hey there, i'm coming to you live at the nasdaq market site when i want to speak greek, i come here. the gods are getting behind me for "options action. while they're doing that, here's what's coming up in the show. >> my fellow americans, our long national nightmare is over >> that's what tesla investors are hoping will happen, but there's something in the chart that suggests there's more pain to come. we'll break it down. plus -- gold is getting crushed, but there's another precious metal that looks worse. we'll give you the setup.

and the options market is expecting one of these names to break out when it reports earnings next week we'll tell you which one the "options action" begins right now. >> let's get to it because it has been a wild week for technology stocks. the nasdaq 100 alternating each day between 1% selloffs and 1% rallies only to end the week higher by just a hair. could this be painting the picture for more volatility to come is that a good thing to come let's get in the money mike, what do you think? >> the first thing i would say, generally speaking when volatility is very low, that's a good sign fourth market. when you see the vix sub 11, sub 10, generally the next 30 days are rosie when you he start to see volatility tick up, you have more cause for concern we have the situation where a lot of stocks didn't seem to want to move now we have evidence that some of them have moved quite sharply to the down side if you're long, you should be weary because of that. >> yeah, i think so.

we saw what the move in interest rates did. that changes the game. it changes the mathematics for stocks here. we've talked about the fact that you have have the equity risk premium. what do you pay for stocks given a certain level of interest rates. when the interest rates rise, that changes your mathematics. this is a time to be less long in the stock. >> and the math gets even tougher when in particular with technology stocks, a lot of them their earnings are so far out in the future, raises so much more uncertainty about whether or not you're going to get paid. >> obviously that's the long-term equity risk. nothing has changed the verne. and the growth rates of these very acceptable companies. after all, we've gone from 210 to 238 on the ten year. >> you did have a change in the central bank rhetoric. >> i understand that. >> sure. the question is is the settling because of that or because maybe there was a crowded situation, complacent situation >> probably a little bit of

both you have that catalyst every single bank is out there saying, no more free 340emoney. >> the techs started cracking. it was on that friday almost a month ago when there was a short report on nvidia the banks haven't quite firmed up to where they are. >> the central banks don't control everything they don't control everything with respect to asset prices we have credit cycles. we do have such things as credit cycles, for example. we've obviously been in one. we've seen increased amounts on corporate balance sheets that increases the risk. that's the fact. >> carter, why don't you break down the facts when it comes to technology. >> sure. aim he going to do the qs. there are things like walgreens, comcast, celgene it's as good a proxy as any for leading large cap technology

stocks i thought i'd start out with a long-term chart, just sort of at or near the lows in the '09 crisis what we have optically is quite clear. you have this massive outperformance, almost three-bagger over the market now i want to remove the s&p and just look at the chart of the qqq on the same time frame so here what we have is the actual chart that we're looking at with its actual high/low close action and what we know is the following. if i simply put in a channel, and the thing about this is i didn't manipulate it these are actually two parallel lines put in by a program or computer what history does tell us often is that if you do over shoot the top like this, that you often will check back. now what's happening is the check back is yunds wunderway we're down some 5% from the peak we're not quite back to the channel here

we're not quite at that level, so i think there's another 3 to 5% to go let's drill down a little bit more and get it to a tighter pattern. here is the day-to-day pattern over the past year or so at a minimum what i'm thinking is we're going to get down to the trend line let's draw a few more annotations here and see what we can look at. one thing that you can also put in is the following. ready? you can call this a minor head and shoulders top, and it is that also has implications for lower prices let's put it all together, and what we've got is we have our trend line, we have our minors head and shoulders top at a minimum i think we're going to come back to trend. and then sort of what is actually more likely, because i don't think you're going to hold that perfectly, is the following. we get back to the average which implies another sort of five that would represent a peak to trough decline of about 10%.

perfectly garden variety it's normal and it would be welcome. that's the charts there. thank you, carter. mike, what's your key trade? >> i'm looking out to september. you can buy the 1.38, 1.30 spread sell the 1.30 puts for 1.20. you're spending 1:25 everybody is net long equity even if you express concern about stocks, not saying they can help right there this is not a crash trade either this is playing for the kind of pull back. we're selling the down side put. we're trying to mitigate that. >> two things to put this into perspective. we know qs on a trailing 12-month basis were up 32% after a 32% 12-month lead are we going to escape with a 4 to 5% dip? probably not

