we're live at the nasdaq market site on this freezing friday afternoon look who decided to stick around for the good old oa, brian kelly, even put on his fancy jacket here's what's coming up in the show ♪ back in the saddle again >> that's what some traders are saying about bitcoin, which is surging again. an options traders see bigger gains for crypto related stocks. we'll tell you how to profit plus, talk about a bank job. >> this is a robbery. >> financials have surged into earnings but if you're tempted to buy,

you may want to wait until after they report. we'll explain. and -- a big event next week could send one of these stocks surging, we'll tell you which one and what it means for the biotech space. it's time to risk less and make more the action begins right now. let's get right to it. the big banks officially kick off earnings season next week and the options market is implying pretty big moves. wells fargo and pnc could see a 3% jolt in either direction. 2% move in either direction for black rock financials one of the best performing sectors over the last year, up 21% how should you play these names into earnings? let's get right to it. carter worth, at the plaza, ready to go. >> it's true as a sector, financials are pacing the market up a bit more. what's interesting it's so dependent on names like american express, big insurance companies

like travelers if you look at the banks, the banks themselves have trailed the market and regional banks have really trailed. let's look at the few charts i don't like banks here and we'll end up with jp morgan. here we have the bkx, citi, jp morgan and wells fargo and so forth. by all accounts you call this a nice uptrend but the question is is it delivering results meaning is it outperforming the market so what i would have you look at then is a little bit longer term and now here's that trend line and here's the, again, new highs over the past two years, keep that on your retina and letend g on to relative charts. same index over the past two years and this is the important part, again, since the election, up, relative performance, that's what matters, you could have avoided this or bought bitcoin,

meaning choice matters, under performing and i'm not sure i'll see something that changes that. jp morgan, now, the key here is yes, it's making new highs, but look what's happening relative so if i add a line right here, this is going to tell you exactly what i think the issue is yes, it's gone up of late. but it's not participating with the general market and overall, it's made no real relative results in about two years. it as a pick didn't do anything other than one could have done by being in the spy. and that's the issue i think what we have here is a stock that has checked back to trend, checked back to trend and i think you have the risk that you check back to trend again on something perhaps unhappy in the earnings results i don't want to be overweight banks here and i don't think jp morgan is any different than the group at large. >> is there a differentiation between the big banks and the

regional banks or mid to smaller sized banks. >> they are worst. >> only up 7% over the past 12 months, massive under performance, and they are the most rate sensitive part of the financial complex. that tells you something there small banks and some of them are outright very poor we do know online brokerage has been really strong it's about the stock picking, not about the ago agrgregate of financials >> thoughts on jp morgan >> let's start with jp morgan. jp morgan is best of breed amongst money centered banks when you look at the fundamentals they remain relatively strong. he was talking about the relative performance mattering another thing that matters is valuation and where we are is at above valuation, including jp morgan, looking at it on a price to earnings basis or price to

book basis we're somewhere between 7 to 15% above historical valuations for the name also going into earnings, some of the names are implying fairly big moves, maybe above average moves. it isn't true for jp morgan, a 2.5% move there. while the bank itself is relatively expensive, the options on it are not. i think the way to play this, i was looking out to march, you could buy the 105, 100 put spread for $1.15 and spend $2.20 for the 105 strike and that's net debit less than a quarter of the distance between the strikes, we like that math we're trying to target that check back that carter was talking about. >> what's interesting, i don't know what you think of the trade and you can give us that opinion, this really goes against what a lot of fundamental strategists are saying on wall street. they love the banks and best in breed, it's regulation and -- >> it's the same thing a year ago, they loved them a year ago. >> that's the question you have to ask yourself, what has changed in the market that are

going to make the banks go higher you might say that with some of the banks that higher interest rates will help that net interest margin, but on the other side when ire talking about the big banks like a jp morgan, they have the capital market side. when there's no volatility, like we've had, that's a problem for their trading desk they don't do as much business that's why in my opinion, we've seen relative flat performance here in the banks because you have a push and pull between different sides of their business. >> you're with them, these guys? >> i wouldn't be long them into earnings i like the idea of putting a put spread on here to protect a long position that you had. that being said on asell-off, would probably be more excited about it. >> those three things, it's taxes and rates and operating business itself and environment these banks are in it's not an all clear sign. >> how about deregulation though >> that too. >> that's going to be the big driver, right less restrictions on capital >> the hope was those things are going to happen.

