hey, there, we're live here's what's coming up on the show >> the bulls are piling in we'll give you the name and tell you just how high they see it going. plus -- traders have been loving mcdonald's this year, but there's something in the charts that spells trouble for the golden arches.

we'll break it down. and later -- it's the question on every investor's mind. >> how much wood wood a woodchuck chuck if a woodchuck could chuck wood >> special report, begins now. >> next week is the busiest week from the earnings season for the dow in particular with nearly half of them reporting. we'll hear from big name, so far, we've seen nothing but downers in the group ibm, goldman sachs, jpmorgan all lower. so what can we expect from some of the big dow stocks next week? dan? >> listen, i think the ones that have outperformed, i think there are a lot of good stocks i think that was the message of this last week with earnings

so, to me at this point, when you have stocks, we're quoing to talk about the dow in a second that's up, versus the s&p that's up 10% that's really what these stocks are going to trade off >> the options market is going to tell us everything that's priced in. normally, you would think that they would provide for that, but this market is is telling us it's not the case. it closed in nine spots today. over the next 30 day, we'll see one of the volatility periods. it can basically be a signal, so apparently, it's telling us we could just go to the -- >> i don't want to be too sensationalist, but i'm going to ask any way. could this be the super bowl for the markets next week? could the earnings hold the fate of the rally in its hand >> i like that i like hie hyperbole i don't know how to spell that one either

next week is the mos important week for this earnings season and with the s&p and a high, to mike's point with the vix as at a low, you could make the cogent argument it is the super bowl for the market. i'll tell you this though. s&p basically closed at a high today effectively. i've said this for quite some time market doesn't give you a will the of time to buy the lows. so fact that we're hanging out here, what does it mean? we're going to grind higher next week an on some surprise by one of the names you're not going to spend a lot. we talk all the time the implied move is this we're really talking about that next day, okay, but look at. this there were a couple of names reported earlier in the week united airlines, csx, two of the transports that have had very nice runs as of late

they disappointed on their results. they had down days the day after and went down again, so sometimes, it can be a sort of slow grind and i don't think any of those names that we had on the board for next week are goingto offer the sort of priz that's going to drive the whole market down. it will likely be some sort of scenario will people consider the fact where we've come from, where we are, what are we expecting for the back half of the year in my mind, i think that the economic picture, i keep hearing about the synchronized global recovery it still feels a bit dicey at this point, especially where valuations are >> so does mcdonald's fall into that category? >> it's not just about the technicals you have to look at a story like this and say this stock was trading at hup$,000 and we know they were cost-cutting

they're trying to introduce technology and kiosks. it's working they've cut costs. they're going higher they've been buying back a lot of stock here's the big issue with mcdonald's the sales topped at in 2013. they're expected to be 20 billion next year, so at some point, they're going to have to keep buying back stock, bringing out cost, doing a lot of stuff to justify this stock trading. >> some of the revenue declines has to do with the way the actual report revenues a lot of refranchising, and then you take a corporate store and make it yours, i'm just going to report what i'm taking from you. rather than the top line number. that's what's going on in this company, folks, there's a lot of financial engineering. you basically are taking the structure of the business, changing it. but you know, that's really the story. that's about a 3% move in either direction. moved on average, 3.5% or so

antarcticaing down the targeting the downside today when the stock was at $153.50, you could look out to the weekly puts. buy the $152.50, paying a dollar for that buying one of the july 28th weekly puts for 1.85 selling one of the july next week 149 puts at 85 cents will cost you a dollar. break even at 51.5 i think it looks like a reasonable target if you get one move down after earnings i think you'll continue to see a follow through. just look at the chart from the april quarter when mike and quarter had a great call it's feeling a little bit extended i think you can see the stock in 140s >> guy, you bet against mcdonald'

>> i haven't for a while we've been pretty steadfast on our show which airs monday through thursday i understand what they're saying and i'm happy he's at least buying options here because i don't think you're getting paid enough to sell opgs here necessarily. that's a different conversation. but i'll say this. if they do come up short all you're going to hear next week is mcdonald's is cheap on valuation. >> mike. >> i agree i think you can say it's too expensive. inexpensive to sell here there's a lot of optimism. i think built into the story >> i get the final word? >> yeah, it's your trade >> this is a trading show. and so when you think about it, i'm risking less than 1% of the price. making a one-week bet. if i get this correct, down 3.5%, 4% i like the risk reward there especially considering the fact that the stock is within a couple of percent of all time highs here so to me, i like playing for a few. >> there was some anger when you said this is a trading show, the way you paused

