bout it because every time i go on the street i think about my own kids. they're the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then i'll drive it every day of the week. together, we're building a better california. hey there, we're live at the nasdaq market site the guys getting ready behind me here's what's coming up in the show >> there's no place like home. there's no place like home >> there's no place like home. >> and there's no hotter trade than home improvement. there's one stock flashing a major "buy" sign we'll break it down. plus, how would you like to buy shares of surging intel for less than a buck >> i would buy that for a dollar >> we'll show you how to do it for less and one battered group of stocks may have just found a

floor. here's a hint. ♪ we're going to turn it on ♪ we're going to bring in the power ♪ >> we'll give you the trade. it's time to risk less and make more the action begins right now. let's get right to of it rates have been on a tear, the yield and ten-year hitting highest levels since july, sending bond rates tumbling. will the rise in rates continue? >> it's really exciting that we had this unprecedented 3% gdp growth in q3 who knows? there should be no reason why rates should not be able to rally with a 3% economy, right you guys all agree with that for a lot of purposes, i mean, i would say, and i'm being a little facetious >> one quarter of 3% annualized growth does not make 3% annualized growth. >> we were thinking what a quick rise in interest rates would be

as we go into qt, as we go into a rate tightening cycle. there's only been two rate increases this year. we're going to get a third in december the ten-year treasury yield is still below levels that it was a year ago, you know what i mean to me, it seems a bit range-bound. we know the one thing that bears will point to or potential people looking for a pullback would be if rates rise too quickly, too fast. we know that janet yellen is on a little bit of the hot seat here i suspect we get this push and pull between dovish and -- >> the fed balance sheet is obviously one of the levers that they have. we also have global levers in play that yellen does not control. and the fact is that even as our own central bank begins to tighten, that is not the policy anywhere else on earth money flows very easily. >> it's changing, mike is that the no one of the stories right now? we went from dovish central banks all over the world, and we were the ones starting to tighten a little bit now it seems like everyone is falling in line.

>> the narrative has changed think about where we were to start the year 265. and consensus was 3 1/4. here we are in october, we are sitting here debating about 2.2, 2.3. >> carter, you say the rates are about to back up >> i think so. i mean, i think they're going to come off here. we've just moved up pretty dramatically let's see if we can draw some lines. all right. you see the chart. ten year yield one thing we could do is the following. there's a pretty well-defined channel. and it has lived within this channel all year in fact there's a lot of symmetry between the order of magnitude and the duration of these moves. let's take a look. for starters, these are all the moves we've had. one, two, three, four, five. look how similar, 25 base points, 32, 26, 29, 34 refuse

what about duration? number of sessions, two weeks. two weeks, eight two weeks, 12. two to three weeks, all between 25 and 35 base points. i'm not sure anything's changed. and let's say it does press on a little bit so what? rates are low. i'm not sure it's enough to really change the backdrop for banks and all of the things that are expected in any event, i'm going to make a bet that utilities can bounce here two ways i would draw the line one, we kind of come back to support. two, that we're on this trend line but either way, i think you've got a pretty good chance of, after this 5, 6% selloff in the xlu, a bounce here i want to be long at this point. >> so utilities for a bounce, mike what do you think? >> well, first of all, i'm going to always go along with carter, or most of the time i'll go along with carter. one of the nice things about trading something like xlu is that it's one of those places where options are really, really

cheap. and when they are extremely inexpensive, if you're trying to make a directional bet, trying to make a trend type trade, it sets up really nicely for that this is certainly one of those cases. and i think we can talk about it a little bit more, but i was just looking out to january, to the 53 calls you could spend $1.45 for those, those are the at the money calls. doesn't take a big move for these things to be profitable. on top of that, you're risking a little bit less than 3% of the current price of xlu to make that bullish bet if that trend proves to be unfounded, then you're really not risking a great deal >> one thing that was really interesting about the charts, that's clearly a down trend. that being said, could you have a pullback in the ten-year yield? i guess the question is, would they rush back into the xlu? it's acted pretty well it's kind of an expensive sector we have this conversation all the time about growth versus value, that sort of thing. where i shake out on the whole rate trade, on your trade, it

makes sense, you're right, options are cheap, it sets up technically, that sort of thing. if the market and the economy and all the stuff that we talk about every night on this desk are as good as we think it is and it's all happening around the world at the same time, the stock market should be able to go up with rising rates. it should be, for all intents and purposes and we've had nothing. what it tells me is, what's wrong here, why is it rates can go up? because everything else is saying all systems go. >> one thing i could quickly throw out also xlu is not like trading tlt. tlt is a fixed income instrument xlu sometimes trades like fixed income but it isn't. these are utility companies. many times you have regulations that can impact their earnings it's obviously a capital intensive business earnings can rise in the sector. that's an important thing to remember, in that way, it's probably more like trading in inflation adjusted instrument rather than a fixed income >> and like for instance,

