highs last year. if we can get above the levels, this is a stock that trades 13 times earning. 33% of market in cash. >> pays a 3.6% dividend. it's cheap and there are catalysts. >> on the up side here, if you look back, we're talking about

microsoft's performance here really, the story of that being stale stock, stuck in the mud. then what happens? turns out that both companies have a place in the new economy, new technology cisco hasn't actually pro vielded any answers to that yet. but to its credit, it trades at a big discount to the market that free cash flow is likely to rise if you're going to try to make a bullish bet, wouldn't you rather do it on a company trading 13 times. >> what dan started, look at the long-term chart. either that is the biggest setup you can possibly have, which is you've been in a massive range after the.com runup and collapse you're going to get out and get free and clear and that is quite a -- the daily chart has -- there was a heavy volume drop in gap on last quarterly results. when you drop in gap on your results, you often get a second gap in the same direction.

just as a stock like -- gaps come in twos or threes typically. there's a lot of data on that. the most recent was a down gap you've got a great long-term setup, but the day-to-day is a bit of an issue. >> i want to mention two points and get to the trades. one of the things that got investors excited about oracle, their move to the cloud and transition it's really only 10% of the business i think cisco is going to talk bay recurring revenue model associated with 10% of their business, which is software-related that could be a catalyst in filling that gap august expiration is going to catch their earnings announcement today when the stock is trading at 32.10, listen, option premiums are very low. you can look out and buy calls here the august 33 calls were offered at 45 cents. that's about 1.5% of the stock price. it breaks even at 33.45, up 4%

i think you get a gap fill the next few weeks and then i think the earnings announcement is the catalyst to make it break out from the long-term resistance levels. i think this sets up nicely from a risk-reward perspective because the premiums are low and you have identifiable catalysts. consider whether it moved 4% in either direction, if you're going to make a bullish bet, you'rebetter off with this you commit much less capital buying this call in the eep vent that carter is right and you have weakness and you have a gap lower, 1.5% is all you're risking. >> carter, is it sounds like any bullish bet at all even for a trade is too early. >> let's stick with what we have we know the most recent quarter was lousy and the stocks a massive under performer. that's the burden for the bull hog. >> i'm going to say, we're at a point in this bull market here where stocks can only go up, we have a lot of multihundred billion dollar tech stocks that are up 33% of the year i think value is kind of attractive, especially if you can tell a story that associated

with some of the strength and the other names. to me, i think you have pay combination of cheap valuation, cheap option prices, catalysts like mike said and you want to make bets at this point in the market. >> it's flashback friday with another group of stocks as well a handful of classic stocks surging. boeing and mcdonald's up almost 30%. 3m surging 19% johnson & johnson up 18% our chart master year says one of these games has come -- carter is going to tell us which of the dow classics is going to be a downer. >> i mean, more than a couple of them today we look at 3m. i want to start with sort of an overlay of industrials as a theme and then maybe triangulate to 3m. >> i've got a two-panel chart. this is the s&p 500 industrials. you got utx and ge and

caterpillar and honeywell and the one we're going to 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 that's a defect. let's go to a longer term chart. this is industrials again. we know we've 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 hold that as a concept then let's go to what is either a chicken cyclical or a dow component, but in the context of industrials, you're lags, you've got this stock, 3m, taken off. year to date, big out-performer. a few more time frames here is five years it speaks for itself you've got out-performance on the part of 3m

here is ten years. circles draw themselves, the numbers speak for themselves here is basically back to the early 1990s. again, what i'm thinking at this point is that 3m is going a little too far let's look at 3m five-year chart. i think you can draw the line this way what we know is, if you bust out -- the angle is so steep now. often when you do that, you will fall back to the point from which you broke out. a slight pivot that would be about an 8% correction down to the 195 level. keep that 195 level in mind. and here just the one-year chart. so were we just to simply check back as we've done several times already, that would be exactly 195. that's what we're looking for. i would take profits, do something. if you're a short seller, i'd go after this one. >> mike, what's your trade