>> wait. what did i -- i'm just throwing it out >> i didn't say that at all. >> other than the moves, i've been on that show once many a while myself i get it with specific expirations. >> we could see a bigger rally when facebook, amazon and apple report next week, each of those stocks implying a 4% move in either direction for the record, that's nearly $70 billion shift in market cap potentially. but the bulls are targeting one of these names in particular for the biggest rally. the key $200 share level that's more than 20% higher than where the stock is trading now mike, you flagged this in fairness, flagged it as well i saw some tweets about this

it was pretty notable because of the amount of premium that was being spent. it was pretty notable because they're reaching out even further. it's the size of these and thinking how far they could go 175 above 175, above 180 up to 200. talking about 15 to 20% moves. frankly, i think that what there might be is a little bit of performance anxiety in these trades you've got a lot of people who are concerned this rally could continue options premiums are low it's tough to chase the top performance stocks that's what facebook is. do you want to run out commit a massive amount of capital to buy a stock at the highs like this? >> it's another point, too, when you have a stock like this that's up 43%, so some people get to position. they can't add anymore, but it's their best idea. they think it's going higher what can you do? add premium, define risk if you've been in this thing for a while and you're targeting you know, a move they were looking at the september expiration, the risk reward was good if you

thought this could be up another 10%, 15% you can decide how you want to play this. >> i wouldn't run out and commit new capital, i would like to -- but with a higher problem babilit success. there might be a little overreach there. i think we can do this with a higher probability i was looking also to september. but looking at the 170, 180 call spread b obviously a small fraction good 3-1 payout. we're talk about really reaching for the stars here, when you think about what that would indicate if facebook is making those highs, going 1585, 19, think about where it's going >> i'm still still trying to

deal with mike khouw's performance anxiety thing. if you're watching the show, i hope you're not experiencing performance anxiety. none of us want that, to we, mel? >> no. sounds like a bad thing. >> you have an easy cure right here in the form of options i think it might be the least expensive of the fang names. >> google hasn't broken out yet. that's one of the things to me if you really want to chase a facebook into its results it makes sense to kind of define your risks it's really important to remember a $10 wide spread mike is willing to pay a quarter of that.

but again, he's talking about better odds of success he's still looking out 6, 7, $8. we're getting a little kind of overzealous here this is the stuff people are chasing. we haven't had a sell off of more than 3.5% in the mark that's going to come and you're going to be happy if you're chasing stock. >> you can check out our website. while you're there, check out our super cool newsletter. it's what guy reading every weekend when he's laying by the pool here's what's come up next ♪ >> biotech has been off and we'll give you the names. plus calling all "options action" fans reach into your pocket, grab your phone, and tweet us your question at "options action. if it's nice, we'll answer it on air.

when "options action" returns. w are you doing? oh hey john, i'm connecting our brains >> logical 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.

yeah, and i can watch thee bgame with directv now.? oh, sorry, most broadcast and sports channels aren't included. and you can only stream on two devices at once. this is fun, we're having fun. yeah, we are. no, you're not jimmy. don't let directv now limit your entertainment. xfinity gives you more to stream to more screens.

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 getting ready to report earnings, meg is on vacation, no, she's not. she's in sunny key west, florida. >> that's right, staying out on the beach here thinking about biotech earnings because no matter where i am, i'm thinking

about biotech earnings, and it's a huge week. thursday, bristol-myers, celgene, roche, astrazeneca, and merck. in terms of projections, doesn't expect a solid though not spectacular second quarter earnings, just increased earnings for estimates across the board and says he expects q2 to be very good. citeding positive currency fluctuations as well as a drawdown on inventory in the first quarter. as is pointed out, those could drive results. 24 increases between april and july 2017 including four from celgene, six from gilead, and six from

in terms of stocks, take a look. those have a lot of what cowen calls troubled franchises. those are big ones to watch as well finally, ones that cowen expects to beat, look at alexion, biogen and vertex he said gilead had the most likely chance of beating earnings expeck tase, so a lot of stocks to watch and potential upside movers. >> if the camera panned over, would there be a luau going on or some zye deco performers? what's happening there beyond the confines of that shot? >> it's pretty quiet here. we've got some sea dos out there on the ocean it's pretty quiet here

