hey there, we're live at the nasdaq market site on the eve of this long weekend. before you take out thos hamburgers and hot dogs, here's what's coming up ♪ ♪ have you driven a ford lately ♪ >> investors have and shares surge. but if you're tempted to take them for a spin, don't there's something in charts that looks troubling. we'll explain. plus -- >> money will always be paper. but gold will always be gold >> gold's doing something it hasn't done since 2011 and it could spell more gains ahead. we'll tell you how to cash in.

and alibaba is surging as amazon stalls out but we want to know which is the better buy the action begins right now. ♪ >> let's get right to it car stocks have been on fire this week despite a mixed bag for sales. ford, general motors, both up 5% avis is up 15% while hertz is up 22%. is is it too far, too fast let's get in the money right now. mike whashg mike, what do you think? >> yeah, i think it is a little bit. i'm not sure, maybe some optimism coming from the fact that there's going to be some car purchases related to what obviously the disaster going on in houston but the fact of the matter is that the secular headwinds for the rental car companies and major auto manufacturers remains intact even know with the stocks having done well this week, multiples tell you this. you wouldn't see them trading at seven, eight, nine times earnings

i think they believe we already maybe hit the peak already >> i typically agree with mike and carter they're smarter than i am. look at ford over the last three and a half, four years series of lower low, lower highs on a broader market tape that's been effectively straight up in an industry where they were selling cars at record paces my question is, if the stock couldn't go up then, could it go up now? if you want to be in the space for a trade, when shunned it yesterday, autonation is the place to be. >> that's definitely going to see a short-term boost for sure. but you know, one quick thing. texas is the leading place for pick up truck sales. it's the most profitable vehicle ford sells let's assume you've got a half a million to a million new cars sold it's going translate to about 35,000, maybe 40,000 f-150s, 350 million to 4$400 million in net profits would be the effect of that, versus 7 billion that's a one-time potential boost. it's not something to trade off of

>> there are moves in principle are enduring, it could be the beginning of something longer lasting and moves that are impetuous, often news related. and the move that simultaneously took ford up the last five, six sessions and gm feels more impetuous than developmental >> there's an argument that need to be made for the inventory that was the thing dogging this group. we are were talking to adam jonas of morgan stanley, and he said this is mother nature's cash for clunkers program. >> yes >> it's a huge transfer of wealth from insurers to the consumer and in turn to the auto industry >> but the secular headwinds mike and carter said, the secular headwinds that excited prior to this hurricane, they are not going away they will abate for a brief period of time and you hate trading things on the back of a disaster like this, but this is going to be a one time maybe one quarter, two quarter phenomenon. yet those headwinds will still exist. so, look, again, these stocks have gone down for a reason.

i think if you get a bounce, you sell them. >> this cash for clunkers represents a at best, 5% of new car sales annually in north america and about a third of a percent of the fleet under the best of circumstances. so, you know, a lot of that fleet. people keep talking about that rolling off. 11.5% is the average age for the 300 plus million cars that we got. so there's a lot of things you could say would be the reason for a new peak auto cycle, but i don't see it coming. >> so let's get to the charts. carter, why don't you show us. >> exactly what guy was talking about. construction over the last three years. i want to start further back here, this truly tells it all. this is a chart that goes back as far as s&p 500 sector data will go. meaning in 1989, 1990, they changed the nomenclature data before that is not the same sector setup as we have now. this is nothing short of outstanding, remarkable or ridiculous what we have in orange is the s&p 500 consumer discretionary sector one of the parts of the whole, the market of course, it's best if the s&p

if you were to look at the s&p, the s&p not as good. now, down here, these are positive numbers look at ford this is a joke so, you actually lost mone since 1989 investing in ford that tells you there's something wrong. more immediately here and now. so, just to put it in context, ten grand. these numbers are clear, yeah? ten grand. 84 grand ten grand is s&p, 61 ten grand, down. you're down negative numbers this is a joke so is that about to get better with with self-driving cars and uber and all the stuff no way the long-term chart. i think you can draw the lines anywhere you want. one thing to comes to mind is that not pretty to the here and now. one-year chart of ford no drawings, no line, no judgments by me. here's a line. that's a pretty straight down trend. it has failed off the line failed off the line.