it's more severe eight, nine, ten i don't think the four, five is enough to correct a fairly uncorrected situation. >> i think you're correct. i don't think there's anything wrong with that. that's the way to play it. you have a relatively low volatility environment it will be relatively cheaper. you buy protection when you can, not when you have to carter's right i can see that scenario happening. down 10% peak to trough is not unusual. it's unusual for us in this market but not unusual in normal markets. >> moving onto the commodities crush. the metals seeing a bit of a meltdown jackie deangelis standing by with more. jackie >> gold and silver getting crushed. gold falling 1% and silver dropping more than 3%. helping the two commodities post their worst week in two months gold now trading at its lowest level since march. silver is now at its lowest level in more than a year. those moves have the options

market in a frenzy both the gld etf and silver etf saw two times their average daily options volume sellers plan to be buying the dip. buyers were at the july 116 calls. they were at the july 14-15 expiration calls >> thanks for setting that up for us, jackie what do you make of the moves in gold and silver? >> they're extraordinary overnight in silver, you had a flash crash. everybody thought it was because of a fat finger. over the course of the day when the markets opened up and you had bigger traders in there, you see it going down. what's going on with silver? twofold. it has industrial uses if we have a flattish economy, it won't be as much. secondarily, it has the

inflation hedge element to it. we're not seeing any inflation we're not seeing a lot of reason to own silver in this environment. >> why didn't it come back after the jobs report today? >> why didn't it >> yeah. >> there wasn't any sign of wage growth or exploding inflation. no reason to come back. >> it would suggest theeconomy isn't weakening. >> yes, but it doesn't necessarily suggest the economy is ripping. >> jackie touched on this, we did see above average options activity one of the interesting things happens in commodities technical weakness, it's very difficult to pick bottoms. with commodities, what very often happens is when they start going lower, unlike with stocks, when options premiums tend to shoot up, sometimes the commodities go the other way the options actually have been getting cheaper even as the underlying commodities have. if any of you were out there,

you're trying to make a bullish bet you're way better buying falls. >> this is specific to precious metals, we've generally had a weakened environment for zinc, aluminum, copper, nickel i think what is particularly serious about this, this is happening while the dollar is big. that's -- >> that's confusing, isn't it? usually the opposite >> that's not always the case. any rolling intermediate character that can be quite opposite long term, yes, perfect inverse relationship basically for this kind of weakness with the dollar this weak, it's pernicious it's suggestive something has changed. for myself, i like gold. that's going to be an issue if this gets much weaker. we have much more "options action"s ahead here's what's coming up on the rest of the show. >> how would you like to buy shares of jpmorgan for just over a dollar >> i'd buy that for a dollar. >> well, we'll show you how to do that for a buck fifty.

plus, calling all "options action"s, reach into your pocket and tweet us your question at "options action. if it's nice, we'll answer it on air when "options action" returns. >> logical. "options action" is sponsored by think or swim by t.d. ameritrade. dea, 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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>> michelle, we have the first round of big bank earnings coming up withreports from jpmorgan, wells fargo, citigroup and pnc all on friday. the financials is the second best performing sector up 6% the options market is implying some pretty modest moves, at least compared to previous quarters traders anticipating a 2.5% move that's a hair shy of the average 2.7% move. wells fargo and citigroup are expected to see a 2.3% rise or decline. wells fargo sees 3.5%. then there's the 1.8% move expected from pnc. that's 1% less than the average 3.8% despite the higher than average move, it still represents a $20 billion shift in the market next week michelle, thank you. >> how should you play the banks into earnings. mike's at the plasma with the

call to action, as we say. mike. >> we're going to take a look at simply buying a call when do you buy a call pretty easy, when you're bullish. it's a bullish bet secondly, options have a defined amount of time before they expi expire look for identifiable catalyst we have one. earnings next week finally, this is a good strategy to use when options are cheap. seema mentioned that jpmorgan, which is trading close to its all time highs where it closed today, this is one of the situations where the options sheet, if you bought the stock, you're taking it at a high level. what i'm looking to do is buy a short dated call i'm looking at the july 94 call. after the earnings next week, you spend 1.50 for those you make profits as long as they're above 95.5 you'll be better off doing this trade than being long in the stock. this is an interesting

alternative. less risky way to play to the up side. >> what do you think, mike >> i like this trade going into earnings i like it as a stock replacement trade. if i'm long jpmorgan, i want to take my trade in that. >> you want to sell the stock? >> sell the stock. buy this call. i know what to expect. for me, i like this a lot. >> let's see, well, i mean, it's a pretty steep move moving into the numbers, right we're talking about being up 16% in the past month. in fact, it's the biggest rolling forward move back to the election in november so i think a lot might be priced in to put it in the context of what i don't do, street wide consensus for this stock for a price target is a dollar higher. 15 buys and 15 holds there's not a lot of euphoria on the street for this. maybe that's the opportunity language in here, there's hot

potential. it's moved 15, 16% going into this number. >> that remains supportive of this trade strategy though rather than being long stock that's exactly the point it's a risky place to be for all the reasons cited. are y this provides us an inexpensive way to provide that. >> which is why i like it as a stock replacement. you have this so why not take some of those profits home with you and take a percentage of those profits home in this trade. >> where's the risk? >> it's only $1.50 you'll risk that going into the earnings when typically it moves close to 3%. to me, it's kind of a no brainer actually. >> cool. coming up next, tesla in a bear market and posting its worst week in a year and a half. that's great news for ko and carter though. we'll explain when "options we'll explain when "options action" returns.

