it was a wild week for the markets. the guys are getting ready behind me. here's what's coming up on the show >> i love gold >> after the week gold just had, there's much to love and there's something in the charts that suggest it's going to get even better plus, it's the question traders dare not ask >> is there anything you can tell us about what may have happened last night? >> no, not that question they want to know if it's time to short home depot. we've got the answer and how would you like to buy

beaten shares of disney for less than a buck? it ain't no fairy tale, but it is our options trade of the mouse house. we'll break it down. the action begins now. >> the dow posted the second worst of the year and it was disney and goldman that really dragged down the index, down more than 2% the question tonight is simple do you buy the dip in any of these names? dan? >> well, it's interesting. i don't know what utx is on the year regular exxon and i know where the other, really underperformed this year, so, to me, you have a market where i think you know, winners have been rewarded you know, we have the nasdaq that's up 16%. we have the dow that's up 10%. the s&p up 9% and then you have the laggards, the ones where the stories just aren't there. are really underperforming, so to me, i think you have to find some sort of financial or fundamental inflection point in the laggards having gotten your

arms around the fact you should buy them i can't say you can make the case for xxon. i'm sure utx can and we will in disney, but that's what this all comes down to. we have a little bit of its own story with the rumors they were going to make a bid for collins, things like that are going to put a lid on the share price i think it speaks to how low volatility has been, that we ar making something of a 2% move over the course of the week. it was not that long ago that 2% from one day to the next was actually sort of the rule rather than the basically the exception. when i look at this, we were possibly due for if kind of thing. i think fears about north korea, hopely overblown there's been a lot of bluster between both countries oaf the course of many decades

>> lower impacts the beta, the stock in the index and it's cheaper than the s&p and it was one on the steepest uninterrupted day over day, week over week move the question is, was that buying the dip. you hinted you're looking as disney >> i think we hit the nail on the head it's not just about price action and momentum sometimes bs it's looking ahead and forecasting what you think is going to happen disney had a bad week. they released earnings that were disappointing. they had a seven consecutive quarter subscriber declines at espn, but to me, i saw some thick things if i could look out a year plus that make me encouraged about disney. as they're buying a little

stock. we talked about it all week on "fast money", but look at that chart there. this is in carter's wheel house there. you see that prior resistance back at the highs in 2015 and you see very good technical support at 90 bucks, the stock is kind of in no man's land. that's when i go to fundamentals i think expectations are low and there's a shift going on here. there's anybody that's going to be able to navigate them, it's bob iger i'm low on the stock, but i was thinking about it this way how can i create a structure that gives me time for it to play out , maybe some unforesee thing, then i can get leverage on this. looking out to december exploration, you could look and do something called a call spread risk reversal i would be selling the december 90 put at $1 and buy one of the december 110, 120 call spreads for about a dollar buying one for 150 selling one of the 120 calls at

50 cents this is how this trade makes money. it costs me nothing. but on december expiration between 110 and 120, i can make up to $10. my max game would be at 120 or higher at $90 on one contract. if i was short, i'd be put 100 shares of stock and have losses below that on a market to market basis between now and the december expiration as the stock goes lower, i would have losses. i'd have gains, i like this trade. it's not a high probability trade. that i'm going to make a lot of money or lose a lot of money i like it as a leverage trade. >> i think the probability is okay i like these types of structures when you're short more options than you're long, generally, that helps put the odds in your favor. seing the downside puts, if you're concerned about what happened this week, you might be more anxious about that, but i think the 90 level is a safe one going back quite some time the secular head winds they face, especially with espn, those are going to persist

that's a trend we're going to be living with. the netflix thing, they could turn that into a positive. i think that's what iger is looking at >> disney faulling, carter. >> if the premise is there's things looking at a year that you like, yes. i would have rather done it at a higher price like 110 the problem is it now, if you drop in gap like that, on tnews after something happened, you trap a lot of people so just to get back to the gap, not to mention through and to the prices we require to make it profitable, i think that's a very hard play something has set the stock back and if your premise is about things in the year ahead i believe it's because you think it's cheaper >> my question though, this goe oth options trade.

