here's what's coming up on the show >> when the money is coming your way, you don't ask any questions. >> frawe have just one question. how much will netflix move next week plus, microsoft just hit an all-time high. but if you missed the move, we'll show you how to buy the stock for less than a buck no, we are not dan nathan will break it down. and he correctly called the

decline in oil >> i just don't want it. the action begins right now. >> we saw some explosive moves out of these names nvidia searching 12% just this week facebook up nearly 6% and hitting an all time high today microsoft hit a new high today that stock up 5% this week apple has been on a tear, so should you buy these names as we head into earnings season? >> i think it makes sense to be careful. microsoft is up 5% on the week up about 7% over the last couple of weeks here. it's at a new all time high. today. so, as we think b about what we're anticipating, a good quarter and good guidance and it makes sense to think b about e

bank stock's reaction today where there was news about what their quarters lookeded like each one had a little piece of news that surprised investors and the stocks were down 2%. they closed decent lichlt part of this is at this point, the play for a continued consolidation, the move might be muted. you could see it down downside to me, it makes sense to be cautiously optimistic. >> the vix closeded at 951 today. a here holiday week, that's an all time low that's one thing we know that when the market's moves are muted, when the options market is expecting relatively muted move for the next 30 days, the market tends to outperform

kind of scary it's this low. >> interesting thing is the sector itself. in terms of weight and 20% of the market exactly a month ago, we got to that level and it backed off aggressively sold off about 5, 6%, now, we're reapproaching that high. a difficult lefl, so within tech, it really depeptinds on wh stock you pick because most have not made the facebook, tech has. microsoft has, but others are still well below that high the fact. >> the fact it's one of the few stocks that has made a new high, apple has not, google has not.

i think it's so to me, if you're like, i have the guy, microsoft before this q4 report next week, i'd say there's probably other ways you can think about positioning yourself mike just mentioneded the vix is closed even in a lowball environment, there's opportunities to sell options to help finance purchases, and that's what i want to do in a situation with microsoft here i think you're going to get a move that's up or down a couple of books over the next week. i don't think you're going to get a fierce breakout. i think there's a potential for a smaharp decline you can sell the next week expiration at 60 cents and buy one of the september 75 strike calls for 1.30 that position would cost you b about 60, 65 cents i think trying to mess up the

math here, but you want the stock to go up to that 75 strike over the next week you want to close below there. julys will expire worthless then you own this july call for 65 cents. the idea here you're playing for a slight move upward, a consolidation then own this, this cheap premium >> wasn't entirely con sis enter. when the vix that's a measure of the volatility, that tends to mean muted moved, it's moderately bullish for the market in microsoft's case, the near dated o ed options are above av. he's selling that premium shorter data option. i like the fact you're catching september, too, because many people think of october. that's a peri period of a lot of volatility. that's after labor day and you're going to own that i think that's a good set up >> and importantly, it's a very defensive offensive stock. meaning if the whole thing is in trouble, it's going to hold up

better it has characteristics that hol that if you can say that at any point in this business but also, it's important it made a new high there are a lot of tech names that had bat patterns and outcomes >> this strategy is looking to -- breakout, short-term gains to the tune of one and a half, maybe $2, that sort f f o thing and you're financing the ownership. so i like those trades at all time highs an names that have acted well, have run into an event. i think you have a better chance of consolidation >> switch gears here energy stocks down 13% this year several times on this very program and on "fast money." >> energy's relative performance

to the s&p has straight down it's the trap that keeps on trapping people are doing it again. my opinion, getting long just because it went up a few days. >> we've got energy. down here at 58% there's something wrong with this i think it's the trap that keep ons trapping after that carnage, a bold call to buy carter, you saying something in the chart has changed? it's not a trap anymore? >> maybe i'm just the last guy to get in the trap t come a long way. got a bunch of charts. i'll tell you what i'm thinking. roll through this bunch quickly.

comparative charts what you have u on top is the s&p and on the bottom is s&p 500 energy and the first one is year to date. that's no joke next chart is a one-year chart again, we see where the divergence took place. next one, a bit further. it's about this current, very sharp decline. we're going to focus on that in more detail. keep going okay long-term. look at this at some point, and that's kind of you know, either the last -- going to get worse or maybe with a little luck, this is going to be where you can get a move. now, ten-year chart. so quite clear we have this, where they start to diverge and you know, i tried to resist the temptation to think it was

cheap. i'm falling into the temperature kags or this is going to be right. let's zero in on the here and now. all right. so this is the s&p 500 energy sector. and it's a well defined series of lower highs, lower lows, lower highs, there's no other way to characterize. now here's the seam short. the period we just looked at yes, the straight down, very -- seven month decline and relative performance to the s&p meaning it's on absolute and more than the market but watch this if i draw lines here, this is key. we made new lows on the actual price but didn't make new lows in relative.

