call today. a place for mom. you know your family we know senior living. together we'll make the right choice.

>> hitting it's highest level 17 years this week and there's three stand outs in the space. explosive move higher. all up more than 10% is there still time to get in on this rally let's get on the money right now, dan. >> a nice break out today. carter can speak to that and obviously consolidated a little bit above the prior high that's almost 70%. but for me it is up 27%. i can't tell you that it's a great buy up 67% on the year but there's probably other opportunities in the space. >> obviously it's for the industry i think i agree with you it

priced a lot in that already this is one of those things. people forget there is some cyclicality in this business so when you have a huge run like that don't believe it. >> that's right. >> what we do know is here and now semis are actually playing catch one the broader market whether it's nvidia based or others. >> do you believe there's going to be consolidation or more consolidation of the space >> that was a huge drive in 2016 there were over $200 billion of deals. we're waiting on this to happen. one of the things that's interesting now it has over $100 billion market cap it trades at over 12 times

sales. 10 times sales was the number where a lot of big teals got done but if you like it for ai and autonomous driving and all of that stuff then you have to kind of look at it. this is a stock that our company hah has about 5 million in sales. let me tell you something, that's what they're expected to accelerate to. 10% growth next year i'm looking at a stock that trades at 2.5 times sales. we're talking about it here it's only up 17% on the year. they're expected to report earnings i think the week of october 16th and 17th. that sort of thing so i bought the stock earlier in the week and talked about it in fast money a little bit but there was a rumor that possibly they'll get business from tesla. but i wanted to look at a trade, a defined risk trade i wanted to target that earnings event and move back just below

16 and i want to give myself a little room down to the up trend that we just showed. the price of options is relatively cheap right now so i'm targeting october expiration here. i want to buy a call you could buy the 13.5 strike call in october. 55 cents that breaks even at 1405 and gives me plenty of room back up toward the prior highs at that point if you get a little movement in here because it's consolidating and they get back on their, the whole sector gets back on the horse prior to earnings season this is going to participate and just one thing, 55 cents that is basically down to that up trend that has been in place from the november lows i think that's a good risk-reward here there's a really good scenario where you could easily double your money. >> i could imagine that 55 cents on a $13 stock seems like a lot

of premium because they are expensive but there's a reason for that the stock does move around significantly as a percentage of its own value and as high as those are they come down from much, much higher levels this is the lowest they have been in two years and it's ironic that people would get so hyped up about number one. ultimately you hope you would do one. >> if you think about the way he started this, we know the group is strong so there's two things you do in that situation you find a lagered and play it meaning for catch up or is it lagging because something is wrong and really that's not known and fortunately they'll catch up as to take outs that can't be a part of investment so now it's a question of do you get the earnings related pop and as you do you'll likely not only move to the top of the chart but perspectively a break out. >> so they have 7 and 20% annual

year on year revenue growth at this company but it incorporates an earnings event. if you had a move back prior attorneyings you could sell a higher strike call, create a vertical call spread and reduce the risk because we all know this that being long premium directional into events is a tough way to do it that's why i'm looking out a few weeks now and i like the fact that they consolidate it. >> check out the high flying fang stocks or should we say what high flyers it stalled the last month with the exception of one name. netflix. shares are up more than 10%.

the reason it's been good is things are better. so a chart, now let's zero in on these over an over an over what i've got here is frequency. three months later, three months rater. these reare earnings and netflix continues to beat on its earnings now the bet is we're going to do that again that's a look at the chart so it's a well defined channel and this is just parallel lines right off of a computer.