>> from a fundamental perspective, 3m has grown for a lengthy period it's one of the rock star stocks that you could have had in your portfolio. it is, however, trading a little bit rich at this juncture. especially when you consider that the top line isn't really growing and we've had obviously a strong rally here. i'm looking at past earnings, which they'll be reporting in july i think the play you can make is to buy the august 210, 200 you can spend 375 for the two ten puts sell it against it p for 130 a net debit of 245 less than 25% of the distance between the strikes. it is because options premiums will be slightly elevated if they capture catalyst. like earnings, they are extremely cheap. i don't really see this pull a -- i don't know if you think that's a possibility i was targeting the 200 level. >> that's right. 195. it's obviously not going to have amazon new -- industrials have been a problem growth is a problem.

people who have to be long, they have to be exposed to industrials will often cluster a crowd into a name like this. it's that characteristic that aren't so volatile a little bit of stock. it feels complacent and it's time to take profits -- >> it's a low beta stock also, this is not a place where a lot of fast money plays. if you look at the biggest holders, it is about the slowest big money you can have but what we're really talking about is a check back basically. i'm thinking in lay may. >> i think that's exactly right. >> i like the trade. i like risking to make -- what mike said, is the top line is expected to grow 2% this year. you have maybe double digit growth seems kind of rich especially when you have a straight up move of 17% since it broke out in february so to me, i like the idea of targeting a really intelligent range. you have catalysts there

it's a little expensive. i do believe there will be one of these kind of complacent industrial names that are going to whip over the next few weeks. it may wake people up to the fact that they're crowded into some of these stories because a decent dividend yield, that sort of thing i think that this makes sense. >> for everything "options action," check out "options action".cnbc.com check out our cool newsletter. what are you waiting for here's what's coming up next you don't know diddley. >> that may be the case. but mike has ideas on how to make money on nike when it reports earnings next week he'll break it down. plus, calling all "options action"s fans. reach into your pocket, not your phone and tweet us your question at "options action"s if it's nice, we'll answer it on air when "options action"s 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. 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 to "options action"s finish line surging more than 7% after the earnings report. the group will be in focus next week when the biggest sports retailer of them all reports,

that will be nike. we have a look at what we can expect hi, don. >> the shadows are getting long, melissa. we're near the tail end much earnings season. that always includes the athletic apparel maker of them all, we're talking about nike. what should investors expect out of nike when it reports earnings next thursday after the closing bell let's get the headline numbers out of the way according to estimates, nike is expected to report earnings of 50 cents a sharon total revenue of $8.6 billion. of course, there's going to be a lot of attention paid to the commentary about future sales orders now, from a trading perspective, here are the numbers to keep an eye on the options market currently pricing what could be a move of 5.5% up or down on the heels of the report over the longer term, the average move is up or down around 5%. according to -- over the last eight reports, stock has finished lower out of six of them the average move has been 2.5%

up or down options traders think possibly more volatility. recent history says less volatility we'll find out on thursday after the bell and of course, regular session trading on the following friday back over to you. >> thank you,.com chu. have a good weekend. if you're nike could run into hurdles, don't worry mike has a way to play the stock no matter what happens professor, take it away. >> we'll look at the call spread you'll get some of sense of the sentiment on this. when you are neutral to bearish on the stock one nice thing about selling call spreads, you're raising the probability of profit of your trade. unlike selling calls naked, which is something we don't necessarily advocate for most people, when you're selling a call spread, you can do this whether or not you happen to own the stock. specifically, the trade i'm looking at is i'm looking out to july i wanted to basically target this level where it's fallen out of bed basically and you can sell the 53.5, 54.5 put spread

we'll want to see what carter has to say about it technically. you're collecting 35% of the total maximum value. think about what dom just said, a larger than average move but lately hasn't been moving that much that's one of the reasons why a short premium trade might be the way to play this one. >> we go to carter he said let's check in with carter. >> i heard that. >> technically, it doesn't look very good. this is a marquee stocks, they're making all-time highs and it's down 20% off of its all-time high. it has two heavy drops in gaps over the last several months those are often associated with news and often earnings news something is not right >> so two gaps not one gap. they usually come in twos or threes maybe it's clear the hurdle with that and then -- >> i think that's a really --

the most important point now expectations are very low. i know it's down 20% from all-time highs almost two years ago. down 10% versus the 2017 highs that tells me sentiment is not particularly rosie in the name you have a setup here where the $50 level, which was a really big level a few years back, then to me you can probably buy the stock because there are some catalysts. we understand there's headwinds in the business. we know app leisure is -- will you will you is down 15% the stock is actually still up on the year. if you can -- investors aren't spooked by guidance -- [ overlapping talking ]. >> to mel's point, this is something you've been talking. >> this is what we think will happen to the degree that people think that's a forward looking thing that investors will be thinking about and that could actually mute the potential move out of this earnings.