staples is tied to this, staples had risks associated with the operating business that utilities don't. some of those businesses are real pressure for structural reasons, whereas utilities as an aggregate are going to trade true rates will either not bounce or rates don't do much. >> and telecon is also in this dividend-yielding. >> right, there too it's having to do with their businesses and market share and all that stuff. >> one final thing i would say where utilities are concerned, and we're thinking about the ability for them to maximize generation storage, batteries, if you have cars in the garage that are electric, plus the fact that you have electric cars so that is a potential driver that you could think about that i think is different than some of those others that you mentioned. >> now to a group of stocks that have been on fire, the chips, the smh semi conductor surging

micron, applied materials, intel, some of the top performers in the last month, up double digits. are any of these names still a buy? >> second try is going to be a charm here last week i picked the one semi conductor stock that closed down on this week i want to look at intel this week one of the reasons here is that i think there's a lot of things that are going for this company right now. i think they've been digesting a couple of really big acquisitions they bought altera in 2017, they bought mobileye for $15 billion. there was a couple of ai deals in between that. i think this is a company that is pretty dead set on not missing the next big technology trends the way they kind of missed mobile over the last ten years. when i look at intel here, i think there's a really interesting setup. we have a couple of charts right here this is a five-year. it's banking up against, you know, the 52-week high that was made earlier this year, $38.45, you get through that, that's a multiyear high then we have a 20-year chart

this is one of the really few mega cap tech stocks i know carter has been talking about this on "fast money" over the last couple of months, that has a ton of room to go. it trades about 12 1/2 times, well below market multiple to me, my bullish thesis on this stock, for most of this years, is that they're going to digest these deals. if we can get something of high single digits earnings growth from some cost cutting and other things that people are not expecting, you're expecting a $3 earnings number. this stock could easily be rerated back to probably, i don't know, 13, 14 times you have a $45 stock. investors will start thinking about that option prices are cheap. i'm looking at their earnings event. it's going to be on october 26th so i want to look at october 27th i just want to target this event. i've been long this stock. i'm considering this as a stock replacement strategy option prices are cheap. when the stock today was trading at $38.05, you could buy the october 27th weekly, 38 calls,

for 85 cents if you do the math right there, that's about 2.2% of the stock price. the stock has just rallied 10% it's at that massive resistance level. the stock is going higher. i think you probably see in the low 40s. >> we rarely talk about the ability to essentially rent options for nothing. this is actually one of those circumstances. what's going to happen is these are actually not going to decay the way an option of this tenor normally would effectively, if the stock rallies, ahead of the earnings event, you will actually have an opportunity to potentially monetize this thing with minimal decay in the meantime. then of course if you don't get a move, you can sit there at that point and make a determination whether you want to stay long using this. i like this trade a lot. >> it'spoised, that's what tha is, those precise levels and also, intel was so not liked as this was going on because it wasn't m&a related and all this stuff. other large cap sort of mature tech names have all been quite good microsoft has been good, oracle,

until the recent setback, quite book i would think this ultimately is going to break out it will catch up and do what the chart implies. it was probably because of the earnings you're looking at >> when you say ultimately break out, do you think the october catalyst is going to be that ultimate does that fit the ultimate timeline, in your view >> sure. so the 38 level, and you saw the chart that dan put there, is very precise it's not only the tops over the past say year, but it goes past to 2014. all in the context of that huge base so that even, let's say even if it doesn't work, you've got limited downside presumptively with a setup like that it's like a heads you one, tails you win. >> this is a stock that moves about 3.5% on average the day they announce earnings if you think about it, that straddle, the 38 call plus 38 put, should be worth 3.5% of the stock price the day before they announce, all right? right now it's only $1.60. you could think about just how

little decay you're likely to experience unless some material bit of news comings oes out in meantime >> those options, 85 cents, depending on where it was trading, when i price it up today. i can tell you this, on october 25th, the day before earnings, i think that at the money straddle that mike is talking about, the call and put premium together, is probably going to be about 40, 50, something like that. you basically get a free look at this to answer your question about that exact date, i don't know what the numbers are, okay >> of course >> i'm just telling you, the sentiment is so bad, this stock is only up 5%, the semiconductor etf is up 30 persi%. it will play quick catch-up. >> and give you a dividend too, unlike most semis. >> that's true >> 28% for more options action, check out our website, check out our newsletterer rumor has it mike khouw reads it

before bed every night why not you? here's what's coming up next here's the market and here's your portfolio we'll give you the stock that will catch you up. plus calling all options action fans. reach into your pocket, grab your phone, and tweet us your question at optionsaction. if it's nice, 'll swweaner it on air, when "options action" returns. >> logical c. your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.

