>> i love investing in american businesses what's the f stand for >> fun. >> this is a little bit stressful. >> unfortunately, on paper, you're out of business. >> do you believe in your company? >> yes. >> prove it to me. >> hey there we're live at the nasdaq marketsite on this friday the guys getting ready behind me here's what's coming up on the show >> the bond market's getting crushed. but there's something in the charts that suggests the worst might be over. we'll explain. plus -- ford just had its worst week in two years. but if you got caught in the wreckage, fear not we have a way to make some of your money back, and later, netflix shares are surging but the rally might come to a pause

when it reports earnings on monday. >> i can never try if you're trying to help me or destroy me. >> don't be so dramatic. we're trying to help you protect yourself it's time to risk less and make more the action we begins now >> let's get to it because the bond bloodbath continued this week as the yield on the u.s. ten-year hit 80s highest level since 2014 will history repeat itself or will we see rates tick even higher. >> straight to the chart master to break this down hi, carter >> critical levels by all accounts what's so interesting is we made no progress despite all the excitement i'm skeptical. look at a few things and go from there. so here is your chart. it's very clear and the lines, the highs are clear. how it's ascended. put in the lines and what we know is that today for the first time ever so

slightly, we moved above this level. so a year one month ago 264, we closed at 266. the question is as it breaks out, does it help the financials i'm thinking no. we'll look at that and the tlt so i want to talk about the importance of this 264 level not only did we get bob it on the daily chart. that also represents a breach of this long-term channel but that's not so important because a year ago, the consensus we would breach the channel and all that's happened is we've gone sideways and breached the channel because the top of the channel has come down so for this to be a new real trend, instead of a down trend, up trend, you need two things one of which happened, one has not. so if definitionally a down trend is an accession of lower highs and lower lows, the first thing has happened we didn't make the new low you'll see here that we held that's key but we have not made a new high.

so the new high level is 3.1 if i drill down and go right to that level, getting to 3.1 is a much bigger issue. that would then represent not a higher low and a higher high for now, yes, we've broken above this line. we've just done that, right? but all for what so if we go to 2.6 or 2.7, or 2.8, financials are still struggling what's hard to believe because we think of jpmorgan and citi going up here are s&p financials on the top. relative to the s&p, performance is exactly where it was a year later. that's not adjusted for risk or bate meaning while it's up, it's relative to the market but it's underthe market adjusted for risk i'm not sure you're getting paid for the risk to be overweight financials here's another way to do it.

a here and now chart here is the move we've gone from 2.3 to 2.6 in yields and financials are not still outperforming the market i think that's an issue. let's then go to tlt, long-term chart. here's your trend line i want to make the bet that bonds are going to bounce, bounce, bounce off the line. and so let's drill down to another way to look at it into this wedge, you can make the bet this which i'm going to do this is consensus. i get that i want to be contrarian. end with a quick tlt right at these lows and myhunch is we're going to hold this and we're going to throw back a little bit. so i want to be contrarian and bet that this big move in rates starts to pause. >> all right thanks mike, your trading tlt. >> the nice thing here is the options on tlt because it's a low volatility product are quite inexpensive.

basically trying to buy a call close to at the money. i was looking at march 124s today. i was looking to sell the march 12s against it for 60 cents. the reason is that i actually don't see us going much more than above that level. i'm not expecting that you anticipate a really strong rally. if anything, i think we might be in a bottoming formation somewhere in here with rates. >> even if we get above the key 2.6, it's the 3% that represents a new immediate high so 2.8 and specially so adjusted for risk. >> so the chart is interesting i look at your charting the ten-year that's a breakout if i didn't know it was the ten-year yield, it was a stock and there was a tail wind to it which i think the rate tightening cycle is this year, i'd say i want to play for the breakout.

i'm usually the con kerrian. it looks like a decent way to play what mike says about the call spread, options structure, it's a cheap way to do it in volume and dollar terms i want to make one point about your choice of march that trade will expire before the march fed meeting, the first of the new fed chair there's 588% probability. >> that's a good point we're talking about longer term rates here is it what the fed's going to be doing that drives longer term rates. >> no, it's gdp growth, things like inflation both rising. both would suggest you'll see higher rates it's the market that takes 10 and 20-year rates and the fed that will dictate. >> it's so one-sided here. we've seen this every year for the last eight, ten years, the beginning of the year the consensuses are rates are. it's not happened yet. are we in a position to start

doing three quart three fist 2al 86 is that going to matter are? i don't think so. >> does this make financials a bad trade in your view >> if this is true and we do see longer term rates flattening out, that's only one part. we saw morgan stanley's results on asset management side obviously rising market, rising economy can be a good thing. >> let's move on to ford seeing a tough couple days. the stock down nearly 10%. this after the company gave disappointing earnings guidance ahead of its earnings report wednesday. dan thinks the worst may be over. >> listen, here's a situation where this stock caught a bid in the fall off of some lows, very multiyear lows it caught the bid along with gm. investors started to get in front of what they thought would be a real investment cycle for both automakers as they think about electric vehicles,