but then the news is good, bad or indifferent i think it's one of the reasons why you might be inclined to sell premium going into the catalyst because it is implying a larger move and there are plenty of reasons it might not be so great this time. >> this is not what i do i'm not in the why business. i'm in the what business why is it -- what is the problem? >> i think there's a lot of things going on. we talk about retail almost every night on this desk i think they're one of the best retailers out there. when you think their bricks and mortar retail experience that they control, it's phenomenal. they have a problem on some of the lower ends, with the foot locker and some of those look at the performance there. i think the deal with amazon, i think it makes front and center it gives them the proper ownership that they need on the web. they do a great job on their own site have great bricks and mortar they have a mobile strategy. i think it's a lot going for. >> it's a catalyst driven kind of thing >> no. at this point it's a premium

brand, always traded at a premium multiple in the near term or in the last year, it's been adidas. >> i know that premium brands, especially those trading at premium multiples are probably the area most at risk. when you're looking -- >> what about starbucks? we were talking about that in the same light as nike a couple months ago and starbucks made a new 52-week high it's since come back >> pretty similar at one point >> you have to stop going down first. nike is still going down starbucks is starting to turn. >> i think it's helped pretty nicely. >> you don't have to come out with a new version of coffee people go back for it every day. still ahead, carter has a hot hand flowing out of the water with the smoking calls on oracle and a.m. again. he'll tell you where he sees each of these stocks headed next. pull out your phones, think nice thoughts. we're taking your tweets later in the show. much more "options action"s 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

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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 some of our open trades. just last week carter said oracle could break out on

earnings. >> that was a big beat i think you get another one right here and the stock will gap up on earnings want to play for that. optimizing oracle. tech that can come to life. >> i'm looking at the august 41, 45, 48 call spread risk reversal pay $1.35 for the 45 straight calls and then sell one of the 48 calls and one of the 41 puts against it $.35 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 prum presumption that it would be news-related gap i think you got to book this and move on to the next. >> only a little over $.30 in profit potentially remaining it went well through that 48 strike call we're short and invested $.65 in this thing. it was quite a victory if i really believed it would gap as sharply as you did. it's a win, we're taking the

money and running. you do, you move on. if you're increasingly bullish in a story, here's a scenario where you look at that gap out level or the breakout level and you could actually start to sell puts at those levels i know premiums have come in a little bit that's where you want to buy the stock back there's no reason to think this should fill in the whole gap that's a good trade going forward, selling puts. to my eye it's about -- >> didn't you say not to sell puts in this one >> in this -- last week? >> now is a good time -- [ overlapping talking ]. >> break outs all-time high on massive volume. >> now on to another winning call here. almost a month ag carter was talking about an amgen surge. >> i'm looking out to september. i'm looking specifically at the september 160, 175 call spread when i was looking at this

earlier today, you could buy the september 160 calls for $5.85. sell the 175s against it for $1.20. a net debit of $4.65 >> it's up 10% since that call. >> i think you stick with this got 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 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.

at crowne plaza we know business travel isn't just business. there's this. 'a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. 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

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 to "options action"s time to take your tweets why in some cases do traders sell calls instead of buying puts mike >> the answer is simple. if you think the move is sharp, buy puts if you think it's going to sit there and do nothing, sell calls. time for the final call. >> carter? >> 3m. i'm a seller. nike, call spread seller in

earnings. yes. up side calls make sense looks like our time has expired. i'm melissa lee. thanks for watching. for more, check out "options action"s.cnbc.com. we'll see you monday >> announcer: the following is a paid presentation from worx. [ dramatic music plays ] nothing offends these members of the mount parnassus garden club like a neglected lawn. and they're here to do something about it. [ clicks ] their weapon of choice -- the all-new worx gt 2.0... the next-generation lithium-battery-powered two-in-one trimmer and edger that means business.