those options, the put your short and further out of the money call those will actually begin to decay. you need to be more comfortable with that 90 level it hit, it piqued in terms of relative performance we've been in in a massive market what did it do eight, ten sexes ago? something's wrong. >> this trade starts and works out well i could get a nice surprise to the upside, too, if it never goes sout of where it is now >> now to the retail space getting hammered this week after macy's, kohl's reported earnings we've got home depot, tjx on tuesday. walmart on thursday. the market applying a 3% move in

either direction for home dee t p poe. carter sees trouble in one of those names. carter >> single out home depot and make the bet that this a great winner, of course, that's what it is maybe at a difficult level. so long-term short, short-term, relative to whole. >> all right >> two panel chart top panel is the stock itself. bottom is relative performance the s&p. which is basically, what everything's b about f. you buy something but the choices that you didn't make do pet better, you bought the wrong thing that's the very definition of running with management. top panel, stock, bottom, relative performance let's put in some lines. there it is, so the tok we know has stock we know has broken out to new highs, but it could never make a new relative high so, even as it's gone up absolute, it's not performing relative to other equities of which it is a major part

relatively, s&p 500. same way to draw the lines just look at this. this is a period where the stock advances but the securities relative performance to its benchmark is poor. and of course, then year to date over the last period, this has been poor both ways. okay the chart itself i kind of see this first line i think you could see this second line. we just move 8% from the bottom of this channel to the top i don't think you're ready to break down tink next move is down and i want to bet against home depot having rallied steeply into its earning earnings >> all right how are are you trading it >> we're try iing to take

advantage of the fact options are slightly elevated going into a catalyst we saw a pop this week in volatility in general, which might favor selling options over buying them. also, be short option, more often than not, the probableties are in your favor. i'm looking to the september 155 call spread. that $5 spread you would sell for 155 and 340 and buy the 160s for $1. this is going to obviously pay you. if it sits here or if it decline, one of the other things though is that to my eye, if it did break out, you were going to challenge those highs probably and that's the reason that we're not obviously going to either naked short the stock or this call option. that's the break out level that we're concerned about. >> yeah. i mean look, there's a lot of tension that's set up. that's the nature of a sort of series of highs and higher lows and it's news that will do it. it's an earnings report then you can get it exactly wrong i think this is probably going

to back away into it >> go ahead. >> do you like this trade? >> it's funny. i do hate it trying to be cute with it. i wanted to get some of these big box retailer next week then put the short back out s&p retail etf, but this is the big one. this and walmart next week they're going to really dictate the course of the sector i think you have to go back to home depot and look at the day in late july when amazon and sears made the announcement about selling some appliances. people got nailed right there. big volume, so, to your point, if if you have any sort of disappointment and there's any sort of structural head winds, the stock's going back down to those lows, back towards 144 so i like my short premium, makes sense. i would maybe sell that call spread and use the proceeds to buy a put. >> the inverse of trade you're doing in disney effectively and actually, i think that could make sense my reluctance steps to the fact it's going to drift down, you're probably going to get some time. we're going to get the news and

if that news is bad, options premiums are going to come in and we're going to get confirmation that's when i would start getting long puts. >> got a question? send us a tweet. for everything omgss actiptions, check out our website and our newsletter nearly 200,000 of you have in meantime, here's what's coming up next >> you want to see something really scary >> check out the vix because it surged this week b and you won't believe how high some trards see it going plus -- ♪ and it's breaking out. and there's something in the charts that suggest it's going even higher. 'lte y hwel llouow to profit when options action returns. [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 gold surging more than 2% and now just $13 away. as concerns in north korea had traders buying vix calls, so if you're looking for a bigger rally in the yellow medal, how should you do it dan? >> gold is up. bitcoin, treasuries, they all kind of bid this week along with the spike in the vix here. we only had the 2% drawdown which leads me to believe we may see a bit more kind of panicy action gold had that bid. almost broke out, but i wanted to look at the gdx, this one moves two to three times that of gld and you may get more bang for your buck here i was looking at a call spread and i want to go through some of the reasons why somebody would use a call spread. first things first

defining your risk makes a lot of sense if you were look tog play for a bounce in the gdx, you would you could buy the etf. but you know, buying a call spread which would be buying the other match up call aoney call,r reason why is because volatility, the price of option is cheap in that name. which they actually are, relative basis in the gdx to its history. and the last one is you know, when you're trying to make a contrarian call, something going against the grain, it makes sense to define risk and look for ways to do it. this is the thing that got me looking here look at this right here. this technical set up. it's made a series of lower highs throughout the course of this year, not particularly impressi impressive, but if you look, there's three lows that have bounced off. all about the same levels. it has not made lower lows