which is even as it's gone lower absolute, it's starting to outperform the market. that's important i think it's the beginning of something. let me show you one other thing. this is the period we're talking about. a five-year chart. this very type gez what that is on the chart it is exactly a 50% retraceable. i think you've got a good bet here for the first time in a long time. long side on xle >> should we invite carter back? just joking. come on back, carter >> we don't like to just go buy premium, but in this case i think it makes sense to get into a long, premium trade. if we're long, you're catching the falling nut. we're not interested in taking a

great deal of risk if you're right, we're probably going to get a fairly sharp. >> i would say -- >> maybe 10% >> we're usually looking at a 60 to 90-daytime horizon. you can buy the september 66, 70 call spread. 1.50 is what you would have paid earlier today. 1:20 slightly less than 2%. of the current value of the etf and you know, look, every now and again, you do need to sort of decide that there is asymmetric risk reward in this case, the options trade by itself offeris you that worth as much, risking 1 cl.20. >> what dupg >> i like the trade idea if you agree with carter's call. really, risk 1 cl.20. one of the things that are interesting to me. look at how the xle has tracked

the dollar index look at the way it closed. it looks like it's got more room in the downside, so this trade may take a little time if you believe the correlation to the dollar that sort of thing it feels like it's got a capitulation >> that was the s&p 500 energy sector we have really had a des information and here's the fibl thing. it's an ecdotanecdotal. and you need that. >> those are not cheap companies. some others have come a little too far, too fast, which is the reason i prefer to play with a

more broad sector space like this than to go and reach for the companies that people thought would be safe because paid and can't sustain in the long run i take a look at this. it seems like a good set up. >> everything opgs action, check out our website. while you you're there, sign up for our newsletter makes for a great weekend read especially when it's rainy out here's what's coming up next >> because it's the question every options action fan wants to know. >> how much wood would a woodchuck chuck if a woodchuck could chuck wood >> no, how much will a stock move on earnings plus, calling all options action fans reach into your pocket grab b your phone and tweet us your question at options action. if it's nice, we'll answer it on air. when options action tus.rern

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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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

to pick up speed, monday, but tuesday and wednesday, we'll see more reports from the rest of the big banks also, united health, then there's a handful of big tech names reporting like ibm, qualcomm, visa and ebay. there could be an uptick in volatility when all these names report so netflix for example is a big earnings mover that's big move. traders are expecting that to move higher by about 6%. ibm and qualcomm, a 4% johnson and jouin and united health, a more than 2% move. don't know which direction this

should shake out, but it's a wild week. >> some of the most we may never get a straight answer for the first question, but the second one is simple. so over to professor ko. >> it's not that tough to do what the options markets are expecting for the future price move you want to look at the weekly straddle want to make a quick look at -- we do the math, united by the

157.5 or $160. one of the thipgs about netflix is that you see all of these big gaps in here all these big price moves. all of that came -- the thing is, this time, maybe not so much last earn, we saw relatively muted moves. september, 160 call spread we can pay $9.15 to get long that calendar call spread a very cheap price i like the -- >> a stock like netflix.

mike when you're playing for it not that sort of move, but you're bullish, you're really saying you know what, i think it's probably going to come in there's other ways to trade it in that scenario i think it makes deny

n netflix.

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.

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mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. . sprint shares spiked 5% today on reports that the company's chairman met with warren buffett about potential investment that news sent the opgs market into a frenzy. call svolume was eight times tha of puts. dan played the stock in march. >> we can uoptions to maybe construct a trade strategy and give you lit m room on the downside you could look down to january 2018 and sell to about 80 cents and use that to buy the january ten, 15 call spread for 80 cents like i said, cost you nothing. >> all right, dan, now what? >> so, the most important thing

about this trade is that you are naked short a put. there's no risk in owning that upside call, so at this point, you know, the stock is about the same spot. selling premium to the downside kept you in the game here. i think the news here sbresing the idea that buffett would take a stake, i'm not sure that would send up the stock, he's likely to get it at a discount, so you want to manage the put strike. this trade was originally conceived because of the notion of take out and there would be a premium. so to me, it's two different pieces >> critical when you think there might be a takeout selling opgs though is actually really important because when you have those deal, often time, volatility drops. >> up next, your tweets and final calls from the options pits 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

steve, other than making me move stuff, i'm here at the td ameritrade 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 time to take your tweets our first viewer asks can you tell by the volume on an option whether it's buying or selling >> you can tell but not the volume that reveals the answer a. it's the price take a look at where it traded and see whether that was on the bid or ask at the time of the trade. that's how you know. >> time now for the final call last word. carter >> final call. let me make it energy and take it on the long side >> mike.

>> to do that, you're going toopt to use call spreads and xle. >> dan >> so, microsoft, if you're cautiously optimistic, it makes sense to call for consol dag >> thanks so much for watching for more, check out our website. have a gat wke a wreeendnde'll see you back here next friday. and we'll see you back here next friday my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a market somewhere. i promise to help you find it. "mad money" starts now >> hey, i'm cramer welcome to "mad money. i'm just trying to make money. my job is not just to entertain y you. call me or tweet me. close watchers of "mad money" know i'm not a choice, but i d