they are not performing. they are not producing the results that you should expect for the risk you embrace by owning them. >> i like jp morgan but don't happen to like it terrifically at this particular price that put spread cost 1% of the current stock price, and decent way to make a bearish bet on it if you don't. >> bitcoin futures posting the best week ever as a crypto trade sizzles, both up 13% break it down as a man too hot to handle himself, dom chu >> how about roller coaster ride up and down or hot and cold? what we have seen in the midst of the price action is a rise in trading interest in the two futures contract the slightly more seasoned cbo bitcoin futures are trading around 4,000 contracts a day the open interest and front month future stands at 2,80

contracts, reminder the futures are one bitcoin of exposure put one contract move to the cme futures, five bitcoins per one future. the average daily volume there, 823 contracts, open interest in the front month, 642 contracts according to data from the cme group. the cme and cbo up 2% on the week as stocks themselves, we've seen a rise in the stocks of other so-called bit coins, bit coin companies and online retailer, overstock.com, it's up 32% in the last five days. payments processor square has been dabbling with bitcoin transactions and those shares up 17% in the time span, bouncing back from a recent pullback. but still, just take a look at those stocks, an interesting move in the whole eco system back over to you. >> have a good weekend what do you make of the recent activity and the fact that bitcoin futures are trading closer to bit coin >> that to me is what's

interesting here we first had the bitcoin futures come out, you could pick up 8% between the time they came out and selling a longer dated future, 8% that has come down significantly. part of the reason why, it was not a lot of brokers were trading futures, therefore institutions couldn't necessarily trade them in size now that you're getting expanding open interest, you're getting expanding volume, you're going to start to see that pick up you're going to start to see the spread between bitcoin and futures compress a bit and that's all a good thing for the eco system that means that it's operating in a healthy way and it's operating in a way that it should like every other future market. >> in terms of what it's doing, it doesn't seem to be doing anything to volatility the thinking was perhaps it would dampen the volatility in the underlying asset. >> yeah. >> we haven't seen that. >> i don't think we've seen that so much yet. i think over time that's going to be one of the things, one, two years down the line, volatility is slowly starting to

die down as more institutions ramp up and you can have that selling pressure from short sellers and futures if they are long, selling futures that should compress volatility but that's something that is going to take a bit of time. >> mike, dom mentioned bitcoin like overstock and square, offering bitcoin sales through the cash app what do we see in terms of options activity i would imagine it's pretty active. >> there's no question that both of those -- and also the cboe and cme have seen significant increases in options activity since they made the announcement that they were going to be participating either as overstock has in accepting it or cme and cboe have in listing futures which are a good idea for two exchanges. one thing i would say, a lot of very good news about it seems to be priced in these things already. cboe, innovative amongst the exchanges, it's not a cheap stock. 40 times earnings, cme trading about 30 times earnings. i like to see the moving in this

direction. it's going to be helpful in the long run but the stocks aren't cheap here. >> what do you make of the action we are seeing these are tethered to bitcoin. in terms of bitcoin itself, quite a bounce off -- >> didn't it that's the important thing and how a44% decline seems like a great thing in and of itself and yet we've seen two 90% declines, three others that were 7 0 percent and each time this is the end. why does it have to be the end you have never thought it was the end. >> no, there's a website that chronicles every time bitcoin has died over the last nine years and it's a pretty long list i don't think this is the end. but what you highlight with the volatility, i think investors need to know this is an extremely volatile asset class, 1 to 5% of your risk assets you can put into this asset class i would not take out a mortgage to buy this, take a mortgage on your house that's a bad idea. >> is there a warning in terms of technicals of it that the

decline we saw really isn't the big decline that we should be expecting this go around in the rally in bitcoin >> meaning -- >> the other declines have been much deeper with very strong bounce back. >> there were some that were deeper but there are several 8, 10, 12, 15, 30 to 40%, it seems another one of those. >> if you want to learn more about bitcoin futures check out our sister show, futures now every tuesday and thursday now on futures now.cnbc.com. of course for everything options action, check out our website and sign up for our super cool newslett newsletter, 100,000 have here's what's coming up next. that's what biotech has done of late. and there's something to suggest that games will continue next week we'll tell you what that is. plus, calling all options action fans, reach into your pocket, grab your phone and tweet us your question @ options action if it's nice, we'll answer it on

air when "options action" returns. >> logical see that's funny, i thought you traded options. i'm not really a wall street guy. 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. welcome back, the so-called olympics of healthcare taking place in san francisco with the health care conference kicking off on monday. rallied 3% for a strong start to the year meg has three names to watch before the torch is lit.

>> that's right, it's the billingest health care investing event of the year, 450 companies present 9,000 attend ees and those are the ones who can fit inside the building. there's much more happening around the conference which sets the stage for the rest of the year for the industry. so what to watch deals. the weekend before the conference or monday morning prime time for m and a announcements. in previous deals we've seen deals like shire in 2015 and a2016. all at multibillion dollar valuations many are questioning whether there's been enough time to digest the tax overhaul for big companies to pull the trigger. the week will also bring major company updates. q4 results early and give longer term guidance, three stocks to watch, celgene which kicks off the conference and that stock had a tough fourth quarter after the company revised the forecast lower. it is a bellweather for all of

