welcome to options action special coverage of the gop tax plan you're looking at a live shot of capitol hill where the final version of the bill was released moments ago. we are awaiting those details and it was tax hopes that fueled the rally today. all major industries today closing at record highs. the dow surging more than 140 points the traders standing by to break down the market moves. tim seymour stuck around but let's get to elon with what is in that bill apparently we're having some difficulty with elon -- >> reporter: is now public >> there we go >> reporter: melissa, as you said, that bill is now public

and here is some additional details that we have learned about what's in it the repatriation rates are slightly higher than what we had been reporting 8% for liquid assets and 15.5% for cash previously we were told that rate would be 15%. also the individual mandate, that repeal will begin in 2019, so a one-year delay of the are repeal of the individual mandate. also on carried interest, we are told the three-year holding period that both the house and the senate have proposed will remain also, first-in, first-out provision that would limit investors' ability to choose when they sell their stock, that is out of the final version of the bill other headline numbers are now confirmed. the corporate rate would be 21% and that would take effect immediately immediately. the top rate for individuals, 37%, and that would apply to individuals with individuals of

$500,000 or above and couples with $600,000 or above one of the key changes that republicans made to the bill was to expand the child tax credit, make more of it refundable in order to win over senator marco rubio. however, they limited the income level at which you can qualify before it was $500,000 they've ratcheted that back to $400,000 that child tax credit would only apply to children who were younger than 17 years of age that is consistent with current law and a little bit less than what rubio had been looking for. so, just a quick rundown of some of the deeper dive details of the bill that we are learning here as its becomes public, melissa. back to you. >> ylan, how does the math shake out? we understand senator rubio moves over to the yes column, senator corker where do the others on the fence shake out? >> reporter: we are still waiting to hear from some of the others, including mike lee, who had worked closely with marco

rubio in order to expand that child tax credit the last we heard, he was undecided. also unclear where susan collins will fall. several of the provisions she had looked for, including expanded s.a.l.t. and expanded medical deductions, those are in the bill but she wanted a vote on health care stabilization legislation and it does not look like that's going to happen before this tax bill comes up for a vote next week >> ylan, thank you in d.c. with a rundown of what is in that tax bill put out by the gop. we saw the rally in today's market the markets are acting as if it's over the goal line at this point. is this something that you should buy >> well, what's remarkable, i can tell you in my own conversations with clients, big mutual funds, pensions, fully half believe it's priced in. >> oh really >> and another halfare like, no, it's more like 60 or 80, implying that there is upside related to this political -- >> which is interesting because if you listen to the street, you

know, my sense is that strategists are now able with some tangible numbers and now they have them, to really put some numbers on eps growth and again, thousand that we can do this for 2018, i'm hearing anywhere from 10% to 18% in terms of eps growth for the s&p. what that means is you have not priced it all in, and probably we're another two-thirds but i agree, it was merely a few weeks ago we were saying this was something that was unclear >> it's interesting. we were talking about it a little on the desk last night. as you get more data and stuff to model, okay, you can start figuring out what it does mean to eps growth and then re-rate some sectors and kind of start thinking about what that means as it relates to the economic growth but you know, that's the one area >> i sense you've got some -- slightly cynical >> i get it. at the end of the day, you know, when you think about it, you can say, okay, so certain sectors should be traded in a market multiple, some may actually see it come in a little bit but then it comes down to, what does it mean for economic growth and jobs and that sort of thing and that's the thing that's going to

be a 2018 argument for most of the year >> i agree with you, but i think at least from the trader point of view, you can have a boost to the stock market without necessarily having that boost to the economy right away >> except for the fact that we are eight years into this bull market and also, you know, pretty late stage in the cycle we're actually going to have global tightening for the first time in a synchronized fashion in 2018. so, to me, i think all those factors are going to come into play >> but for the first three quarters of this bull market, this was an earningsless recovery in other words, we were complaining about the multiple expansion just because rates were so low, s&p was not because of the earnings and growth this tax bill, let's be very clear, this is all about corporate america. this does not really help the individual and in fact, in many states, it really hurts them be clear 21%, the repatriation of cash versus liquid is something that was a little disappointing i bet a lot of guys don't do anything with that number. but 21%. >> that's what makes the rubio posturing to important, not only

