hey there, we're live at the nasdaq marketplace the guys are here getting ready behind me. here's what's coming up on 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. and 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'd 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' the hint ♪ we're going to turn it on ♪ we're going to bring you 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 it because rates have been on a tear the yield in the ten year have hit the highest levels sending bonds toppling what will it mean for the markets. let's get on the money right now, dan. >> it's exciting we had gdp growth of 3% who knows. there should be no reason why rates should not be able to rally with a 3% economy, right sfwh do you all agree with that? for a lot of purposes i would say, i'm being facetious, sarcastic. >> one quarter of 3% annualized growth does not make 3% growth. >> we were thinking about what a quick rise in interest rates

would mean as we go into qt, as we go into a rate tightening cycle. there have been only two rate increases this year. we'll get a third in december. it was below levels from a year ago. for all intents and purposes, it seems a bit range bound. we know the one thing that bankers will point to or potential people would be looking for is if rates pull back janet yellen is on the hot seat. we get this push and pull between dovish. >> the fed balance sheet is one of the levers they have. we also have global levers in play that yellen does not control. the fact is even as our own central bank begins to tighten, that is not the policy anywhere else on earth and money flows very easily. >> it's changing isn't that the story we went from dovish central banks all over the world, we were 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, two six five and consensus was three and a quarter. here we are in october debating about two two, two three that's the big subject nothing's happening. >> carter, you say the rates are about to back up. >> i think so. i think they're going to come off here we've just moved up pretty rapidly. let's 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 is within this channel all year in fact, there's a lot of symmetry between the order of magnitude and the duration of these counter trend move starters, these are all the moves we had, one, two, three, four, five look how similar 25 basis points, 32, 26, 39, 34

what about duration? number of sessions sessions for two weeks two weeks eight, two weeks 12, three weeks 17, three weeks. two to three weeks all between 25 and 35 basis points i'm not sure anything's changed. let's say it does press on rates are low and i'm not sure it's enough to really change the back drop for banks and all of the things but in any event, i'm going to make a bet that utilities can bounce here. two waste i would draw the line, one trying to come back to support. two, we're on this trend line. either way, i think you have a pretty good chance of after this 5, 6% selloff in the xlu, there's a bounce here. >> utilities for a bounce. what do you think? >> i'm going to always go along with carter or most of the time.

xlu. trying to make a trend type trade. it sets up nicely for that i think this is certainly one of those cases. i think we can talk about it a little bit more. i'm looking out to january to the 53 call. you can spend $1.45 on those those are the at the money calls. doesn't take a very big move at all for them 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 not risking a great deal. >> one thing interesting is that's clearly a down trend. could you have a pull back and will people rush back into the xlu? it's active pretty well. it's 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 to your point. options are cheap and it does set up technically i would say that if the market and the economy and all the stuff that we talked about every night on this desk is as good as we think it is, it's all hang around the world, stock market should be able to go up with rising rates they should be for all intents and purposes we have had nothing. what it tells me, what's wrong here you know what i mean why is it rates can't go up? everything is saying all systems go. >> one thing i would throw out and that is that xlu is not like trading tlt. that's a fixed income instrument xlu trades like fixed income, but it isn't these are utility companies. many times you have regulations that impact the earnings earnings can rise in the sector and i think that's an important thing to remember. that in that way it's probably more like trading in inflation adjusted instrument.

>> staples is tied to this they had risks associated to the operating businesses some are on pressures and utilities as an aggregate are going to trade true. either rates are going to move higher and this xlu will not bounce or rates don't do much and the xlu is down to a pretty good rebound. >> and utilities are telecon >> right it's how do you do their businesses, market shares, all of that stuff. >> one final thing i would say where utilities are concerned. we're thinking about the ability for them to maximize generation. storage of batteries, plus the fact that you have electric cars and batteries. that is a potential driver that you can think about. >> all right now to a group of stocks on fire you guessed it the chips. the sma semiconductor surging 30% in 2017. the rally is getting higher.