i'm going to make the bet that that's going to fail again let's pull it back further two-year chart no longer or drawings by me. here comes the line. these are the same thing fails off the line fails off the line fails off the line going to make the bet it's going the fail again pull it back more. guy was talking about the three, he's in the five year putting the lines. a well-defined series of lower lows and so, why are we going to bet anything other than with history? with precedent i don't like it. sell >> can i ask carter worth a question >> of course >> you know the way i feel about carter >> he's in the top three of all guests that have ever appeared >> what's that thing, the one with all the heads and rock, mt. rushmore >> yeah. >> but i have a question >> y ses, sir. >> as i have pointed out, the broader market has been unbelievable if the broader market were to turn to the downside, is there safety in owning ford or will that rollover as well? >> no, in principle, the things that do the worst in a bad market are two things.

things that have never really rallied with the market then fall out the floor, and the opposite end, things that have been very extended, and people rush to take profits there's also this. people think dividends can help. the 5.2% ford's cut its dividend 50, 60 times in the history of the company. the dividend is always good as the next six months. not a value play not anything you know, that is pretty clear, isn't it >> yeah. i don't think that you could be anymore clear carter than in the past few minutes >> how do you really feel about this this? >> mike, what's your trade here? >> selling the october 11, 12 call spread. stock ended up about 3%, so this could collect more than the prices that i saw when looking at this today. you could sell the october 11 calls for 50 cents, by the 12s against it for a dime, you're collecting 40 to 45 cents for this this is with the stock below 11.5 you could have an opportunity to make a small profit if is stock sits here. it will profit if it declines. we're protected at 12, just in

case by some miracle it happens to break that downward trend line we just identified >> right >> does the chart look the same for gm >> well, gm also rallied hard this week. gm hasn't been as broken as the ford chart over the consistent five-year period, but gm is no party. there's something wrong with the industry, right? it's things you guys are talking about. >> jim's been sideways to slightly lower, where ford has been pretty much, that chart illustrated it it's been a straight line down they both have issues. the worst stock is ford, not that there's any safety in either right now to be honest with you >> what would cause you concern about this trade anything >> unlikely we're going to see anything fundamental that's going to emerge. if anything would concern me, it's the same that's concerning me about every bearish bet i've made this year, which we can identify, you know, caterpillar among them and many others situations where i think there are plenty of reasons why the stock should have hit a top or

should be rolling over continuing down trends that would be the one possibility if we get a really strong rally in september, it could lift all boats >> shifting gears here to another win their week, that would be gold. the medal having its best week since february, but some options traders aren't going along for the ride seema mody has more. >> that is right the precious metal is now up 15% this year versus the s&p's gain of 11% gold's rally has been fueled by a weaker dollar and its flight to safety amid a rye in geopolitical concerns, but the options market does not appear to be as bullish. according to occ data, overall open interest on the gld options is up 0% this month, but the majority of that increase has come on the put side in fact, bets on puts have grown 18% while call interest has only seen a 6% gain this month. if gold were to hold its year to date gains, it would be the first time since 2011 that gold has beaten the s&p

melissa, back to you >> thank you very much seema mody that wouldn't be bad for this year, guy. would you buy into that, though? >> i think there's something going on with gold we had a great conversation with steve liesman, and we asked him, are you concerned about this administration talks about this dollar as much as they do? we had a great conversation. he wants a weaker u.s. dollar. a weaker u.s. dollar will be good for gold. look at gdx. it's now pushing up to levels we saw in january i think there's a stealth rally going on in gold and i wouldn't fade it here >> sounds like it's not because of geopolitical risks. >> that's the cherry on top. >> it's a risk off trade, but we have seen the levels of other commodities rise as well so it clearly would make sense in that context. the options market, we are seeing premiums go up. this is not unsurprising