what he did but for his perspective going forward. >> that child tax credit thaechted. mike, just before, we were showing by sector who could benefit the most from a decrease in the corporate tax rate. is that where you should invest? >> reporter: well, look, i think when we take a look at what the eps impact is, then obviously you could say this deserves a little bit of a boost in that area i think it's important i think dan and tim were both sort of touching on this to sort of keep some perspective on this when you take a look at the total corporate income tax revenue in the united states, it's surprisingly small, i think, to a lot of people in the context of a $19 trillion gdp. so you're talking about maybe $350 billion how much of that impact actually flows through to the economy broadly isn't going to be that great. i don't actually factor in any kind of a benefit for that, frankly. and also, to the repatriation side, let's remember that a lot of companies that had significant cash overseas found mechanisms to bring that capital

to the states by obviously issuing debt apple is probably the best well-known example of that so you know, i take a look at this i think we've probably 75% baked this into the cake >> well, bank could be one of the biggest beneficiaries. trouble in the charts for the banks. break it down. >> we know this group has caught up with the market financial as a sector is a little bit ahead of the s&p now. the real question is, as a bet, are you really going to get paid for the risk i want to just start with perspective from the prior bull market high. in fact, this is starting from the exact prior bull market high, october of 2007. and if you were simply in the spy versus the xlf, this is what you have yeah you've got this if you're in the market and you've got this if you were in financials i mean, that says a lot.

now, let's look at a few other charts here and then go forward. in fact, at this point, adjusted, you're not even back to new highs now, we know that the total market cap of financials are well above, but because of the share delusion, if you're sitting here in stocks like bank america or citi, you're nowhere near where you were in the '07 peak let's keep going now we have, i think, this is important. this is exactly a year ago this is where we had the euphoria around what is actually happening now. this is the election where financials came to life, and what's happened since, financials have trended higher all year, and yet they've made no progress, absolutely dead flat on a relative basis now, adjusted for risk, financials have not paid you in fact, you have generated negative alpha, so to speak. but that's the question. are they really going to do better going forward take a look at regional banks. this is even worse here's the same line

this is exactly election time, and what we know is actually this is dead flat, and the relative -- this is the most rate sensitive area of the market within financials is down and so i think that is going to be the offset so any positive relating to financials is that interest rates are really stuck. so, if you were to say this was a currency, a stock, commodity, i mean, basically, this is going nowhere. and there's nothing in this chart that i see that suggests any great upside or let's say it is and i'm totally wrong and this is some sort of head and shoulders bottom okay, but all you're talking about is getting up to 2.5, 2.6. are we really going to 3 this is a problem for financials and then finally, let's look at the long-term chart, back to the peaks when they were fighting inflation. here's the trend line. what we know is that you're still well within the down trend. yes, we haven't made a new low, that's important, but in order to validate a new cycle, you'd need to make a new high, so get

above 3.05 i think the taxes and politics are good for financials but they have this burden of a very benign interest rate environment. >> all right i want to go out to mike mike, how are you trading the banks? >> well, i think xlf is the most obvious proxy for financials generally and it's a very liquid and tight market on the options side we saw the vicks close below 10 today and that presents an opportunity. i was looking at the march 27 spread in xlf. you could spend 35 cents for that considering if it went all the way through to that 25 strike, i'm not saying it's going to make that move, you're going to get a payoff of almost 5 to 1 on this trade that's basically taking advantage of the very low premiums but also the fact that out of the money premiums haven't come in as well as the at the money premiums. take a look at the biggest constituents of xlf. we're talking about companies that all are trading at or above