autonomous both companies are doing partnerships with companies can like lyft, investments in ai companies, buying autonomous sort of things this thing had a 30% rally, ford has just given back 10%. they downgraded their guidance for 2018 it wasn't dramatic here. next week when the implied move in earnings about 2% in either direction. that's probably a nonevent getting this bad news out of the way gives them the opportunity to talk about fundamental issues that could drives the stock for the balance of the year. if you look at this some of you guys like to use a three-day rule on a down, on a downward spike. this thing is right now at six months support it better hold we have a five-year chart. the down trend looks like from the highs in 2014, if it doesn't hold, it's probably going backing to 11. then you see at 10.5, that was the 52-week low, a double bottom

low from 2015 also, that's down another 15% in total this is the way i want to play this a lot of bad news out of the stock, sentiment is stock. there's two sales. if there is any decent fundamental news, i think you see the stock back at 13.5 the way you play this, look at march expiration you could buy the march 12 calls for 33 cents, 3% of the underlying to me breaks even at 12.33. i showed you the charts. the downside to 11 or possibly 10.5 if you like what they're doing with electric and autonomous. >> do you see what dansies in the charts >> sure. all the safety here in the sense that having plunged like that, 13.5, it touched 11, that is exactly where the average comes into play. it touched that line stabilized let's say the number is a disaster they say yet another bad thing the bet you're making is that

you've already had the beating it would take a lot for the stock to drop further whereas if there's anything good, you get the upside potential i like it. >> ford has a number of really good products coming out their new f series trucks are among the best selling vehicles ever made. they made $7 billion in net income not that long ago cyclicals always trade as the cheapest multiples on a trailing basis right before the cycle ross over against them that would be knock. a 33 cent call makes a lot of sense. think about what that is relative to the price of the stock to make a bet, i think it makes a lot of sense i like it. >> we're at all time highs it's getting harder and harder to buy winner withes here. at some point you'll see that rally broaden out. then you can try to find value stories like this.

if you can actually try to reassign value to what they're doing in electric and autonomous, this thing could go back easily to 13.5 over the next few months. >> check out "options action"s.cnbc.com. sign up for our news letter. so what are you waiting for? here's what's coming up next. >> i love television so much. >> investors are loving netflix this year. but it might be time to hit pause on the stock we'll explain. 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. more "options action" right after the break. 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." netflix set to report earnings monday the stock is up 15% year to date julia is in l.a. with what we can expect from the streaming giant. >> netflix subscriber numbers are always in the spotlight with investors hoping this quarter the company will top its own forecast of 6.3 new million subscribers in q4. over 5 million coming from overseas with shares up about 60% in the past year, the pressure is on for them to keep up their growth analysts projecting revenue will grow nearly one-third from the prior year to $3.3 billion while

earnings projected to grow by 175% to 41 cents per share on the company's earnings kaw, investors and analysts will be looking for the ceo reed hastings guidance for the year and whether the company plans to invest even more in content than the billion it will already announced it will spend this year. >> what's happening is their originals, netflix originals are now driving the growth in the service. and that's making it such that the competition that netflix is facing, the growing competition isn't mattering. >> and netflix is facing more competition than ever as amazon continues to invest in content and disney expected to ramp up investment in hugh will you once it gains a majority stake in that streaming platform. investors can expect a big swing in the stock once netflix reports, the implied move is about 8% in

either direction the affect move has been over 5%. >> thank you, julia boorstin with the stock's recent run and a huge implied move, protestor is cohas the call to action. >> after this big run, if you hold the stock, you might be concerned is a pull back if you doan, you might be think it's due for one we'll take a look at buying a put spread when it is appropriate we'll look for identifiable catalyst we have one in the form of earnings the second thing is, are we expecting a big move the options markets say we are, just under% is what the market is implying. granted the last four quarters just over 5% but that included a double digit move. so times it moves, sometimes it moves a lot. finally, this trade will work as either a bearish bet outright or a hedge against long position depending on your position taking a look at the stock, it's

had very sharp moves heeshl are especially associated with things like earnings. think about this we might be able to play for a move that size or even less and risk very little doing it. i was looking at the february 220, 205 put spread. you could spend $8.70 today. there's 100 shares in each contract it's hard to risk own that apartment to make a bet in any direction for a $220 stock you can see that obviously it's going to make profits. actually if the stock only moves about 4% to the down side. so this is a way that you can make a bearish bet here. not risk a great deal. and i think there's a good chance that the stock could make a move that magnitude for more. >> what do you think >> it has to do a couple points he identified here identifiable catalyst. expectations are high and i was reading preview notes. estimates are actually three con

senses what the company is guided to. earnings and revenues and subs for q1 if they can't come into what the street is expecting it sets up for disappointment supposedly spotify is coulding to market at some point in the quarter. don't think for a second if that think is a hot deal, people will say take chips off the table on netflix. >> the moubls are no, sir bleed territory. granted the stock price indicates if they want more capital they have it all they want and then some they're looking for increases to margin to maybe 7% even if they get that, full year 2019, probably somewhere in the neighborhood of $2.62 a share, putting it at 90 times 2019 earnings that's heady stuff they're competing with amazon. that's scary for any business. >> as the chart goes, it's god-like in the sense that. >> it's got what. >> god-like.

