hey there, we're live at the nasdaq market site and look who's back cart er, we missed now. while carter and guys are getting ready, here's what's coming up on the show. >> the only thing we have to fear is fear itself. >> well, maybe not because the vix doing something really funky and it can spell trouble for the market we'll explain. plus -- ♪ that's what bank stocks are doing and there's something in the charts that suggests it's about to get better.

we'll explain and -- >> ♪ >> if you're talking about the dollar, perhaps not much lower we'll tell you how to cash in. the action begins right now. >> let's get to it the u.s. dollar just posted its best day since january it's worse stretch in more than three decades, so does today's move prove it could be time to bet on king dollar dan, what do you say >> i think that the bounce obviously, while it's not that exciting, it's up less than 1% of on the day, it kind of stopped what was really a massive halt it was down on the u.s. dollar index was down about 10% from 2017 highs that was a clear indication of the sentiment regarding the u.s. reflation trade as far as the economy was concerned and people

started saying this is going to make the whole move from the election maybe that's saying something about the course of the reflation, so to me, it's important we have this data. the most important thing, we saw wage inflation that gave wage inflation some traders more confidence that the fed is going to raise rates in the december meeting that should be positive. you saw this bounce. we have a chart. i'll let carter talk about it b but the up etf, it made a really beautiful double bottom and bounced off. to me, i think it sets up technically. i think there's reasons it could make sense it got so one way and it could set up as a decent -- >> it was that issue with respect to the euro head winds for the dollar when you take a look and you have policies that could pressure that as well and obviously, we have heard from the fed they have an interest in

raising rates. if they do, that could create strength and it lacked like it came far >> something that's been a move that has the prospect. you're getting involved and you're shorting the euro it's a basket. it's 57% tied to the euro. 13% to the yen the big bet here is that the euro comes off unrelenting move the prospects of it stopping and it has on a double bottom are important and therefore, unlike unlikely to be just one day. so i think you're day one here if you look at the uup in particular, you look at options prices we have a chart of the price of options. there's few classes where implied prices are that cheap and that gives you a little room especially if you want to lean on a certain level there, so to

me, look at the uup chart quickly. got as close as 27 that was the double bottom i want to loout to january expiration you could buy the january 24, 26 call spread paying 60 cents for that buy to the january 24 calls for 70 cents, selling one of the 26s at a time. it breaks even at 24.60, again, what's important is the stock is trade iing at 24 and a quarter. it's in the money and you can make up to a dollar 40 i like the fact you're in the money. that implied volatility option prices are cheap and that you have this technical backdrop where you have support at 24 last lastly, it got really one way, so you could have a a quick bounce here back towards 25. currencies are an area where you see low implied volatility why that still makes sense to buy it even though volatility is

low is because you can get into these trends one of the things that does is you can use options. in a way to make a directional bet. if you make it right, you get good leverage on your capital and if you get it wrong, you're limiting the amount of risk you're taking. >> do the markets stall out between now and january if expectation for the market is higher >> small moves don't necessarily have that big an impact. it was tied to banked today and it was all sort of pieces of the puzzle we know that the british pound had a bad week after the boe news that's part of the uups make up. >> what do you say >> yeah, i agree your question it's a good one. do equities stall if we get a quick rebound in the dollar. low rates and weak dollar have all contributed to the fact of the s&p 500 equities are at a high it's been beneficial so, to me, could it act as somewhat of a, if we get 5% snap back, do

equities get killed? >> no. >> i was rising through last year i don't think the change in the dollar is going to have that one of the reasons equities may be an investment is because equities risk premiums are broad. that would be a reason to pressure equities more than a spike in the dollar would. >> another big story financials are on fire posting their best week in more than a month. the financial etf hitting its highest level since december 2007 today bank of america, morgan stanley, citi, goldman all pushing the space higher this is a little bit of a reversal there's a little bit of life for the first time we're going to figure out

whether anyone who's been in banks has paid dearly. you might be up, you have underperformed the market. the question is now is there alpha? i have a two panel chart to start and i want to basically highlight the pique in rates rates essentially were at 4% that's the right panel here at 3.6 and hook at this this is the key thing. watch. even as this is going down, we have performance that's starting to let's reverse, go to the next slide. ready. watch this now, i have the xlf. you could draw your lines anywhere you want. i think you can draw one like this i think you could draw another one like this.