well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome back to "options action." the dow saw its best three-quarters of the year since 2013 a dream team of stocks like boeing, caterpillar, apple, mcdonald's paved the way

are there another names you can play catch up with if you missed the rally? carter >> home depot is making all-time highs, 52-week highs it's lagged in many ways in certain key aggregates of which it's a part. home depot is here compared to the dow jones industrial average. basically over the past 18 months we see quite clearly, it might not seem like a lot, still you're talking about underperformance at this point and i think that's going to be sort of narrowed home depot versus the dow. here is another way to look at it home depot versus the s&p. albeit barely, but still here too, lagging let's go again, here is the s&p 500 pure growth etf. this is a growth stock this has lagged as well. i think there's an opportunity here let's look at the charts

a little bit of data this refers to what i was talking about. i'm not sure we're moving. you saw that let's go forward again there we go. all right. take a look at this. got some lines coming. that's a heck of a setup so the presumption is a breakout from these well-defined tops i think that's an opportunity. we close at 163 today. take a look at where the stock is in relation to the five-year channel. it has been just in the middle were we to get back towards the highs which is every distinct possibility, you've got 10, 12, 15 points. it's probably the earnings that does it. i want to be long on home depot, i like it. >> mike? >> i'm trying to take advantage

of some of the same numbers. i have a feeling that whatever happens in the meantime is likely to be gradual they've gotten a little bit of a bounce because people are talking about a pop due to home improvements going on unfortunately because of these storms specifically i'm looking at the 1.65 october/january call spread sell the october 1.65's at a buck oh five i'm taking advantage of the fact that i don't think there's a whole lot in those preearnings options. >> do you like home depot? do you like the trade? >> the chart is a beautiful breakout it's one of the strongest names in the last year and a half of this rally it bucked a lot of trends, when we saw prior leaders fail, it never failed, it kept on going i love calendar. mike is selling that go shorter dated one and setting up to run

the longer dated one the only thing is are you getting too cute with selling that october 1.65. you have three weeks this thing could blow right through it he said, 12, 15 points, something like that. who knows? i think if you're playing for that breakout and you believe in his charts and you like the fundamental setup into november, holiday selling season, i think you actually just buy a january call spread and something like that and sit with it, rather than getting too cute. you won't lose money if that stock goes up three or four dollars in the next few minutes. >> evenmore than that, probably you can think about that 1.65 strike, january will still have at least three bucks of premium in it. i do hear what you're saying >> you get all these inputs right and you get the trade structure wrong. it's a little tight. >> it's an absolutely fair point, if you're looking to get more leverage to the upside, a dollar for the calls is not a great deal on a $165 stock we'll be clear about that. these options like so many of

them are cheap options are cheap for a good reason we've obviously had very low volatility fundamentally, of the two, between this and lowe's, this is clearly the better company, a better managed company you're talking about twice gdp growth on the revenue side >> and a better chart than i think it's terrific. your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know.

>>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.

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call today. comcast business. built for business. comcast business. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome back to "options action." time to take a look back at our open trades. two weeks ago dan made a bet that american express was going to break out >> to me, i think this thing place some catch-up. the price of options is very cheap. i think you want to target that

earnings event in mid-october. to me this is really an easy one, the vol as low as it is, look out the stock was trading today at $86.80 you could buy the october call >> it looks like dan's bet worked out since the time of the trade. american express shares are up 4% and just hit a 52-week high today. dan, what's your next move >> this is how you trade the options. you don't have to read a book to learn how to trade the options >> you should, though. i've got one >> a great book. here's the deal. those cost $1.40 the stock is now at $90.30 those are worth $3.40. i think you roll them up, you take profits on the 87 1/2 strike you say, you originally paid 1.40, you paid $2 in profits. the calls are offered at $1.40, i could buy those, i have a break even at 92.40. i was targeting a move to 95 you roll up that premium and you've locked in, you can't

lose you could lose the new premium you committed to it but you can't lose from the initial trade and you're booking two carter said two weeks ago that mcdonald's run is done. >> my guess is we're going to check back, check back, check back to trend. if i'm long, i want to take profits. if i'm a short seller, you have just you get a 5 to 8% solid >> december, 155, 145 put spread that's a $10 wide put spread goes all the way out to december you could spend 2 1/2 dollars for that >> it's been a bit of a roller coaster ride for the stock mcdonald's fell more than 2% and recovered some of the losses carter, what do you say? >> it's done nothing and the market's surging, massive underperformance a great setup for further trouble. >> this thing has almost no decay. i would stay with it naca fm e tis weets and the fil llrothopon desk i think it's terrific.

your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.

well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate.

the earnings tool from td ameritrade. time for tweets. from josh, he asks, why would you use a debit spread versus a credit spread and vice-versa mike >> if you're expecting a big move and options are cheap, spend money. if you're spect small moves, spend credit >> how do you determine when to roll up or down in an active trade? >> good question, we hit that with the american express trade. it's long in the money, i'm going to take that profit and define my risk a little better >> last word from the options desk >> i want to be offensive and buy home depot i want to be defensive and buy xlu. >> i really like the intel call, i've got to say. >> the intel, this is really important, because you've got to get october 27th, not the october regulars, because earnings fall on the 26th. i like those calls >> our time has expired.

i'm melissa lee. thanks for whapping. for more "options action," check out our website. see you back here next friday at 5:30 p.m. eastern time "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 work somewhere and i promise to help you find it "mad money" starts now hey i'm cramer, welcome to "mad money. welcome to cram america. other people want to make friends i'm trying to make you money. my job to ed katd and teach you. call me at 1-800-734-cnbc or tweet me @jim cramer holy cow, we got through some --