but there is a pina colada waiting for me after i get off air, o i'm going to enjoy that meg tirrell in key west, florida, where she is thinking about earnings next week those stocks sizzling in the summer heat. we are watching the ivb. professor kyle has a way to do it for less than $5. >> options are inexpensive and we have a lot of catalysts coming up and that could set up for a good time to buy a call. you're looking for situations where you have an identifiable catalyst you're looking for situations where the options are cheap. and, finally, this is the kind of approach you might want to use if you're looking for a stock replacement strategy i was looking at celgene it seems to have started to move after basically being sideways

all this time. so right now we can actually take advantage of these low options prices look out to september. you can buy the 140 calls and spend $3.80 for those. obviously, relatively small percentage of the current stock price, much less than the recent move we've seen higher this is a way to make a bullish bet that will capture earnings, but it will capture a lot more than that, too, because we're giving ourselves a little bit of time >> should we invite mike back to the desk joking, of course. >> it'sing are interesting biotech has underperformed in the past year. and now if you pick them up, it's up. biotech is a better performer. the xpi is up 35%. celgene is one of the best acting megacaps. it looks like it's playing for a break down at the breakout level. risking about 2.5% of the stock price. and you give yourself some time to do it i think that makes a lot of sense. it's important to remember, if we had meg on, another one was down

i think one way to do it if you don't know the story well enough in the earnings is maybe look at the ivb or xpi and just look at it avoid the syncretic nature avoid the exposure >> that's actually one of the reasons one of the places where you see names, a lot of options activity tends to be bio tech for this reason and sometimes, it is to your point, very much adult swim because these circumstances, whether something works out is very binary but celgene is a name that's proven itself over a more extended period of time. it's not a one-trick pony. >> you're an adult and you like to swim. >> pardon me >> you're an adult and you like to swim. >> both actually i would be in the adult swim >> in celgene? >> we have been spot on celgene for some time. makes it relatively inexpensive. a balance sheet most companies on the planet would kill for not just biotech

dan's got a chart up why? because in the middle of 2015, where did we top out around 138, 139 or so. you have three or four days next week to trade this thing if i remember long celgene, i would be taking profits into the number looking for the pullback >> so not only is it a trading show it's an options show here's the thing if you were along the stock, look at this if you were long the stock, you thought the -- look at microsoft. if you thought the stock was going consolidate, you could sell that call against your long stock, so say you're long 100. you'd sell one of those 140s, take it it and then you'd have a scenario where you would still profit you're just stopped at $143.80, so that would be an overright. all right.

up next, microsoft hitting an all-time high after its earnings report last night. that's great news for dan. we'll explain. plus, you know what time it is get those phones out send us some tweets. if they're nice, we'll answer them later in the show much more still ahead. 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. 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

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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.

action." it's time to take a look back on some of the open trades. last week, dan played microsoft for a breakout >> options market is implying about a 5% move in either direction, so here's the trade in microsoft today around 73. a called calendar. if you want a position to own longer date td calls, so today, you could see the july 21st next week expiration strike call at 65 cents and buy one of the september 75 strike calls for 1.30 that position would cost you about 60, 65 cents >> well, microsoft hit a new high in the after hours last night but closed lower today so, dan, that call expire. what do you want to do >> so this is exactly what i wanted to happen i did not think the stock was going to go off to the races here, but if you were bullishly positioned or inclined to be bullish, the idea of playing for

consolidation made sense to me so those july 1ist, they expire worthless. now, you own the september 75 call, which is out of the money, but you actually made money here because the short call financed the difference of what you lost in september so this is how i want to use call calendars even in the lowball environment because you're taking advantage of some of that premium that's there. >> i like these kinds of strategies that one didn't work out at well in all fairness. we closed that on one on monday. these are strategies that are higher probabilities of success and take advantage of decay that options have. up next, your tweets and the final call 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

qqqqqqqqqqqqqqqqqqqqqqqqqqqqqqqe 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. we have time for a tweet ivan asks why isn't guy wearing a jacket doesn't he know there's a dress code on "options action" well >> you want me to call this right here crazy eye. give me some of that >> time for the final call

>> begging you to play used call spreads on facebook. >> dan >> i like these call calendars if you're looking to play for upside >> thank you for joining us. >> i love when you have me on. one of my favorite shows on the network. >> our time has expired have a great weekend. "mad money" is up next (male announcer) right now, it's all new. a paid presentation from meaningful beauty by cindy crawford. (female announcer) with special appearances from some of your tv favorites sharing their number one skin saving secrets. (male announcer) plus, a stunning before and after story from today's special guest, lori loughlin. (female announcer) at age 52, the star of full house and much more says her skin seems to be looking not older but younger thanks to friend and supermodel cindy crawford. (lori) i really do feel like my skin has been restored and i've traveled back in time.