you can draw your lines like this put in the top line. we've made no progress as the market has made a will the of progress for the first time all year. >> mike, what's your trade a simple one, isn't it >> just looking out to october xlf, the october 25 calls. those were a little under 90 cents. quick point. these are in the money call options. implied volatilities are low we're paying about 35 cents over the inic value of this option to own it very much like being long the xlf. as a hedge against it. the amount needs to go up.

that's less than you'd need if you bought the 26. >> so, two things, if you agree with this charts and it's hard to say you're not building if r a breakout it could fail there and we could have the xlf there, but it looks like a lot of the charts that make it out are constructive the fact is, if people start making expectations, then we're going to have a breakout in the sector i was wrong in early june. the point about the underperformance -- we talked about it on "fast money" earlier in the week. jpmorgan looks like it's building to go straight to 100 in a straight line that could take it up. >> take a rook at the biggest

constituents exclude berkshire hathaway way companies trading 12, 14 times earnings and in a market that's had a really strong rally, this area has not had such of a rally. these are relatively cheap, folk, compared to other names in the s&p and s&p in general >> they're doing this in the face of not much move at the long end of the curve is suggesting this buying is to the sector and has nothing to do with the macro environment >> if you like dan's first trade, you have to like mike's trade? >> my trade is a bust now and so, as trader, you have to reevaluate what's going on here. the fact is, we had mixed earnings and to your point, they've underperformed a lot of other sectors if you're quoing to play this rotation, this could be the one >> you're referring to his xlf or uup trade >> that's what i thought you meant. >> that's exactly right.

no, i think that's the right way to think about it and the answer is yes there is some connist ensy there. yn you're worried about that it's ancient history if there's a message >> speaking of the banks, we should note jamie dimon will be on cnbc with an interview tuesday 11:30 a.m. eastern time. set your calendar reminders now. you did say jpmorgan was going to be the easiest trade on the planet in the market is going higher, jpmorgan is trading 1100 in the next couple of months. >> got a question, send us a tweet. check out our website. while your there, check out our cool newsletter. rumor is, it's all carter read while he was on vacation sochlt what are you waiting for, here's what's up next >> vix may seem calm, but it just did something positively terrifying

we'll tell you what that is and what it means for the market plus, calling all options action fans tweet us your question at options action if it's nice, we'll answer it on air. when options action returns. >> logical [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on 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 to options action hear that? that's the sound of volatility is making right now. the vix falling below ten today as the markets remain quiet. breaking it down is a man who himself is never quiet

dom? >> it's quiet, melissa, may maybe a little too quiet i guess not unexpected given the fact we keep making record highs in the stock market. the economy isn't growing fast, but it's still growing businesses aren't posting blockbuster earnings in sales growth u, be but they are still growing, it's like we have a good enough market so, with the volatility and all you have to do is look at the cbo volatility index or vix, we did it again dropped below that ten level as a result, we just hit the lowest levels since july 27th ae vix has now traded below ten on an intraday bases four straight days if it sounds like a broken record, it's because it is this marks the 36th time this year that the vix has traded below that ten level and if you're looking for a bigger superlative, here's a good one if you look back at the history of the vix, low levels below ten. don't happen all that often. but those 36 instances this year

means that now two-thirds of all vix readings under ten have happened yes, just this year alone. so, some pros have been talking about this idea that there's cheap rates for stock market insurance. but at this point, melissa, it doesn't look like anyone is really rushing out to buy that cheap insurance even with these low rates and vix prints below ten. back over to you >> thank you well, you hear it all the time that when volatilesy low, options are cheap, but thant be as cheap as you think. professor ko is breaking it down >> first of all, low levels to the vix, why don't we put numbers around to get a sense of it the average is below 15. below 12.5, that's about 15% of the time that happens less than 1% of the

time why though is it so low? and the reason is because the market itself is barely moving the highest volatility for the s&p this year was less than nine and the last time that happened, i wasn't even born yet, none of us were. that was in 1964 that is the reason this is what you're saying for options. that's what you're getting in terms of volatility. however, it can rise it does. and so, i'm thinking you still need to take advantage of the fact that options premiums are low. i would give yourself some time. out past into the next earnings season s prk y, use as a hedge. november 240 calls the 240 put you would want to buy. we're big it slightly out of the money and you get a little leverage there

