we're live at the nasdaq market site on this chilly friday afternoon. look who stuck around? guy. well, guy and the crew are getting ready, here's what's coming up on the show. >> my fellow americans, our long national nightmare is over. >> that's what investors hope is the case with struggling shares of general electric, and they might get their wish come monday we'll explain why. plus, the walmart price. >> just hit an all-time high, and there's something that suggests shares could go even higher when the company reports earnings next week we'll break it down.

and here's what shares of roku are doing but if you missed the move, we'll tell you how to get long for less the action begins right now. let's get right to it because we are heading into another busy week for retail earnings target, best buy, home depot, gap and walmart all out with reports but the big moves could come from the big box names. the options market implying the 4% move in either direction for target and walmart a 6% move for target how do you play these names into money and spin the money you're taking a look a walmart hit an all-time high today. >> take a look at walmart number one because it hit an all-time high number two, because it's trading 20 times earnings. this is the haves and have notes in retail, isn't it? this is what you've talked about, the relatively high implied move implying a move under 4% normally a good deal lower than that 2.3, 2.4%. is what we normally expect i think we can take advantage of

people do feel like there can be more of a move i don't think it's going to be a huge surprise most likely. we will look to try to sell some of the near dated premium. i think the best way we can do this is look at a calendar spread i was looking at the november-january call spread you can spend $2.50 to the bijanry 2.5 calls, sell the novembers against it, spend $1.40 to do the trade. this is going to make some money if the stock does drift a little higher or even a little bit through it otherwise, that shorter dated call will roll off and you'll own that other call for a relatively low price that's a nice way to maintain a long position in a name that's had really quite a run. >> yeah, it has quite a run really in the last month or so if you think about it. it was consolidating pretty well definitely outperforming the rest of retail especially most of the big box guys my view is into an event like this when you have a stock trading at an all-time high after such a sharp rally in such a short period of time, it makes sense to define your risk. i like the idea of a call spread

because if you are wrong, you're risinging a little more than 1% of the stock price a lot of retail acted very poorly you're choosing one that actually is a leader x amazon. >> even once that have done okay lately, target bad on the year but better lately trades at a big discount to where walmart is they're getting a lot of credit basically, you know, for trying to go into the online space despite the fact the company still has a big bricks and mortar presence. million employees. they still have the legacy problem. i stuck around. >> i know. we tried to remove you forcibly from the set but the chair wouldn't roll. >> your loss or my gain or something -- look, we're talking about walmart real quick >> yes >> you mentioned an all-time high it also traded up to level that it failed at the end of 2014, the beginning of 2015. if you recall, because i do, you saw a pretty precipitous drop. all throughout the year. not to suggest we're on the precipes of that why do i mention it?

because walmart does trade at a premium. walmart's had a huge move over the last six weeks target trades at a discount. i would submit, we've said this on july 13th, when, when you were sitting in the middle at 6:32 in the morning, i was on your right >> wow. >> you came out and preannounced the upside and i said at 52 bucks there's something going on here i think that stock goes higher trading 61 what does it mean, you stay with target, take money off the table with walmart. >> i have a question letting it go through january do you have any indication on holiday sales that could be another opportunity for the stock to move. if it doesn't work out >> are we going to get an example from walmart or retail and yes, you definitely do get clues on what's going on in retail before the january expiration date of this option we will see retail sales numbers a couple times between now and then and get a lot o boots on the ground analysis. which will give us flavor on how it's going >> just one thing on the actual trade structure. the idea of a call calendar, he's selling the near dated premium and long the jan, then a lot of times the way i think of it if this stock were to move up or stay around here, then

he ends up financing owning that jan call which actually may be a great time to own it, especially after this big run if it's going to consolidate a little bit. this is a smart options trade. >> there are two things you could do after this november expiration rolls off if it goes up enough, you can sell a higher strike january call against it. if it does trade sideways or slightly lower, you can look at to sell the tests against it to continue to try to finance that trade through january. >> let's broaden that out, since you're here, guy, you're the straddle between "options action" and "fast money." >> this is my seventh or eighth time on the show. in my world i'm like a regular >> yeah. who's counting. >> i am. >> anyway. of these big box retailers - >> yes. >> which one would you like most >> >> interearnings target, tgt i think they told you something in july. they were clearly behind the 8 ball for i would say eight to 12 months behind walmart. but i think they finally got their act together and on valuation target makes sense we talked be about jwn a few days ago on the show "fast