the average analyst price targets so these are companies that essentially are outrunning the people who follow them most closely. >> you don't like financials here >> i like his trade a lot for a couple reasons when it looked like tax was going to be a 2017 thing, the xlf was at 24 in august and went straight to 26 it consolidated, and then it made this other move in the last month and a half or so up to 28. so mike's choosing 27, 25, he's giving himself three months, you don't even need anything as far as rates or tax or this and that, whatever, you can just have a good old-fashioned pullback in the market and this trade offers a really good risk reward so i like the strikes >> got to take a break here but we're all over the big story, the gop releasing the final version of the tax bill. representative brady is set to speak outside his office in just a few moments. we'll bring you the very latests. much more options action on this very busy night. stay tuned >> announcer: want more options action it's easy.

head to our website and sign up for our newsletter we have more than 100,000 subscribers, so what are you waiting for? that's optionsactioncnbc.com . cm m see that's funny, i thought you traded options. i'm not really a wall street guy. >> announcer: options action is sponsored by think or swim eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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and with just a single word, find all the answers you're looking for. because getting what you need should be simple, fast, and easy. download the xfinity my account app or go online today. 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." representative kevin brady, chair of the house ways and means committee is set to speak outside his office at any

moment let's get to ylan with more. >> reporter: well, the house is planning to vote on the tax bill as soon as tuesday that is what we have been hearing with the senate following after that and the one number that republicans are going to be highlighting is that a median family making $73,000, their tax cut, under their plan, according to their analysis, would be $2,059 and republicans have been criticized for their tax plan as primarily benefitting the wealthy because many of the tax cuts for individuals expire versus helping the middle class so, that is a number you can expect to hear them talking about a lot, especially as they use this win as the crown jewel in their legislative agenda, looking forward to 2018. >> so the median income on that figure is $73,000? >> family making $73,000 >> $73,000 the tax break will be $2,059 a year so we know they're going to vote

on tuesday any fireworks expected there smooth sailing to the senate and then we start counting senators at that point? >> i feel like the real question mark here has been the senate. the house has passed this with a very ample margin. the most vocal agitators had been the freedom caucus and conservatives in the house they had been looking for a 20% corporate rate that began immediately. they got half of what they wanted in this bill, 21% but it starts in 2018 so i think they're going to be pretty happy with what they see here we know that republicans had been briefed on this bill, the conference call is either just recently wrapped up or still under way, so republican reaction will start trickling out to this, but i do expect that at least in the house, this is going to be smooth sailing. >> congressman kevin brady to come out and speak at that podium we're going to sneak in a quick break. "options action" will be right back >> announcer: "options action" is sponsored by think or twswimb

td ameritrade. h that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from 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. kevin brady, chairman of the house ways and means committee speaking his office. >> we're also going to have tax relief for families that live in high tax states. we made that commitment. and we achieved that and we now

have a $10,000 deduction for s.a.l.t. taxes, families can fill it up with the way they need for their families. we have a lower top bracket, really a key ask by lawmakers in s.a.l.t. states, but those help everybody in america as well, and then we did achieve even more middle class tax relief and so all that was done to drive tax relief for everyone, regardless of where they live. >> with not attention to the deficit? >> absolutely not. that was continuing to lower the brackets and lower the rates, make sure we're -- we want people to keep more of what they earn wherever they live and we achieved that. >> can you talk about the timeline of votes first, house, senate also, what about -- does that -- >> well, i always leave the

timing in the vote to schedule for our leadership i do know we'll be returning monday to begin the rules process. the votes in the house and senate will occur after that the timing, i'll leave sequenced to our speaker and leader, and yes, i do predict both the house and senate will approve this tax reform bill. lots of momentum building. >> can you discuss what some of the revenue raisers were to make -- >> well, i would direct you -- we will have joint committee on taxation will lay out the revenue tables here shortly. what you'll see is that there were adjustmented made throughout the whole tax reform bill there wasn't any one or two provisions that allowed us to stay under the $1.5 trillion it really was a combination of different adjustments in different areas, which we think is the most balanced way to do

it >> are you confident that the -- or will there be some people that will see a slight increase? >> look, i think -- no i know everyone's lives will be better off under tax reform, because of the tax relief families get, because of the higher paychecks, because we have a stronger economy, and again, this is all about also bringing back jobs from overseas which, if we had not acted now, we would continue to see our headquarters, our research, our manufacturing, and our jobs leave the country. and so, the combination of that will raise paychecks and allow you to keep more of what you earn maybe -- and this isn't really talked about much, but we need a tax code where our local businesses can compete and win anywhere in the world, including here at home we achieved that