>> up 30, 40% on the year. so when you think about looking at put protection with volatility where it is, i think it makes a lot of sense. this is something we talk about all the time things are nerve racking and complacent every so often, when you have gains you want to protect into a period where you're getting nervous, it makes sense. >> part of the reason you want to have insurance is to keep your lungs on. you would say it's inexpensive, so why wouldn't i buy?

>> we know what this is. it's hard to time something that could go terribly wrong, but insurance is good to have and short interest is at the same level it was in may of 2000. we were down in august of '16, same thing in january. you've got to have this thing to protect against just that. >> there is a last important point i would make, that low volatility, some think it's too complacent that's not true. when volatility is low, the 30-day returns in the s&p is above average over the next 30 days something many don't know, but just because the vix is low doesn't mean you want to sell the market >> up next starbucks shares have gone from hot o not, but there's something that could be signalling a bottom plus, hey, you out there yeah, talking to you pull out those pne warhos,e e talking your tweets.

more options action right after this 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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only at td ameritrade. welcome back time to take a look back on some open trades. colin carter thought the share of starbucks were about to heat up >> what we have here is what you can see a 20% move up. a 10% give back. my guess is that we found support. and that we're going to get a good balance i'm a buyer! mike, what's your trade? >> september 60, 65 call spread, spend 1 clnt 20 for that >> carter, what does it look like now >> it's more than a cool off meaning post earnings, the stock dropped from 58.50 to 53, 54 so down three bucks on 5%. the reality is that it did

exactly the opposite thing rather than bouncing it got a massive haircut the only thing you can say is that after the swoon, it's back to the support levels of the entire sl months so i don't think there's much downside >> the trade itself is dead. we lost the 11.20 and more thana cup of couffee on that one i will a, i go to starbucks every day a lot of other people do, too. she goes every day my inclination is to address these strikes and go out a little bit aye look agent the 55, 60 call spread >> all right, colin and carter aren't the only ones h in the hot seat last month, dan played cisco for a breakout >> today when the stock was trading at 32.10, you can simply listen k option premiums are low. you can buy calls here the august 33 calls were off at 45 cents that's about one and a half

percent of the stock price it breaks even at 33, 45, up 4%. >> stock is down around 1% dan, what do you do now? >> here's the thing. those calls are worthless. the stock is not much further lower than where it was when we looked at that trade we have that earnings event f. you were to own these and they were less than a dime, you don't sell them, they're a lot of ticket into the earnings trend, but you know, this is one where you want to look at some of the sfuf you heard from some of their competitors and customers and make a decision if it's something you want to throw good money after bad because you made a bet playing for this set up. it hasn't worked out, so sometimes, it doesn't make sense to be too early. at this point, i think i would take my shot and leave them on and see how it goes. >> up next, your tweeting 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 and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol.

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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 alex tweets us all the time i was considering selling a $10 put in snap. is this a smart options trade? sfwl first of all, we love your charts you tweeted us. thank you. he's great charts. here's the thing this one is obviously theme sentiment's bad. we know lock up is still going on i don't rov the idea of selling downside you're okay, but the likelihood of it being up 10%, above 15, i don't know so, to me, it's okay, the risk reward here, but i don't know. >> kind of mad okay thank you. >> time for the final call last from the pit. carter >> warm up to fms and get long x

xlf. >> mike. >> i like the 25 strike call slightly in the money. >> dan >> etf looks look it's going back to e trk f. >> for measuring check out the website. meanti meantime, don't go awhe.nyer "mad money with jim cramer" starts right now. anywhere "mad money" with jim cramer starts right now my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you so call me at 1-800-743-cnbc or tweet me @jimcramer. we too often investor the day! i hear people talk about what is working, and in the ol