let me show you. okay. our thinkorsform 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. what if we could bring you by having better values? at blue apron, we work directly with more than a hundred family farms. so instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most: making farmland healthier. cutting down on food waste. and bringing you higher quality, fresher ingredients for less than you pay at the store. because food is better when you start from scratch. get $30 off at blueapron.com/cook

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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 to options action time for the up side call. that's where we look back on some of our winning trades last month ko and carter said it was time to pump the brakes on tesla.

wow, that's worked pretty well take a look. >> on "options action", it's how we make speedy profits risk less so we can make more, and that's just what ko and carter did with their bearish bet on tesla carter thought shares on the electric automaker had gone too far, too fast. >> tesla is up here. number one performing stock bar none i think at this point you take profits. if you have a little courage -- >> but just shorting the stock that could leave your portfolio looking worse than this. so to make a bearish bet mike saw the jusold the july strike for 375. to make money he needs the stocks to stay below 375 above 375 profits will trail off. mike won't see losses until tesla rises above the strike price by more than the cost of the trade or above $393.40 by

july expiration. >> they say an open road helps you think about where you've been, where you're going. >> but there is a tradeoff above $393.40 mike could still see infinite losses so, to limit his risk mike bought the 395 strike call for $10.40 and created his bear call spread between the 1840 he collected by selling the lower strike call and the 1040 he spent buying the higher strike call, mike still gets to pocket $8. that $8 is the most he can make on a trade, but in order to see profits mike needs tesla shares to stay below $383 by july expiration above 383 loses do kick in but they are limited to the strike of the call that he sold and the strike of the call that he

bought minus that credit so, in other words, mike did something that even the most skilled drivers can't do, make money whether tesla falls, stays flat, or revs slightly higher. and since the time of the trade tesla shares have crashed by more than 10% leaving "options action"s biggest fans asking one thing, what will ko and carter do next? >> tesla officially entering a bear market this week, so what do the charts say now, carter? >> so we know what was interesting is if you look back when we started getting the crash from apple, nvidia, all the same day tesla held off if you look at the exact peak to trough decline over the past ten plus sessions, 387 down to 306 20% decline. close around 313 if you're long i guess at this point it's too late to sell.

if you're short, i would cover that move on. >> we made all the money you can out of this call spread. we sold it for 800 bucks and it's basically worthless now we took all the profits. you can close it but it will cost you 15 cents to do that probably should. i don't think tesla's a screaming buy at these levels. >> short again >> well, from a fundamental level i still think the thing is ludicrously over priced. i don't understand this. you sell $100,000 and you lose money and you are worth more than a company that -- >> a thousand times. >> there's big shortage put which creates a cushion. i am interested potentially in selling sput spreput spreads anl spreads. >> it's massively over valued. >> it's not going to rally

why wouldn't you buy long term puts >> because they're incredibly expensive. >> how is that >> when you're talking something that's three, four times as much relatively speaking to most of the stocks in the cues. >> it's three to four times as volatile. >> the volatility is muted to the down side. what happens especially if you've been short this thing, you've had your head gone. you want to buy it back. >> covering here. >> that's exactly right. >> it doesn't make any money the thing is on this, on a tactical basis, stock that declines 20%, there's congestion from april to june if it would crash, it would have done that. that condo thing you're talking about -- >> we were at a kensho earlier in the day, and i was reminded how often tesla has fallen 20%,

like a lot throughout its short public his triz. >> in this case you're getting the stock low and i'm thinking buy it at 2.80 that 2.50 level looks like a significant level. >> that's our dale will tesla segment. up next, tweets and the final call don't move 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

es. 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. time to take your tweets our first viewer asks, is it still true that 90% of options expire worthless mike >> yes, most options do expire worthless. however, that's not the only thing to ask yourself. you also risk less than you buy them. >> it's not money, poof, gone up in smoke >> that's right. >> final call, carter. >> i expect it to go down more

i want to sell the qs. >> highlight jpmorgan into earnings much more than i like the stock. >> i like buying tesla, 300 stock around 340, 350. >> catch us back here next friday at 5:30 "mad money" starts in 4, 3, 2, now. >> 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.