>> we've been listening to kevin brady, the chairman of the house ways and means committee speaking about the gop tax bill just about 20 minutes after the official filing of that bill what we know now is the house will vote on the bill on tuesday, which clears the way for the senate to vote sometime later in the week. tim, what do you think of what he's talking about he thinks it's going to clear. what does it mean for the market >> and that's what we're here to talk about i get back to the consumer discretionary or the core retail big box place. think of -- i realize this isn't a name you think about it. but 39% effective tax rate, totally domestic story home depot is paying 36% and if you think that the mortgage deduction isn't a big deal, these guys are the biggest beneficiaries. >> still ahead, there's a dow stock that one of our traders says is about to take off. we'll tell you the name and how high it could go much more "options action" right after this >> announcer: "options action" is sponsor bed by think or swimy td ameritrade. complicated, you know?els too

well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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you're going through a lot right now and i know you're scared. but you're stronger than you know. but look, we'll get through this together. and remember... we at the imaginary friends society always have your back! 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." chip stocks have been one of the hottest trades of the year surging nearly 40% for its best year since 2009, and check out some of the big players in this space. breaking out in the last six months, micron is up a whopping 38%. intel is up. dan's been hot on the space. you're looking for a bigger breakout >> specifically hot on intel for a whole host of reasons but we don't have a lot of time to get into fundamental reasons i think some of the fundamental moves that the company had making through acquisitions and such over the last two years are paying off look at that one-year chart right there. massive breakout after q3 earnings it just checked back to that, and it kind of helped. we have a five-year chart. look at this epic breakout that it just kind of embarked on here, maybe there's a little bit more room to the downside, a gap fill, that sort of thing but look at the 20-year chart here there is, what does louise say the longer the base, the higher the space. this thing has got to support down about 5%, 10%, and you want to be along it and to me in the

near term you want to set up with a short-term call calendar, you want to finance the purchase of longer data calls so today when the stock was trading at 44.60, you could sell one of the january 47 calls for 30 cents, buy one of the february 47 calls for 80 cents that call calendar cost you 50 cents. i'm selling the january to buy the february, because january options will not catch their q4 earnings on january 25th, but feb will i think it will be the catalyst. earnings will be the catalyst. you want to own them i like this call calendar as a way to get long intel in the new year >> mike, quickly, what do you think of the trade >> first of all, i definitely like calendars the other thing is, when you think a stock is going to move in a direction, do what dan has done and choose a strike where you think the stock is going to go this is a good trade >> carter, how did the charts work >> did you see those charts? >> i mean, i don't know. >> those are great lines the breakout's real. let it rip >> you country cur

you lisle intel. >> fundamentally, if you think about what's going on, the last 18 months has been a draw down of inventories, inventory build will help this cycle, it's a longer cycle for these guys. stay long semis. >> if there's one copy out about this trade, what would it be >> near term, could it fill that gap? that's why i'm trying to finance the longer date calls and i like calendars in a period like that where things should settle down a little i'm selling january. 47 is also that prior resistance, so it could come up there and stay there that's really what i want it to do is inch forward over the next few months >> time for the final call mike, out to you first >> yeah, if you think financials are going to pull back a bit right now, the march 27, 25 spread looks like a good deal. >> dan >> i like that xlf trade, obviously, and i also like figuring out ways to get long intel. >> carter. >> xlf, the problem is that rates, i do not believe, are going anywhere fast. >> tim, thanks for sticking around for us tonight. >> great to be here. sad day for us here on "options

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