that down trend line, which is interesting. here's the last point i want to make about the gdx is in the low 20s, about 23. it's near. over the last couple of year, options prices are low maybe some kind of -- and i want to define my risk. so lastly, the trade when trk f was trading about $24, the 28 call spread. the call, at a time and cost 60 cents, the risk there, breaks even at 24.60 and you could have gains up to 340. i like the risk reward

we have probably two extra money there then at this point, you could probably figure out what you want to do with this trade about 2.5, 3% of this etf. >> i'll make two comments. one thing i like and one thing i don't. the thing i do like about it is you're buying a $4 call spread and only pending 60 cents. i don't like that you're selling an option for only a dime, which is less than a half a percent of the current level. it strikes me that it might make more sense, given how cheap options are and they are as cheap as they've been in this space and they also see the other wire at a low level, that you would buy that call option and look instead for opportunities to spread out of it potentially into that call spread that you're talking about, which i know is a strategy >> and i want to -- we get that question all the time. why are you selling a ten cent option that option is going to be worth like two cents soon if nothing

happens. at that point, i could cover it and sell, take it more premium and buy more more time and lower my cost spaces, but to me, doesn't 28 sound like a real stretch there? >> i think we're witnessing history. i don't think ever watched on gold and had gold -- not saying that's better. i personally know nothing about gold dan knows nothing about gold nobody does. some people think it works in inflation. in deflation but what we know is that it looks good it's a series of lower lows, and that kind of set up. that's sort of indecision, typically resolved by a move yeah, straight down. >> and you know, the other set up that we have of course is in options premiums are dead lows i'm just not interested in selling options when volatile is at its dead low. i like the direction i have

about the trade. >> we disagree over tim. splitting hairs over ten cents ch don't sell that call, that's all. >> still ahead, volatility surging more than 50% this week to its highest level, but if you watched last friday, you didn't get too nervous. we'll tell you what we mean. plus, got a question, send us a tweet. if it's nice we'll read ilar tt teinhe show. much more still ahead. 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. your insurance on time. tap one little bumper, and up go your rates.

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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. time for total recall where we take a look back at the open trade. back in july, dan thought it might be time to put on some protection >> let's get to the strategy i want to look out to october expiration that's going to encompass really a lot of news about this the next earnings report, but today, when the stock was trading at 150, you could look out to october expiration and sell one of the october 160 calls at $2.95 and use the

proceeds to buy one of the october 140 puts for $2.95 >> stock is up 5% since then, so what do you do with the trade? >> i think the thesis still stands the quarter was good i don't think there's a reason to get negative about apple, but there are some unforseen things. we don't know what's going to happen next month. we don't know if this phone is going to be released looks like there could be res t resistan resistance the 140 put is is not so particularly useful, but we got in a kind of little panicy market, so i think you leave this thing on now, give it a couple more weeks. any, you know, the longer you wait and it doesn't go through the call strike. >> called away >> that's the thing. it's really important. you only put this on if you wanted to get downside protection, so if you say to yourself, i want to keep the position, you always cover that short call >> speak wg the whole protection theme, last week, mike played the it for a spike in

volatility >> i'm thinking you need to take advantage of the fact options premium s are low. i would give yourself time into the past earnings season spy, use as a hedge. the november 240 put and that would be a hedge against the decline in the s&p >> well played, mike >> little early to declare victory when we only had a 2% decline after a single week. >> pretty exciting considering the small moves we've had all year >> that counts for excitement these days in the mark this is simply a symptom that would give you an indication of why you put this on and we can keep it on if this pushes into something bigger >> carter? you're part of this. >> i suppose that's right. i am i don't know it all seems a little sort of lull i guess you know, it doesn't -- >> speaking of dull, can i pick it up for a second

jeffrey was on the air earlier in week. bought spx puts, playing for a pretty dull 3% options are cheap. >> having a dull friday week >> up next, fil llnaca 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 tweets. if long stock an looking to exit, what is the optimum duration if selling covered calls to exit. sounds like a michael ko question >> my answer is 30 to 60 days. the idea you want to make sure you're selling an option that has enough premium but selling long dated opgs is also not the answer and i think that would be a sweet spot here. >> time for the final call carter >> bet against home depot.

mike >> sell the 155, 160 call spread collect $2 sfwl dan >> all these three points i had about the gdx trarks >> all right looks like our time is expired 'lg.ks for watchin wel see you back next friday "mad money" 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. every night i come on here for two big reasons. the first is obviously i like the attention. but the second and more important reason is i want t