we're live at the nasdaq in times square on this foggy friday the guys are getting ready to clear it up for you. here's what's coming up on the show >> talk about a face slap. shares of facebook are experiencing a rare down day but something in the turn suggests now is the time to buy. and one tech stocks had a massive run in 2018 and the options market is pointing to a big breakout next week we'll give you the name. it's the second worst performing sector this year.

and here's a hadn't. we'll tell you how to cash in. it's time to risk less and make more the action begins right now. >> facebook is facing the music, the stock having the worst day, down 5%. this after the social media giant says it is revamping its news feed so users see more posts from friends rather than other content. of course, this stock has been on a meteoric rise, up more than 42% in the past year gaining $160 billion in market cap so could this be one of your best chances to buy this stock already saddle ed up and ready go carter >> buying weakness has its risks and weakness begets more weakness and sometimes it's the best thing to do i'm in the camp of take advantage and let's answer the

question why we know this has been a very orderly up trend you can see it here. we have the channel on it. it is remarkable how precise this asset has responded to its trend over and over and over and then we blew out through the top and once you do that in principle, the top of the channel then becomes support there's no that much room between where we are now and channel. you have pretty good support on the long-term day to day chart over the last year or year here's the trend line, put it in and we also are looking at this kind of thing. we're getting into a position where whether you believe it's long term trouble or sell-off news related or not. okay here's the here and now chart. this is what, six months i think one line you can dra what's called the internal trend

line along the top it's very precise. you can see that very precise it responded to it you can also put in this line, the prior high exactly the prior high and we're back to that level i think it's going to be contained. and again, we've got this trend line, my hunch is that it's weakness to take advantage of rather than weakness to stay away from. i want to step up and buy facebook. >> carter likes it here, thinks it's an opportunity. dan, do you think there's a longer term impact by changing the feed >> i think there is and it is a smart move on their part how they are kind of releasing this information before the earnings come out but this is not going to be something that changes overnight and it's going to be a story that progresses over 2018 and possibly into 2019 we won't see results of that i like his chart work. what the whp is doing makes a whole lot of sense $530 billion market cap. if you're going to make big

changes about how you're going to get new subscribers are users after you have 2 billion active users, you have to figure out some things. what's the next ten-year plan? >> wall street likes this from the more immediate term perspective, could it have a hit on revenue and how do you trade this >> it could have an impact on revenues we have two -- this is one catalyst, earnings which are coming up the end of the month are another. but at the end of the day, one of the things to think about, does this improve the user experience i think this is good thing happening now, why to get in front of it, they are getting a lot of scrutiny. this is an opportunity to use a type of trade we don't that off tep. i'm looking at selling a put spread in facebook, trying to take advantage of the fact february options are slightly elevated because of upcoming earnings and looking at selling the february 180, 175 put spread

when the stock was trading around 180, that's almost half of the value of the spread so essentially you could have the stock put to you at that 180 level but you're protected at 175. the idea here being that maybe it's going to bounce if it doesn't or something that comes out on the earnings call is viewed unfavorably,you have protection to the downside. >> one thing to also consider, when you have a major reset, like a breakout or drop in gap like this. how big a gap is it? only 4 or 5% if it were really trouble. it could easily have dropped 8 or 12 or something very -- it seems contained for now. >> yeah. >> again, i like the way they got the news out before earnings when you think about it now, the stock was trading yesterday very near all time highs and now expectations have come down. now, the onus is on the company to put up a beat and raise if they they do less, it's -- i like -- short premium, option

premiums are elevated. if the stock does nothing, he's going to make money. if it goes up, the full difference between the width of the spread and your credit. >> what's the one concern you might have >> one could reasonably suggest that this is a stock not going to linger right here it is either going to bounce and then proceed to trade down even further for two or three more days as people begin to digest that and people who didn't see it today, for example. we might see that. if that's true you'll be able to take advantage of that on monday. if it opens at 175, instead of the 180. >> what do you see about the concern about further drops? >> it has to be contained. one thing we could also sort of hang on to, it's a type of stock, same way apple is treated

and may all hold up very well. of course there wasn't a spill-over this was just a facebook story if there was real worry people go into other names like it and maybe do say little trimming. >> let's stick with technology a slew of big names. we'll also hear from big blue, otherwise known as ibm the dow stock has been on a tear as it moved into blockchain technology this could be the sleeper pick for next week. why? >> maybe it's associated and two thirds of their sales come from outside the u.s., this dollar, have you seen the dixie, the dollar index, last quarter in q3, october 17th, they put up a quarter that surprised people and stop gap up 9% some of the strategic imperatives and faster growing things like cloud and wattson

did better than people expected. the stop gap 9% and gave it back now it's back up above the levels you mingsed blockchain blockchain services and hardware related to it was probably a $700 million business in 2017. some research companies estimate they got 30% by 2022 and some are expecting this to be an $8 billion business and ibm seems well positioned here i don't think you get a whole heck of a lot of answers right now about blockchain and what that means for it. if you get these strategic imperatives doing well for the second quarter in a row, they already have a low tax rate. the new tax reform won't be a huge deal. this stock could fill a gap from last april i think you play this with a call spread and going to define your risk and target that gap and if you agree and think there's a chance you get two consecutive better than expected quarters, this stock will go back above 170

