hey there, live at the nasdaq market. getting ready for christmas. what's coming up on the show -- ♪ now that you've sooner the ne chevrolet ♪ and a somewhat savannah new way ♪ hope you'll place your order for the '59 chevy ♪ >> better ways to get a gm we'll show you how plus, a classic investment theory is flashing a buy sign for one dow stock. here's a hint.

♪ who let the dogs out, hoo, hoo, hoo, hoo ♪ >> we'll give you the name, and how would you like to buy micron for under $5 >> all: that's incredible! >> no, it's not. it's just my co-signature option strategy and we'll show you how you can do it, too it's time to risk less and make more the action begins right now. let's get right to it, because autos are kicking into high gear. check out shares up 70% in the last six months. gm and toyota surging and ford up and all stocks on base for their best annual performance since 2013 could any of these names jump-start your portfolios let's get "on the money" right now. looking at gm? >> as of six months ago, detroit automakers dead. caught a bid this fall autonomous vehicles, electric

vehicles, all of these technical, or technology themes that are playing very well with some of their competitors. with private companies like uber and part of alphabet, that sort of thing all of a sudden gm caught a bid. stock rallied 30% i think from september to late october, early november at that point on this show, actually i was fading that move. a little too far, too fast gm's pulled back now i think the very themes will be important in 2018 and you could be a -- could be a great investment thesis. carla will speak to this i like the breakout. pulled back to that breakout level. holds here, to me looks like a decemberant entry for a long as we think about early 2018 setups. >> long? >> to me, do something we did last week on the show. look at call calendars at a holiday period. things could be quiet the next week, week and a half. then into january. may see people take profits.

those situations set up good for call calendars selling short dated calls buying longer when targeting. today when gm traded at $42 i bought the january, february 43 strike call calendar sold one of the january 43 calls at 60 cents. bought a february 43 call for $1.20. cost me 60 cents my max risk. what i want to do the next weeks, as the stock moves towards the 43 strike, expire worthless. be long. the february 43 call for 60 cents. at that point i'm targeting earnings event q4 earnings fall in february i hope the guidance catalyzes this stock for a meaningful breakout off the hold of the 42 4re678. >> mike, would you have traded >> the think about general motors, the company is incredibly cheap trading agents over seven times earnings stock price approximately where

it was christmas of 2013, and the company's made $35 billion since then and going to sell 10 million cars in full year 2017 i like it as a valuation story i think people discounted autos far too much the call calendar, i like that structure just for this season in particular for the reason's stan outlined. in general, because the stock is so cheap, be long, longer dated calls here because you might have tax gains, selling in january, the call calendar might make sense here. >> carter? >> if one looked at the general theme of autos, there's a lot of talk of peak sales and quality of lending going down, but we do know there's an atf that captures all of them a cute symbol. carz, carz, daimler, bmw, ford, porsche, tesla, ferrari, everything in terms of gm, the chart dan had on the screen, dead set right. break out and check back to the point from when you broke out,

it's the definition of what a reset or a repivot is. you then get the initial breakout plus some much better than ford as a pattern. at least from my seat. >> does it look better than the others >> some better than others toyota particularly good like that one. ferrari in trouble tesla, too it's case by case. gm is as good as any. >> the main fundamental reason i'm looking at gm, investors want to find value and something to increase the value. to me, invested in liyft, the sorts of things investors may start to rerate the stock higher if they see some, a big plan where they could be a leader in autonomous fleets or ev that sort of thing. sets up as an interesting trade. again, defining risk 1%, 1.5% of stock price. optionality heading into january. >> move on a record year for records.