money" that airs from 5:00 to 6:00 monday through thursday, dan, stop making faces at me and potential for a double bottom huge short interest look for a pop and you have about a 5% pop. i think there's more room for the upside there >> do you like target, too >> i do. it's trading 13.5% earnings. your room for error in that name is obviously a lot better. they do occupy a similar space i think, you know, the issue, walmart is getting a lot of credit for doing things although i don't know that that's translating in terms of magnitude. it's a big shift so they have to do a lot of things right i do think target is compelling it here. now let's move on to general electric the stock getting a boost ahead of its investor day on monday. despite the rally shares are down 35% this year shedding $99 billion in market cap and that's put the state of the stock's dividend into question will they announce a cut morgan brennan in the newsroom with a look at what we can expect morgan >> melissa, that is the biggest question on wall street.

that's the one they want the answer will ge cut the dividend the ceo called the cash flow, quote, horrible after last month's earnings so the expectation increasingly that it will to put that potential scenario in perspective the last time ge cut was 2009. that was during the recession. the only other time since 1899 when it started paying out a dividend, 1939 the great depression this would be a big deal the other big topics, there's a number of them that everyone's looking for answers to flannery's looking to cut $3 billion in costs through 2018. will that target get more aggressive especially as more layoffs seem to be coming? for example, according to reuters, now layoffs in ge digital. other questions, what will comprise flannery pledged $20 billion in divestiture transportation, health care, lighting, baker hughes, these are some of the companies that have been tossed around in speculation especially since ge does have a hefty debt load to counter. lastly, in light of all of this, what's the new profit guidance ge still technically has a $2

per share target for 2018. it's outdated. analysts have disregarded that for months now the current consensus on the street, $1.14 per share for 2018 there is a lot on tap from flannery as well as the new cfo, jamie miller and the ceos of aviation and power all of this is going to start at 9:00 a.m. eastern on monday. meantime, if you take a look at shares of ge they did close this week higher. they rallied today they are still down about 20% since flannery announced this event back in late july. that was right before he took the helm as ceo. melissa? >> morgan, thank you morgan brennan in the newsroom dan is actually making a call on ge into the event. why don't you head over to the plasma. >> i will head over to the plasma here's the thing morgan brennan did a nice job describing what went on or what has been going on. with ge. >> you okay, guy >> i'm all right. >> massively under performed its industrial peers over the last couple years here.

then all of a sudden things have gotten confused. there's been management changes and a lot of uncertainty about what that earnings power is going to be. what this company is, this big conglomerate, how do you value all the pieces of it to me, november 13th, that's monday you have this event. john flannery seems to be the right guy to kind of re-right this ship here it could be a little messy in the near term. that's why i think it makes sense to be contrarian using options defining your risk here's a five year chart of ge it's pretty much a disaster here one thing i think is pretty interesting. this is the flash fast crash in august of 2015 look where the stock seemed to have stopped for now it's consolidated a lil bit over the last week here as investors start to kind of think about what could come out at this meeting next week. i want to flash forward to the one year chart, okay so this is that 35% drop that we've kind of described. this is in a year when the s&p 500 is up 15%.

this is what i want to focus on right here, when all of the earnings were coming out in q3, and the guy down here, the stock about 24, it went right down to 20 it's consolidated a little bit to me, i think it makes sense to target looking out a couple of months but target some sort of bottom coming in this stock and getting back to that $24 level where it just broke down here's one point though. this is applied volatility, the price of options it's been moving higher. the stock moving lower there's a lot of uncertainty here here's the thing buying premium long premium buying calls is an expensive way to do it i think you want to sell something against it today when the stock was trading at 20.50 i wanted to look out to january expiration and i wanted to buy a vertical call spread i wanted to define my risk, the premium i'm spending today when the stock was $20.50 you could buy the january $20.24 call spread paying $1.10 for that and buying one of the january 20 calls for $1. 25 i'm selling one of the

january 24 calls at 15 cents my max risk is $1.10. i start making money at $21.10 i can make up to 2.90 at $24 that's a pretty good level to target in the near term. one other reason why i'm looking at the january expiration, it's going to be messy between now and the end of the year as far as what investors get comfortable about with this company and the future direction of it. it's down 35% of the year. worst performing stock in the dow. maybe we see some new year action so to me i like the risk/reward. in this trade. it's already 50 cents in the money an then i basically have the potential to make close to three times what i'm risking. >> mike, there are a couple of questions to ask first, do you like dan's trade in light of what he believes about ge, that the stock is near bottom and do you believe that stock is near bottom >> first of all i think the new management team and the changes they're making are the right track. this is one of those situations though where this comes down to make a lot of changes, right so these problems are not going to be easy to fix. it's not going to be quick to fix them