when the stock was trading at 164, you could buy the 175 call spread paying $3 and buying 165 calls and selling 115, break even at 168. and then your mass risk is the $3 and premium you paid and lose all of it -- >> that's a lot of numbers. >> i will say this, it actually makes a lot of sense the trade you're picking for a host of reasons. we often point out the four catalysts such as earnings, you'll see elevated options premiums and that's why you want to look to spread rades. >> and ibm unlike other stocks, still has to show us -- despite cloud, they are going to be a key player same thing with block dk chain will they be a key player? earnings may reveal that and this is a low risk way to make a bullish bet going into it. >> it has a bearish to bullish

look we have dan's chart there, some people might call that a head and shoulders bottom what we do know, it has the potential to fill the gap that dan is citing, the down gap from april of last year and three out of the past four quarter is every possibility it gaps again. >> the implied move is only about 3% which is below the long term average, well below how much it moved last quarter the way i think about this, you're risking 2% of the underlying stock price and breaks even up 4%. if you get the direction right you'll make money on the trade but you have to have conviction about the fundamentals. >> send us a tweet check out our website. and while you're there, check out our newsletter what better way to spend a three-day weekend than cuddled up next to a roaring fire reading the calming words of mike coe what are you waiting for

>> what is a yut >> one of the worst performing sectors this year but something just happened that suggests it might be the time to buy. calling all options action fans, reach into your pocket and 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. 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

we know life can be hectic. that's why, at xfinity, we've been working hard to simplify your experiences with us.

now, with instant text and email updates, you'll always be up to date. you can easily add premium channels, so you don't miss your favorite show. 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 call it die vergence or rotation or what you like what we've seen happen in interest rates and related moves in the stock market have been dramatic over the last few months u.s. government bonds have been selling off krogs the yield curve and yes, some maturities more than others as those prices have fallen and yields have risen, we've seen market underperformance in sectors that are considered interest rate proxies. ten-year bond yields have been trending higher since early september. over the last three months, the lagging sectors in the s&p have been higher dividend paying sector like consumer staples and up around 4% in the time frame against the s&p 500's 9% gain. telecom services up around 4% as we well real estate has lost 5% in that span and the worst performing sector has been the utilities, down 7%. all four of currently the worst performing sector so far this year as well

meanwhile, over the last three months, the more cyclical sectors like energy and technology have posted double digit percentage gains melissa, if interest rates keep rising will traders keep selling off those interest rates stocks. back over to you. >> thanks dom chu, have a great long weekend. >> so is the safety trades in danger back to break it down for us. >> there are different parts of the safety trade it's not even a sector, it's two stocks utilities is a real sector and what i want to focus on is two of the oldest indexes, dow jones industrial average, 30 stocks and dow jones utility 15 stocks. you can see the line as i can and one is going this way and one going that way i want to focus on this spread between the industrials and the utilities. one year chart, five year chart,

all about this dif verge ens, this is becoming interesting by my work. let's look at stacks on this here's the here and now chart again. i want to focus on the 40-day spread over the last two months of trading the numbers and stats are as follows, going back to 1929 this happened eight times. the eighth time. that is an incident rate you can't even -- you might as well call it zero it's so rare as to be well exceptional and what has happened when this has happened in the past. what this is, industrials versus utilities, after -- after 40-day spread of 20% or more and what happens is the odds of industrials outperforming are low, low, low. and industrials one week, two

weeks, three weeks, this is a trade for the weeks aheadnot years or anything like that, industrials under perform and resip pro cal of this chart is utilities outperform not only odds of it happening but the actual gains relative to what they are. here's the decline you can see in quick order, a plunge of 12.5%. where is this move in the context of a long hef term chart. since the absolute low in '09. let's put in our line and i'll be darned, it's sitting on the line you can make your bet that it's going to bounce. that's mine or you can make the opposite bet i'm going to make the bet it's going to bounce. >> i love when you reveal it, almost as if he was surprised himself. >> can i ask a question? >> okay. >> carter -- >> that's not what we were going to do. real quickly, when it broke the one year trend line it went much

lower, why can't it do the same thing on the 10-year when you first approach a trend line you have a good rebound potential and you can see that here the first thing, let's say it just hesitates and ultimately breaks and you're in the camp that rates are going to 6% and don't want to be in utility. on the first approach to the line and stats i showed, i want to make the bet it has rebound potential and everyone is out of this and into the dow and it seems very lopsided. >> so, the nice thing about utilities, very low volatility, they can move a lot over a relatively short period. you can buy the march 51 calls for under a dollar when i was looking at the 2% price of xlu, you get the march xpiration to make your bullish bet. it dropped 6.5 bucks to the down side could be the 4% dividend draws people in or rates basically