the dow sets near all-time highs, the classic dogs of the dog theory point to big gains in the new year, in the index breaking it down, a guy who know the a dog or two cnbc's dom chu. >> i have two of my own. a habbenese, lucy and tibetan terrier, the blonde 30-pound one. i'm not the only dog guy out there. some investors taking stock who the dogs of the dow will be in 2018 quick refresher. dogs of the dow, a screen slash investment model ten highest yielding stocks in the dow. buy and hold them a year rinse and repeat the thinking is that the highest yielders often are stocks that have gotten beaten up and due for a bounce collecting a better than average dividend. as things stand now, here's how the new dogs will look for the new year in the number ten spot, it's general electric, yielding about 2.75% after a dividend cut

nine, procter & gamble, close to 3% cisco systems around that 3% mark a hair above coca-cola, 3.2%. merck at 3.4%. chevron, 3.5%. exxon mobile north of that, about 3.7% feiser comes in at 3.5%. ibm, 3.9% and top of the heap dividend yield, verizon, 4.4%. there you have it, melissa any of these stocks may become the best in breed and may a question for traders and investors next year. backs to you. >> thank you, dom. >> by the way, merry christmas. >> oh, merry christmas to you, dom! dom chu in the newsroom. hardest working man on the show. on at 5:00 this morning on worldwide exchange. carter is taking a deeper dive in the dogs in the dow theory looking a the a name that could break out next year. carter head to the flat board. >> try to pick one so obviously, you can only pick

from those names that have the highest yield, typically meaning been bad performers. let's look at the -- the investment results of this premise. this is the dogs of the dow. 1989 to present. and this is kind of quite remarkable, actually $10,000 invested in the dow. you've got yourself a nine bagger and you've got this -- if you simply went after that stock or the one you pick with a very high dividend yield. half of all returns, because of dividend yeeds, look at s&p and dow. the heart and soul of this income is as much important as appreciation anyway -- what i'm going to do is pick chevron, but here is that chart to show you. again, this is an epic kind of thing. you've got the dow versus dogs of the duh over the last several decades. not even close

so while you might want to pick the one i pick, you also can pick among all of these and dom just talked about them marquee names that everyone knows offering decent yields so i want to show you actually the actual stats on this, these dogs this is their current dividend yield as a basket. versus -- the market or the dow right? you got 100 basis points more in yield. look at the year-to-date performance. it's telling talking about the dogs, right? in a big year. the dow we know is up 25%. so if you believe in mean reversion, that's what a lot of this is, that's the bet that one is making by going after losers. that's what this group is. go nowhere, dow up, 25%. must be a loser. the loser i pick is chevron. year-to-date wipeout. chevron has done this. dow this keep going here is over the last five years. you can see the numbers.

chevron lagging. here's ten years well, ten year's not there go to the absolute chart how to draw the lines. chevron itself, i think draw it this way cup and handle cup and handle, resolved up and out. let's clear it draw it this way a nice wedge breakout and check back and now i think you -- already seeing it -- pivot higher okay long-term chart. going back to its all-time peak at about 135 i think you could say this -- here's the wedge just to get back to the high give us about a 10% move i think you could draw it this way. again, this is a five year got the head and shoulders, just to get back to thehigh good momentum here this is my dogs of the dow pick for 2018 >> all right so let's go to mike. how are you trading chevron?

>> yes interesting. a relatively low volatility name, although had a good move off the midyear low. i think you want to buy a call spread here. looking at the march 125, 135 call thread for $3.20. lookingality it earlier today. i would like, as dan has done, try to find options to sell. frankly a little too cheap to sell down side in this one i think this is a way to basically risk a little less than 3% of the stock price to make a bullish bet through march. >> dan what do you make of this trade? >> that charting was surgical. shows you how you really have to look at different time frames, too and why we use the charts to inform the strikes mike is using a 125. nice support in targeting 135. to mike's point, that call spread that cost about $3 is about 2.5% of the stock price. that exposure the next few months makes sense a great-looking setup whether you like oil stocks or not.