oftentimes when commodities rally, they anticipate higher volatility going forward that's quite unlike equities it certainly has the ability to move and probably more sharply than it has even so far. >> what's interesting, this not randomly is an anniversary we know the peak in gold was in 2011 t was september 2nd it was a friday. here we are friday, september 1st, 2017 and we came down 1877, all the way to 1129. now back up to 1330. it's got momentum to it. whether it's because they're never going to raise again or because people think the missiles are going to fly, whatever, it's got momentum. momentum is one of the most powerful forces both on the way down and way up. it's going higher, i would say >> chart master likes the gold i like when he pulls the dates out. >> it's almost like poetic when he compared the highs.

>> real quick, gold miners or gold >> generally speaking, the miners do have a little bit of leverage where gold is concerned, but i'd probabl rather the medal here, if we start to see weakness, cash flows into the commodity, gld is a straighter way to play it. >> got a question? send us a tweet. if it's nice, we'll answer it on the show and check out our website. got videos, tutorial, winning lottery numbers. you get the picture. just want to make sure you're paying tan shun. check out our super cool newsletter here's what's coming up next >> alibaba shares have doubled but if you missed the move, relax. we'll show you how to buy it for less than $5 plus, calling all options action fans reach into your pocket, grab your phone and tweet us your question @optionsaction. if it's nice, we'll answer it on air. when "options actions" returns

s 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.

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 to "options action." if you think amazon has had a good year, check out alibaba let's get to deidre boss in sa francisco with the story

hi, diedra >> hi, melissa that's right, amazon's had good year 30%. but alibaba has had a better one. its shares nearly doubling that puts it within striking distance of de-throning amazon and in the race to half a trillion dollars in market cap over the month, alibaba is up 10% since august 1st on the back of an earnings report that blew past estimates amazon's rally has halted. shares falling 1% and down about 100 bucks. that's from the recent peak. from analysts, alibaba gets more love as well of the 47 brokers that cover the chinese tech giant, not a single one has a sell rating. it's mean target price is $197.51, about 15% higher than when shares stood today, according to fact set. amazon has one sell rating of the 44 an wrists covering it, it's about 17% from its mean target price now, guys, both dominate e-commerce in their respective markets, u.s. and china and both are expanding into new business, like groceries, original content and cloud, but one of the major differences is that alibaba has the much larger and faster

growing chinese market and, of course, the middle class some investors see alibaba as a proxy for that growth, and that's part of the reason alibaba has returned more than three times what amazon has this year. amazon continues of course to dominate e-commerce and cloud here in the u.s. cloud growth slowing a little in comparison to some rivals and some analysts say uncertainty over the whole foods integration may be giving investors pause these days guys >> thank you if you missed the big run, fear not. mike has a way to buy the stock for less mike >> we're going to talk about a structure called a call spread this is a structure you want to make when you're bullish, and this is a structure you want to use when premiums are slightly elevated and finally, this is a trade that helps you minimize your

risk, particularly buying the stock as an alternative. phenomenal forms from alibaba. we're start tog see more volatility sometimes, that can be a warning sign, that could be a good thing or a bad thing reflected in the price of options that's one reason we will use a spread specifically i'm looking at january, and the 180 and 200 call spread. we can spend 5.60 for this sell the 200 against it for $4 that's how we get to 5.60. that's a quarter of the distance between the strikes. gives us time for this to play out. as you can tell, $5 on $182, $200 stock, it's not a lot to risk when considering making a bullish bet here >> mike, how does this trade go aw awry >> it goes awry if the stock goes down, and it won't do hot if the stock trades side ways from here. i think that's unlikely, though.