stop rising right here could be a host of things but could easily move a dollar or more. >> to put the drop in perspective, a 12.5% drop over a week or two for something that has a beta much lower than market, it means it's a much bigger drop associated with the type of asset that it is so again, if you're in the camp that rates are going higher and it's all game changer, you don't want to be in utilities. even if they are going lower, i would make the case they are going lower through a higher price, rebound potential. >> if you agree with the technicals the options set up perfectly and break up even at -- and that's where it was trading ten days ago like the trade options and you have two months for this to play out. as far as i'm concerned, you're probably going to get a low from a higher level. >> utility for a bounce, industrials for a decline. with valuations where they are in industrials, where do you see that >> in a pairs trade world you want to put that on an incident rate that soz rare to be

exceptional and stats on other times it happens suggests it is convergence and you want to trim. >> you could sell call spreads in the etf if you chose to to help finance this trade. >> nice, up next, jp morgan surging after an earnings report and that's bad news for one of our traders. we'll explain why after this two,that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum -- just to help you improve your skills. boom! that's lesson one. education to take your trading to the next level. only with td ameritrade. we rbut we are not victims.ack. we are survivors. we are survivors. we are survivors. and now we take brilinta.

for people who've been hospitalized for a heart attack. we take brilinta with a baby aspirin. no more than one hundred milligrams... ...as it affects how well brilinta works. brilinta helps keep platelets from sticking together and forming a clot. in a clinical study brilinta worked better than plavix®. brilinta reduced the chance of another heart attack. or dying from one. don't stop taking brilinta without talking to your doctor,... ...since stopping it too soon increases your risk of clots in your stent,... ...heart attack, stroke, and even death. brilinta may cause bruising or bleeding more easily,... ...or serious, sometimes fatal bleeding. don't take brilinta if you have bleeding, like stomach ulcers,... ...a history of bleeding in the brain, or severe liver problems. slow heart rhythm has been reported. tell your doctor about bleeding,... ...new or unexpected shortness of breath, any planned surgery, and all medicines you take. if you recently had a heart attack, ask your doctor about brilinta. my heart is worth brilinta. if you can't afford your medication, astrazeneca... ...may be able to help.

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 welcome back last week coe and carter said jp morgan was headed for a breakdown. >> it's gone up of late but it's not participating with the general market overall, it's made no real relative results in about two years. i don't want to be overweight banks here and don't think jp morgan is different than the group at large. >> the way to play this, i could buy the 105, 100 put spread for $1.15. jp morgan reported better than expected earnings and the stock is up 4% since then. carter, what do you say? >> it is up. i think we've got time here. we want to stay with this in the sense the relative is still the problem. if you do it relative to the

peer group, the stock is straight down on the chart relative to its peers, that's a problem. vt put spread is worth 50 cents. if it did hit, that would pay off -- you wouldn't sell it to initiate a trade here so obviously you would stay with it. >> let's move on here. coe and carter said small caps were going to break out. >> we've got the breakout and check back and next breakout and had this checkback,it should b ideal right here and right on trend. you can put your next in and make the bet that it goes higher and i want to be long. >> i was looking out to february, i could buy the 1.52, 1.62 call spread and spend $3.80. >> it was a good call, ibm was up more than 4% zpl now i think you can take profits and roll out -- i would go out to march

at this point. meaning you're going to continue with the trend talking about the melt-up in industrials and think about the beneficiaries of tax reform, you know, possibly infrastructure, these domestic companies should benefit. why shouldn't you have a melt-up in the iwm this was down on the year in the summer while it is up absolute, it is underperforming the s&p, the large cap peer group. >> we were right and we had a relatively tight call spread and so this is one of the reasons why we could take those profit and push it out and he'll be playing with house money >> final call next well, 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.

two,that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum -- just to help you improve your skills. boom! that's lesson one. education to take your trading to the next level. only with td ameritrade. welcome back, time to take your tweets the first question is from john, when do you use a

bullish call spread versus a bullish put spread professor mike >> if you think the move is going to be big and can buy a call spread less than 30% of the distance between the strikes, go a long call spread if you think it's going to be modest and you can collect 30% distance, you want to buy the put spread. >> that's how options are priced if you thought options are priced cheaply, if you think they are expensive, you'll want to sell the put spread. >> second from zach, i bought intel february $1643 calls for 1 ht 42. what do you think? >> it was a newsy couple of weeks for intel, they report on january 25th the option market implying a 4% move you have time for this to play out. if investors like what they have to say, you're probably going to have the stock back above 45 in my opinion over the next month i like finding the risk because it is at a key technical support level. >> carter braxton worth. >> final call i want to be long

utilities for bounce and facebook as well. >> utilities by those march $51 call for a buck. >> i think ibm if you want to make a bullish bet you do want to define your bet. >> our time has expired, i'm melissa lee. check out the website. have a great long weekend and enjoy monday "mad money" is up next 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.