we responded to these levels over and over and over and i'm thinking at a minimum we're going to make it back to the high of the channel. where are we now here we're literally in the absolute midpoint so not overbought you have the earnings prospects to get you higher and we want to make that bet especially in the context of the following look at this performance over the last 12 months as all the others have stalled. this while it's up is not up anymore than the market and if you look down toward the bottom half of these high flyers it's starting to be down. down one, down two i like it compared to here we call this here and i want to make the bet. >> this is a critical time because you're going to see what their subscriber ads are

the end of this month and we're going to find out but they have been doing pretty well so far on pace to have more subscribers this year as they did last year. last year was a 25% growth year. that's outstanding looking at the bottom of the channel i thought the way to play this was the november 170 call spread risk reversal. if you bought the call spread and sold the 170 puts against it you collect 25 cents it's down about 10% this year. if it fell back you lose nothing. on the other hand if it moved to the upper end of that channel that's the way you want to play this one >> the stock did sell off from 195 down to 162. it's comes all the way back up

so to me you needed that big raise for the stock to gap up 10% like the market is going to expect you're going right down to the put strike and that's short. the only thing i would say is if you're going to buy the stock, why not? but you only have $10 of potential gains in that call spread and you have a lot more potential losses to me, to my eye, this thing is going down to 160. >> the down side risk is that you can put the stock at 170 and if you think it's going to 160 what's your risk $10. what do you make $10. it has to go up 10 to make 10 and it has to go down how much $28 to lose the other ten. >> that doesn't give you a pause a little bit. >> after it gaps up. but that's what it did often ask you to get reset and they were anticipating it and that's the perspective bounce.

this is just this. if they miss, if it's not part of investment, right but the precedent is that something is going on here and wha think is important, all of the others under pressure. >> but the whole idea here and the reason we're putting on this options trade is there is that risk and there is that move. >> sign up for our news letter and never leave home without it. i really don't what are you waiting for here's what's coming up next >> let's make a teal. >> that's what investors think sprint and t-mobile will do. and calling all options action pass reach in your pocket and grab your phone and tweet us your question at options action

when options actions returns 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.

whentertaining us,es getting us back on track,hing? and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money.

call, visit or go to xfinitymobile.com. 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. >> a rally again could be close to a merger. the deal chatter sending the telecom space this week. who better to break it all down than our friend dom. hey dom. dom. >> all right

all right, melissa yes. we are seeing a surge in activity trading wise around both sprint and t-mobile usa shar shares over the past week we have seen around five times the average weekly call option trading volume for sprint and around six times the average trading volume now all of this as more reports surface around whether it can be agreed upon. any potential tie up is going to be pretty heavily scrutinized by regulators but still it's a part of the broader theme by the telecom sector this week but still stellar performances by at&t and verizon have made the sector the best performing one in the entire s&p even though sits smallest sector by market cap and a number of constituent

stocks there's only four in the entire sector still we're talking about a sector that has a 2% waiting in the index. it's been the second worst performer this year down by over 8% but it's been a star performer this week. back to you guys. >> thanks. so you play these names, this call to action. >> so he was talking about the options action when earlier this week we saw the october 9 calls being bought in sprint and the november 70s in basically t-mobile you might want to take a look at a call spread. a couple of reasons for that, one higher profit probability and secondly a lower rate of decay. what's going on here i'm looking specifically at t-mobile now the chances of the stock moving this much are obviously greater than of it moving that much so we're going to try to take advantage of that. specifically what i'm looking at is the number 65-70 call spread. if you could spend $1.45 for

that there's a 37% chance the stock is going to get to here which is where you need it to be to start seeing profit. that's versus less than a 20% chance if all you did was buy that call and there's only a 10% chance if the stock does go higher so this is a higher probability way for you to make a play these companies are talking about a merger and not a cash take out so the chances of a move higher will likely be more modest. >> should we invite mike back? just kidding come back on over mike. >> i love his description of what's going on there. a lot of the activity rooked like lotto tickets this is how they sometimes get bailed out but mike is talking about probabilities. the combination of these two, like he said, this would be a very heavily invented entity and the economics will be interesting and the stock may

not trade where people expect it to. >> it's larger because they're significantly higher more premium brand higher margins obviously heavily capital intense businesses like this there's certainly synergies. i guess that's what people must be hoping for. >> when you think about it, it's what lead up to this point we know last year, sprint was up some 135, 140% and then for the past 18 months very dormant, very quite something to unlock this and not only is it down, it's down substantially and other interest rate sensitive areas. >> here's one last thing to consider also. if you take a look at a one

month semistrike call in t-mobile that's a 30% option it costs 80 cents if you buy the november that call spread is a little over $1. the rate of decay for the call spread all else equal is going to be lower. if the stock does essentially nothing you're better off. >> still ahead, soup and cereal stocks getting creamed this year is there more in store for the safe sector? >> dig into those pockets, we're taking your tweets later in the show that's more options actions still ahead. 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