the increase in volatility in the options market suggests that we'll see moves at least of the mag chewed we saw for the firs portion of this year until the year's end this is going to profit if the move is upwards. in terms of amazon or baba, which looks better >> one is better in terms of how it's acting, amazon has endured selling of some kind it's been under pressure alibaba has been uninterrupted what makes it vulnerable is just that no weakness no one's doubted it, and it's the breakout. from the 120 level in june now, it's 170, 175 it's come a long way stretch in fact, they have risks, i would say >> these are not cheap stocks. one thing question say is that the chinese market is faster growing than this one. it will soon be -- is at least as big as amazon's is.

but look, you're doing is, this is a momentum trade, where we're mitigating our downside risk for that reason, because there are downside risks >> is amazon's performance, carter, indicative of where you think f.a.n.g. as basket could go >> apple has been onto itself and microsoft, super cap, large cap growth, but google and amazon have been quite soft. their relative performance has stalled for the better part of three months others are not great in that f.a.n.g. group, but it's struggling of the big ones, i think apple is the best. up next, caterpillar on a tear this past month that's bad news for one of mike's trades. got an options question for our trarsd traders or our special guests today, guy adami we'll read the best ones on air. more right after this. rading de

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

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 to look at our open trades two weeks ago, ko and carter said caterpillar surged way too

fast >> they're a miracle or going the same way i bet they're going the same way. i'm a seller >> i'm inclined to go along with carter here. i'm going to buy a put spread to do that. the october 15, 100 put spread, you coul spend about four and quarter for the october 1 sell for 60 cents, spending $3.65 for that. >> the cat scratched the back. the stock rallying 4 % since then mike, what do you do >> we have until october for this and the value of the trade has declined on the meantime on caterpillar's recent strength. my thesis, certainly the fundamental thesis that i had remains intact this is one of those situations where we used to have big industrial names like this we were talking about it earlier. cyclicals, you would see the pis drop they have not, now, basically, it trades at a market multiple, they don't deserve to. it is not earning the money it used to. >> and the principle being of this fairly uncorrected advance over such a long period of time, leaving us at a difficult level, guy's going to talk about it, but we want to stay with this. we got lots of time.

this is so much. can it eke out gains yes, but can it collapse yes. >> i agree if you go back five or six years, you're setting up for a potential for major double top in caterpillar valuation in my opinion is extraordinarily expensive. it's not near lit company it was ten years or so ago. if you think cat is going higher from here, i've said it for a while and corrected, you got t believe that every hole that's going ton dug over the next year is is going to be one of those big cat tractors with one of those hooks on the back ain't happening, sister, back to you >> industrials as a whole up 8% so far this year and there's real stellar performances. take a look at general electric. just this week just today, in fact, up 2.4% >> that happens when you're slipping, going on a five-year slide like ford. ge is a disaster it peaked at 33. stocks up $24 stock. losers pop their head up >> we've got a new ceo though.

there's a reporters report saying they'll cut staff, slim down, and do -- >> the options market made a big bearish bet. using the strength we saw as an opportunity to sell. >> up next, final call from the options pits 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.

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." time to take your tweets our first asks if you're confident, want to buy call, deep in the money or at the money. mike, what do you say? >> i would say at the money. you are paying more extrinsically, more decay, but they're just buying stock. >> time for the final call last word from the options pits. carter >> 11.35 bet it's going lower back to where it was pre harvey. >> mike. if you're bullish in baba, it's better to play to january than

the stock. >> guy, it was fun >> dan wilson. >> who's dan who's dan? just kidding hi, dan. >> energy stocks next week if they don't turn next week, they ain't turning >> looks like our time has expired. thanks for watching. i'm melissa lee. for more "options action" check out the website, optionsaction.com. have great long labor day weekend. "mad money" starts now >> announcer: the following is a paid advertisement for tai cheng, brought to you by beachbody. >> two minutes, mr. van dyke! >> oh, hi! i'm dick van dyke. you know, back when i was doing "the dick van dyke show," audiences would laugh every week when i'd come in and tumble over the ottoman. today, that wouldn't be so funny. a fall like that can mean broken bones, loss of mobility, loss of your independence, or even worse. so, if the aches, pains and, you know, that funny balance thing are slowing you down, keep watching this show because i've discovered an incredible program