some of the businesses are talking about selling and spinning off basically like the locomotive business. it's one example it's not that easy if you are inclined to make a contrarian bet this is definitely the way you're going to want to do it you're risking less than i think 5% of the stock price right here and kite move that much. they were talking about the high debt level that company has, shy of $140 billion in debt. the higher the debt level the more volatile the level becomes. as the stock prices drop options prices haven't come down enough to go along with that. i do think this is way to play it >> guy >> game on on monday monday is the 13th monday is general electric investor meeting we're going to learn a lot more, i think. we've seen in the last couple of months company reports earnings, two weeks later they speak at a meeting and they say something totally out of the blue. we can rattle off the companies. maybe celgene being one but i digress. the point being, you'll know more at this time on monday i hear what dan is saying. you have to ask the right

questions. what is the right multiple for general electric a company with no earnings growth compared to a honeywell that will grow from 11 to 13% should they be trading at the same multiple? i've said no for quite some time and you see the out performance of honeywell at a certain point you will find equilibrium at ge. i don't think it's 20 bucks. i think dan is giving himself time which makes sense in the here and now as dan said and mike said, there's going to be some murky waters. >> yeah, just real quickly on the event, you're either going to get a capitulation. where they cut the dividend and everything sounds nasty and you see a stock in the high teens or the thing will solidify and you'll see trade structures playing for a move back to the mid 20s. to me i like the risk/reward >> for everything "options action" check out our web site optionsaction.cnbc.com while you're there you can see our newsletter it's what guy reads every night before bed what are you waiting for here's what's coming up next. >> roku shares are running wild, but if you missed the move,

we'll show you how to get long for next -- for less. plus, calling all "options action" fans reach into your pocket, grab your phone and tweet your question @options action if it's nice, we'll answer it on air when "options action" returns. 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. welcome back to "options action." check out shares of roku skyrocketing this week after

blowout earnings the stock is up nearly 150% since its public debut in september making it one of the best performing tech ipos of the year if you want to get in on the rally, how can you do it for less mike is at the plasma with the call to action >> it can be awfully challenging to buy a stock after it's had such a sharp rise like this one has. we're going to take a look at a way we can do that selling a put. the stock has risen sharply. we'd like to buy it at a price lower than that. secondly, because the stock is moving around so sharply and it's a recent ipo, the options are extremely expensive. we want to take advantage of that the other thing we're going to try to do because we saw how big the move was this time, we're going to try to avoid th next earnings because we're probably going to see another big, sharp move. here we can take a look at how big this move was. we may get a move as large as this one when we look at the next earnings. what are we looking at for this? look out to january. when i was looking at this today, you can sell the january 35 put for $6. in fact, it closes with a 7 bid. you can sell that for $7 at this point. what does that mean?

it means that you could be forced to buy the stock at $35 but net of the 7 you collected your purchase price is going to be just $28 which happens to correspond with the not updated analyst target prices for the stock. this is a way that you can try to get in at slightly lower levels than where it's currently trading. >> what do you think of mike's trade? >> do i get to comment on roku >> yes >> the trade makes total sense when we look at the situations over the years when we have these small floats, they're high short interests and this opportunity to sell a put, effectively get involved much lower levels worst case scenario, between now and january is the stock will go through the difference of the strike and the premium that you sold then you are losing money. i don't think that's likely to happen the next opportunity for that to happen would be some competitive announcement, that's where i want to talk about roku, or some types of earnings missed or something like that which is going to happen after january. expiration to me, this seems like a good way to

take in some premium over the next couple of months. >> the worst thing that can happen to you if you take the trade, you will own the stock at $28. a pretty big discount to where it closed today, just under $34. obviously i think a lot of people are looking at this, one of the things the company said, i happen to agree, we're all going to be streaming, right they have a huge secular tailwind the valuation, we can't talk about valuation in a company like this. >> let me remind you of -- >> they're all high. >> fitbit and go pro came public the ceos told me everybody is going to be using health bands, everyone is going to be go proing it seems kind of similar, don't you think? >> where are your gopros and fitbits right now? >> in my drawer. >> and where's your roku. >> active accounts for roku, 16.7 million they were 11.3 million last year at the same time that's pretty significant growth i get it they're doing something right. this is the deep end of the pool trade, folks all of the people who watch oa understand to mike's point, everybody that came out on the analyst's front initiated on october 22nd with

22, $28 price target i thin mahanes, he was 28, all going to have to rachet it up the level that you're going to wind up being long this stock, worst case, is not the worst thing in the world. >> do you subscribe to roku? >> no. >> i just subscribed i'm telling you, i will bet you that six months from now you probably will be. >> oh, with a lot more people. >> what do you mean? >> all right still ahead, shares of general motors have been in reverse falling 9% since its high a few weeks ago that's good news for our friend dan. he will explain why. got a question, send us a tweet, if it's nice one of the traders will answer it later in the show much more "ing ones action -- options action" right after this 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.