up double digits are any of these names still a buy? >> second try is going to be a charm. last week i picked the one semiconductor stock they closed down on this week. i want to look at intel. the reason is i think there are a lot of things going for this company. i think they've been digesting a couple of big assets they bought they bought mobileye for $15 billion and there were a couple of a.i. deals in between that. this is a company that's pretty dead set on not missing the next big technology trends the way they did the past few years. when i look at volvo, it's interesting. this is a five year. it's banging up against the 52 week high made earlier this year 38.45. you can see clearly that's a

multi-year look at this this is one of the megacap stocks carter has been talking about this on ""fast money"" for the last couple of months. that has a ton of room to go lastly, trades about 12 1/2 times well below market multiple my bullish these tis sis on this stock for most of this year is you're going to digest this if you get high single digits earnings growth that people are not expecting, you're expecting a $3 earnings level. this can be rerated back to probably, 13, 14 times you have a 45, $46 stock. i think investors will start thinking about that. options prices are cheap i'm looking at the earnings event. i want to look at october 27 i want to target this event. i've been long this stock. considering this is a stock replacement strategy, options prices are cheap you can buy the october 27

weekly 38 call for 85 cents. if you do the math right there, that's about 2.2% of the stock prices if it rallies 10%, it's at the massive resistance, the stock is going higher you see it in the low 50s. >> we rarely talk about the ability to rent options for nothing. this is one of those circumstances. what's going to happen is because they capture the earnings, these are not going to decay the way an option of this tenor normally would effectively if the stock rallies ahead of the earnings event you can monetize this with minimal decay and then if you don't get a move you can sit there at that point and make a determination if you want to stay long i like this trade a lot. >> it's poised that's what that is, those precise levels intel was so not liked because it was not mna related and all of that. we do know that other large cap sort of mature tech names have been quite good.

microsoft has been good, oracle until the recent set back quite good i think this ultimately is going to break out it will catch up and do what the chart implies and it is probably because of the earnings that you're looking at. >> when you say ultimately it will break out, do you think the october catalyst is going to be that ultimate? does that fit the ultimate time line >> sure. you saw the charts dan put there is very precise. it's not only the tops over the past year but it goes back to 2014 all over the context of the huge base so let's say even if it doesn't work, you've got limited down side presumptively. it's kind of a heads you win, tails you lose. >> i want to leave everyone with the one last idea. it moves 3 1/2% on average the day they mention it. 38 call plus 38 put should be worth 3 1/2% on the stock price the day before they announce right now it's only 1.60

you can think of how little decay unless some material news comes out in the meantime. if it does, you'll be glad you have options. >> 80, 85 cents depending on where it was trading when i priced it up today if you think about it, i can tell you this. october 25th, day before earnings, i think that at the money straddle and the put for you is going to be about $1.40, $1.50, something like that just to answer your question about the exact date, i don't know what the numbers are, okay? >> of course. >> i'm telling you this. if they have a beat in raise, the sentiment is so bad -- it's only up 5% stocks, semiconductor is up 30%. this stock is the second largest name in that group it will play very quick catchup. >> digital dividend. >> 28%. all right. for everything "options action" check out our website "options

action action action".cnbc.com here's what's coming up next. >> here's the market and here's your portfolio and we'll give you the stock that will catch you up plus, calling all "options action"s fans. reach into your pocket, grab your phone and tweet us your question at "options action. if it's nice, we'll answer it on air when "options action" returns. >> logical 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.

witness katy perry. witness katy perry become a legal witness.

witness katy perry and left shark. or a card shark. grandma? witness katy perry work. witness katy perry firework. witness katy perry swish. witness katy perry... aaaaaaw look at that dog! katy perry: with music videos and behind the scenes footage, xfinity lets you witness all things me. 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 since 2013. it was a dream team of boeing, apple, mcdonald's, cat, if you missed the rally are there any other names you can play catch up with. carter's got some clues. >> looking at home depot obviously it's making all-time highs, but it's really lagged. certain key aggregates of which it is a big part few charts to that end home depot which is here compared to the dow jones industrial average what we see quite clearly, while it might not seem like a lot, still you're talking about under performance at this point and i think that's going to be sort of narrow home depot versus the dow. here's another way to look at it home depot versus the s&p,

albeit barely but still, too, lagged here is the s&p 500 pure growth, etf. i think there's an opportunity here let's look at the chart. a little bit of data this refers to what we're talking about on the chart ready? i'm not sure we're moving. you saw that let's go forward again here we go all right. here it is got some lines coming. that's a heck of a set that's a breakout from the well-defined comps that's an opportunity. 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 so where we can get back towards