biotech. another one to watch is going to be shire, the buyer in two of the biggest announces to jp morgan in previous year, down 14% in the last year regeneron, fourth quarter results of this conference and we'll have ceo len schleifer, you won't want to miss. >> thanks, meg biotech stocks were among the top performers, should you bet on biotech in the new year carter >> i like them i think you should keep betting on them in the new year. let's look at the charts since inception ibb, we know when you have dynamic ground breaking life changing product, you can have dynamic ground breaking life changing results ibb has doubled the performance of the general equity market since launch a lot of different companies but the point is as a theme, as a beg an aggregate, it's a place

you wants to be long term. the issue is the underperformance of the past three years, having peaked some three years ago, what i have is that same long term trajectory and on the bottom is relative performance of the s&p what we know is that this has come down to this line and bounced and bounced and bounced and bounced and we're right down there again. and it's my thinking that having underperformed, we're about to get outperformance not only relative but absolute performance. okay let's draw some lines. here is the last five years. you can draw the lines this way. and clearly, came out of the wedge to the upside. let's move on. you can draw the lines this way. which to my eye would suggest more of that you can draw the lines this way. people like to look forehead and shoulders but the implication is

that either way, i think the way is higher for this former winner that's underperformed. this is the past 12 months, here's our trend line and i want to make the bet again we're going to bounce off the line, bounce off the line, bounce off the line, bounce off the line and make a new high. i like ibb. >> looks convincing. mike, what do you think? >> you know, i like the space. there's a lot of names that are constituents of the ibb etf that unlike a lot of other stocks we look at all the time are actually looking pretty cheap. that can create essentially a floor in prices and that's kind of what i'm betting on here. there are not a lot opportunities in this volatility environment to collect premium but this is one of them. i'm looking out to february, these are options that expire a little over a month from now the 1.09 puts, i can collect $2.25. the downside would be if ibb

does drop, i'll buy at the $1.09 stock price so i'm going to own it a little bit lower. this is a way to collect some premium, potentially put it at the favorable level and it is a way to collect premium when there aren't a lot of opportunities to do that. >> listen, i'm a guest here tonight and hate to go against carter andco but here's the issue i have, i would love to see more volume. we haven't seen a ton of volume. the average volume has been a little bit lower on something like this, the way i tend to trade is i wait for a breakout on higher volume than trying to get it here. to me it actually looks like at least in ibb we might look -- over to xpi, the nasdaq etf, that one looks like double top not as tlihrilled, sorry. >> i think the important thing

is you're betting on an aggregate, five stocks are up part of the way. so you are betting on the big ones but the issue is this, if equities are going higher still, does this group play catch-up? i would say yes. yeah, that's the bet. >> mike, final word, you want to respond? >> i look at the name like c celgene, that's one of the reasons i'm not trading celgoen outli outright and looking at the broader basket of stocks ibb might be one of the ways to do it. >> still ahead, energy stocks coming back from the dead, surging 10% in the past three months and mike was one name could rally even higher. he'll give us the details. got a question for one of our traders, send us a tweet if it's nice, we'll read it later on in the show much more after this

see that's funny, i thought you traded options. i'm not really a wall street guy. 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. welcome back to "options action." time to look back at our open trades

last month we made a bet that halliburton was higher >> i think halliburton is the best way to make a play. although you cited the facts that the stocks have done well recently, overall for the year this is one of the sectors that actually is not trading at its all time highs the trade i'm looking at is the january 42.40 put spread, you can collect 50 cents. >> since the time of the trade, halliburton shares up 20%. mike, what do you do now >> you know, so this is one of those cases where we put on a high probability trade when we sold that credit put spread and sometimes you'd actually have preferred to have taken the low probability but i still like halliburton here. you can close the put spread and buy longer dated call options. >> agreed, schlumberge rext, stocks still behind the commodity. >> i think it's a great way to

buy upis tside calls so you sti have exposure to the upside of halliburton. >> up next, your tweets and the final call from the options pit. stay tuned see that's funny, i thought you traded options. i'm not really a wall street guy. 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

, it's earnings season once again. >>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. up next on "options action," first question, i own 100 shares of bank of america, can the desk suggest any way to benefit through selling an options contract on this mike, why don't you take that. >> sell at 32 calls, best way for most people to begin trading options. >> next question from our friend alevel question for dan, gm ready for a bullish breakout, is it ready to buy itout right or through options? nasty weather ha jamaica. >> i mean, i think you can be aggressive and buy the options

but either way it does looks like it's open higher. >> final call, mike? >> covered calls are always the best way to get started as an options trader. >> carter? >> i want to get out of banks and into biotech. >> bk? >> thanks for having me, let me put a jacket on, love buying option in a low vol environment. the following program is a commercial presentation of total gym fitness. i work out to stay young. to stay in shape. to be able to do things that i wouldn't normally be able to do. and that's what total gym does for me. it keeps me active. it keeps me positive. it keeps me focused. age is a state of mind.