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. if you want to know where the white house stands on that no vote this afternoon from senator john mccain they believe the path to passing graham cassie is extremely difficult cull at this point but not all together closed. i just got off the phone with mark short and he said this to me at this point we're only two votes away we'll continue working to get their votes.

we'll keep pushing forward until we succeed in repealing obamacare and i asked him specifically about what the white house could do to win over the senators that are on the fence and susan collin said she is leaning against and he wouldn't gattis cuss that specifically i asked about a sweetener for alaska that potentially there were kick backs for the state that would help get her on board. he said there isn't such a thing in this bill i asked him about the prospect for a bipartisan effort to take shape after this bill and he said it's too soon to talk about that but at least from the white house perspective despite that john mccain is a no and rand paul is a no the white house still believes there's a very slim chance here. >> kayla, thank you. we get to see health care stocks rally when we first took out the initial indications that this would not pass but this also has the implications for tax. >> i don't think it's going to

pass it's a last ditch effort and then basically repeal is dead on the table after that so i think that the move we saw in the health care stocks that's the way you want to play it. >> time to look back at our open trades last month. dan made a bearish bet on being down sames stocks. >> action prices are low and volatility is off of 2017 lows you could look to it in the money put spread when the stock is trading at 5475 you could buy the january 55, 50 foot spreadment pay $1.30 for that. >> falling more than a percent. >> more than a percent that's one of the rb reasons i look at it give this some time. we were all in agreement that this is not a great looking chart so when you think about rates going up, you saw how some of the stocks performed, i think you want to stick with this and

just remember this was a put spread 50 on the down side. i'm not exactly expecting 50. >> i definitely think you want to stick with this first of all, very often, things like put spreads tonight have the risk that single stocks do and those down side puts tend to be more expensive. so i would stay with that trade. >> the chart is broken fundamentally they're expensive. and what's the upside potential? >> up next your tweets and the final call from the options pitts. 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. hey, i'm the internet! ♪ i know a bunch of people who would love that. the internet loves what you're doing... ...so build a better website in under an hour with... ...gocentral from godaddy. the internet is waiting. start for free today at godaddy.

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 so this is from mike meyer calls of 27 and 32

close to a double. believe the stock is going to 40 what would you do before earnings >> i would certainly roll up those calls. one of the reasons to own option is lower risk to the down side but deep in the money calls you're sharing the same risk as the equity the only risk is possibly tax related so obviously if you have short-term gains and you're trying prevent that that's a separate issue >> he's also saying 27 and 32 and this is one where this stock moved a lot so if you own deep ends and you're sharing a lot of the risk to the down side and you have one for one risk to the upside so to me take the profits and roll them out to find the risk for further gains the stock is up 33% in the last month. >> time for the final call. >> netflix long going into earnings new high and days and weeks ahead. >> netflix and call spreads in

t-mobile. >> so if you think they kind of held in here, i'd like it to the upside. >> well it looks like our time is expired i'm melissa lee. thank you for watching check out options actions dot actions.cnbc.com in the meantime mad money with jim cramer starts right now. >> announcer: you're watching a paid presentation for veggie bullet, brought to you by veggie bullet, llc. from the makers of the world-famous nutribullet comes the next innovation in whole-food nutrition extraction. introducing the veggie bullet, the world's first cyclonic spiralizer and lightning-fast food prep accelerator. now you can spiralize nutrient-rich whole foods in seconds for incredible pasta recipes, like zucchini spaghetti and meatballs or ribbon spirals for great lasagnas, even the family favorite -- curly fries. the secret is the veggie bullet's cyclonic-action spiralizer and high-torque motor