>> and looking at this in the context of dogs of the dow how does it compare to other integrateds? >> and chevron, and its competitor exxon pick your dog with the dow pick and get it wrong every year. the principle here is what matters. as an aggregate, those that have performed poorly that have a high yield, have a way of catching up having lagged by so much. >> mike, to you? >> obviously one of these issues a lotof these integrated oil companies haven't been replacing their reserves and obviously, if they're not interested in investing gives us doubt one. reasons a call spread makes sense. if we get news, that could result in a dividend cut like in ge, presents a down side risk and this is a way to make a bullish bet without risking a great deal. >> for everything "options action," check out our website and sign up for our app. perfect for the christmas holiday. meantime, here's what's coming up next

>> tomorrow morning, 10:00 a.m.! santa's coming to town >> santa oh, my god >> announcer: yep. santa is coming to town, and in honor of the big guy, we've got a fetie i festive way to give l micron for less than $50 and reach into your pocket, grab your phone and tweet us your question @optionsaction. if it's nice we'll answer it on-air, when "options action" returns. >> logical >> announcer: "options action" is sponsored by -- what's the he 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

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.

i'm not really a, i thought wall street guy.ns. what's the hesitation? 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

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. action." time to look at open trades. two weeks ago dan said cosco's big run was done. >> look at this earnings event next week it sets up i think massive ramp in costco over the next month and a half ago a good opportunity short from a trade do it with a fine risk makes sense. look out to january expiration

today the stock traded at 188 buy the january 185, 175 put spread paying $2.50 for that. >> since the time of the trade costco's rallied to a new high and since pulled back. how do you manage the trade? >> got the fundamental situation wrong. carter correct on the breakout it didn't hold a tough situation. stock lower than when i put the trade on the trade i paid $2.50 for, $10 wide sput-of-put spread out to expiration, yesterday trading $1.85 get out on chinange i closed it. you want to move on. depending how convicted i could see it back to near $1.80 in the near-te near-term. >> and the dow set to soar higher. >> look at how the stock behaved. we can see the move especially most recently has been particularly sharp i'm looking at this level from

whence it moved. i look at the february, 265. 285. 305. call spread, buy the 285, sell the 265. whole trade costs about $3.30. >> that was a good call. since the time of trade, risen nearly 5% trading meree ining n high mike what do you do with boeing next >> still like the stock. actually adjust it not a usual situation. implied volatility has gone up as the stock has gone up setting up trades now if you want to initiate them now. close this one put on a reversal or broader strike than that, out to march. >> carter? >> we know it's come a long way. look at micron up 100% on the year boeing up 90 a different animal industrial company to look forward figure out orders.

tech can do anything i would be inclined to reduce, if i were a long-term holder right calls, do something in the sense this is always a risk of a checkback. >> also take profits >> yeah. a great trade. in the middle. guys got the direction right, fundamental story right. >> up next, tweets and the final call from the "options action" desk stay tuned you traded optio >> announcer: "options action" is sponsored by -- what's the hesitation? 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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>>i don't know. >>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 top "options action." time to take tweets. first from edward asks any thoughts on selling a put spread into cat earnings in january mike >> i like these types of plays from moderately bullish moves but this stock had a huge run and maybe extended take a punter with calls. >> because it's almost christmas marco had to ask, have traders finished christmas shopping? to dan for that. dan? >> shopping for hanukkah for weeks.

i'm all set. >> all right time for the "final call." last word from the options pits. mike >> merry christmas tree in micron. >> oh, gosh. carter >> merry christmas, buy chevron. >> dan >> calendars, look do to it in the end. happy christmas. don't go anywhere. "mad money" is up next following paid presentationncee is proudly brought to you by samsung. delivering you innovation and technology, and quality connected home electronics, appliances, phones, televisions, computer tablets, and more. samsung. when you walk in the door, does your home feel noticeably different, fresh and clean, like the cleaning service just left? do your senses tell you, it's okay to relax because the work is really done? how would you feel to just see the fresh lines from the vacuum, the pet hair, dust bunnies, and the crumbs have just disappeared? you can have that, daily. you should.