...from godaddy! in fact, 68% of people who have built their... ...website using gocentral, did it in under an hour, and you can too. build a better website - in under an hour. with gocentral from godaddy.

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 time to take a look back ot some of our open trades last week mike made a bearish bet into snap into earnings. >> this is not a very good picture for me i think one of the fundamental reasons for that they're competing with facebook. facebook was one of the names that actually did well as the earnings progressed because the company was doing well i think they're going to have a much harder time what i'm looking to do is sell those very expensive november 10 weekly puts.

they collect 65 cents for those and use those proceeds to help finance the purchase of the same strike, the january 14th for 1.10. >> well, the stock fell more than 16% this week so mike got the direction right on the trade. wrong structure. >> yeah. well, i mean so we paid 45 cents today. it closed -- the short one went off. the trade was made 75 cents over 45 30 cents profit. not that big obviously the magnitude was bigger than the bearish move i anticipated. you can roll that position out to basically the same strike. >> now to gm last month dan thought it was time to pump the brakes on the stock. >> to me, i just think it's gone a little too far too fast here because a lot of the stuff that this company needs to transition and do is going to take some time when you think about it from an earnings standpoint. earnings are expected to climb next year year over year so this is a very cyclical story. there's obviously some huge secular head winds

when the stock was trading $44.80 today you could buy the november $44.40 put spread paying 80 cents for that >> since the time of the trade the stock actually rallied to a new high but then fell so what do you do now, dan >> so you have one week expiration the stock is down $2. the trade is up 50% in premium terms. at one point it was double this week. that's when i would have looked to have taken it off the risk/reward isn't so hot there, playing down to the short 40 strike. to me i think you probably take profits early next week and move on. >> what happened to gm >> i think this is a chance to trade at 40. >> this is a stock that went from 35 to 45 in basically a month. in trader parlance, there's something called a back and fill why are you shaking your head? >> also. >> get him on camera doing that. it's mean. >> 50% retracement of that move is 40 bucks. i think gm will print -- >> that's what i was going for thank you. >> thank you. up next, your 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.

i am the proud father of aeness very strong little girl named adelaide who was diagnosed with infantile spasms an incurable and debilitating form of epilepsy. it's been a devastating journey that has robbed my baby girl of normal development. that's why i have launched the my shot at epilepsy campaign and i'm asking you to join me. take your shot at the hamilton pose, donate to help us find a cure, and lastly, share it on social media. this is our shot to take. learn more at: myshotatepilepsy.org 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 your tweets our first fan ian says what is the best way to play the rumored acquisition of mattel by hasbro. mike >> the most classic trade in options for this is the buy right. buy the stock, sell the calls at the strike where you think that acquisition is going to take place. that's a way to risk guard, guys. time for the final trade -- final call, excuse me. last word from the options pits. mike. >> rather than buying roku the stock sell that january 35 put for 7 bucks. >> yeah, so ge, obviously it's a little dicey here. i think you could have the stock back towards 18 if the news isn't fantastic. you have time to play it out i like contrarian plays. long january calls >> thanks for having me. >> oh, yeah. >> joy for me to be here can i give you a history lesson quickly. on the 11th hour of the 11th day of the 11th month in 1918, major

hostilities of world war i ended. what did that create anybody? veterans day >> oh. >> veterans day. that's tomorrow. so you know what, thank a vet tomorrow, folks. >> all right looks like our time is expired thanks for watching. stay tuned "mad money" is up next >> announcer: the following is a paid presentation for volaire, brought to you by junee brands. >> people ask me all the time, what's my secret for beautiful hair -- hair that just moves with natural, gorgeous, weightless volume. my secret? one word -- volaire. >> look how much hair i have. it feels like i have so much more hair than i really do. i love it! >> it feels like there's an air machine literally lifting my hair. >> i've never seen my hair go from zero to 60 in one go. i'm never using anything except volaire. >> announcer: introducing volaire, the easiest three-step