>> wow. >> it never gets too high. if you think about it, one of the problems with the stock that gets hot like caterpillar or boeing, you have great checkback rick netflix keeps checking back every three to six months, it has a big drobnjak down which allows it to go higher i like this as the hedge against the long bet there's nothing in this chart that suggests it's gotten too hot. >> this is a broadly held stock. institutions have to be pretty much full up on it it's outpacing the market broadly. who is the marginal buyer for netflix at this price? into to your point, the stock just broke out now up 15% it had to pull back down to 2.10 because stipulates got ahead of themselves, that would be is the level you would reload on that sort of thing. >> it just sold off from 210 to about 180 within the last 60, 0 days it had to give back. what makes you vulnerable for give back is having had no give

back this has had give backs along the way. i like it as a hedge. >> is this in your view the best chart in the market right now? calling it god-like is pretty lofty. >> mastercard, where they neither go parabolic nor start to roll. >> throw and in there. look at the consolidation. >> that looks pretty good, too >> still ahead, ibm singing the blues. the stock down 4% today despite an earnings beat last night. is there any hope for a turnaround in sight. plus, got a question of course, you do. send us a tweet to @optionsaction. much more "options action" right 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. moderate to severe rheumatoid arthritis was intense. my mom's pain from i wondered if she could do the stuff she does for us which is kinda, a lot. and if that pain could mean something worse. joint pain could mean joint damage. enbrel helps relieve joint pain, and helps stop further damage enbrel may lower your ability to fight infections. serious, sometimes fatal events including infections, tuberculosis, lymphoma other cancers, nervous system and blood disorders and allergic reactions have occurred. tell your doctor if you've been someplace where fungal infections are common. or if you're prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure or if you have persistent fever, bruising, bleeding or paleness. don't start enbrel if you have an infection like the flu.

since enbrel, my mom's back to being my mom. visit enbrel.com... and use the joint damage simulator to see how joint damage could progress. ask about enbrel. enbrel. fda approved for over 18 years.

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 to "options action." time to look back as the some open trades. last week dan said ibm was headed higher. >> this stock could fill a gap from last april. i think you play this with a call spread, define your risk. targ that gap and really if you are agree and you think that there's a chance that you get two consecutive better than expected quarters this stock

will go back above 170, possibly 175. today trading at 164, you could buy the february 165, 175 call spread paying $3 for that. >> despite snapping 22 quarters of revenue declines shares sank 4% today after reporting earnings dan, you say ibm at a key level. >> yes, it lossed last week at 163. this week at 162.30. the stock went above 170 and gave it back on today's earnings here let's see what's going on here i don't think the quarter was that disappointing i think it's going to hold these levels i'm long it. this call spread which bought for $3 when the stock was 1164.30 lost half its value. i like to use a 50% premium stock on long trades like this i'm going to keep a tight leash on this one. i think it's okay at 162.30. >> if you listen to the clip, if

did exactly what he said he said this thing has the prospects of gapping up and filling the april gap. it did that and then makes it almost untradeable, gave the whole thing back a surge like that, come back, it's back to where it started and a nontrader i this i. >> moving on two weeks oe and carter said a biotech break out was ahead. >> 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. >> i'm looking at february these options expire a little over a month from now. i could collect $2.25. >> since the time of the trade, the ibb is up 2% mike, what do you do now >> i think we can probably cover these puts and roll out. >> yeah, absolute performance

but not relative it's underperforming in the market i would say kick the can down the road. >> this is a trade that only makes a little bit of money. that's essentially what this thing is doing. >> next tweets and the final call from the options pit. stay tuned 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 to "options action." time to take your tweets this question from a familiar handle in "options action" super fan. the one and only guy adami asks is it worth taking a look at the fed 315 boeing puts into earnings >> absolutely. i like this company fundamentally, but wow, it's come a long way quickly and evaluations are starting to get pretty up there, too >> sure is much more than netflix. >> time for the final call guy, hope you got your answer. carter. >> want to be contrarian and take a bet tlt bounces

>> mike. >> take a look at netflix put sfred spreads and earningsings >> ford's contrarian at the money calls in march. i like that. >> i'm melissa lee have a terrific weekend. see you back here at 5:00 on monday "mad money" starts right now 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.