the highs, which i think is every distinct possibility, you've got 10, 12, 15 points i want to be long in it. >> all right so, mike, what's your trade on hd >> i'm trying to take advantage actually of some of the same dynamics that dan has in his intel trade. i'd like to be long in the actions that capture in november i have a feeling whatever happens in the meantime is grad actual they've probably gotten a little bit of a bounce. they're expecting a short one-term pop so specifically what i'm looking at is the $1.65 october-january call spread. i could buy the january $1.65 for $4.65 and sell it at $1.05 i'm getting long that daily call i don't think there's a whole lot in the preearnings options >> do you like the chart >> the chart is a beautiful

breakout it was one of the strongest names in the year and a half of this rally it bucked a lot of trends when we saw things in 2016. prior leaders fell i agree with your technical trade. i love calendars he's selling the shorter and he's setting up to own the longer dated one the only thing with a stock with momentum like this, are you getting too cute with selling the october $1.65. he said 12, 15 points. to me, if you're playing for that breakout and you believe in the charts, you like the fundamental setup into november, holiday selling season, then i think you just buy a january call spread or something like that and you sit with it rather than getting too cute. you won't lose money. >> no, i mean, even more than that probably because you can think about that 1.65 strike as still january, i'm going to have 3 bucks worth of premium. >> we kick ourselves all the time get all of the inputs right and

the trade structure wrong. i'm thinking it is a little tight. >> it's absolutely fair point that if you were looking to get a little bit more leverage to the up side, $1 for the october calls is not a great deal for the $165 stock these options like so many of them are cheap options are cheap for a good reason we've had very low volatility. between this and lowe's, this is the better company five times in earnings. >> yes, i think there will probably be earnings something fundamental that resolved it. up next, chards stocks surging. dan says one of those names right there could go even higher plus, send a tweet to "options action." if nice, we'll answer it later in the show. in the show. more "options action" ahead. 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." time to take a look back at our open trade dan made a bet that american express was going to break out. >> to me i think this thing plays some catch up. implied volatility the price of options is very

cheap. you want to target that earnings event in mid october this is an easy one. with the vol as low as it is look out, when the stock was trading at 86.80, you could buy the october 87 and a half call paying $1.40. >> it looks like dan's bet worked out since the time of the trade american express shares are up 4% what is 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. i've got one. >> yeah. those cost $1.40 the stock is at $90.30 that's worth $3.40. you roll them up take profits on the 87 and a half strike. you say make $2 in profits the october 91 calls are offered at $1.40, okay i'd buy those and i'd have a break even at $92.40 i was targeting a move back to 95 i think that's how you do it

roll up that premium you've locked in you can't lose you can lose the new premium but you can't lose from the initial trade and you're booking $2. >> ko and carter said mcdone 23458d's run was done. >> my guess is that we're just going to check back, check back, check back the trend so i want to fade mcdonald's if i'm wrong, i want to take profits. if i'm a short seller you get a 5 to 10% selloff. >> december 1.55, $1.45 wide put spread $10 wide you can spend $2.50 for that. >> it's been a bit of a roller coaster ride mcdonald's fell more than 2% and recovered some of the losses what do you say? >> stick with it in the sense that it's done nothing and the market is surging which is massive underperformance that's a great setup for further trouble. >> this thing has no decay i'd stay with it. up next, tweets and the final call from the options pits 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. first one is 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, options are cheap, you spend money. that's a debit small moves, they're expensive, credit spread. how do you determine when to roll up or roll down in an active trade >> good question we kind of hit that with the american express trade the call that you were long is in the money now i'm going to take some of those profits and roll it out of the money and define my risk. >> time for the final call carter >> offensive and buy home depot. i want to be defensive and buy xlu. >> i like depot but i like the intel call i've got to say. >> intel, this is important. you have to get october 27th not the october regulars because

earnings fall on the 26th. >> looks like our time is expired. i'm melissa lee. thanks so much for watching. for more "options action", check us out online. don't go anywhere. "mad money" starts right now >> announcer: the following program is a paid advertisement for the hd mirrorcam, brought to you by inventel products, llc. yep, they're out there, driving recklessly, causing accidents, and driving up your insurance rates! this is a show about car accidents... ...classic cars... ...and the hd mirrorcam, the personal security camera for your car. this is... "accidents caught on camera" with the hd mirrorcam. today, we're going to hear from people who have been in accidents and used the