hey, there, live at the nasdaq market. here is what's coming up on the show my fall comes down to a few moments. >> tech's big moment is next week with a number of new shows. we'll give you the one name options see as a must. biotech is breaking out. there is something in the charts that suggests it could go even higher next week we'll break did down and, boeing shares are doing something they haven't done since 1988

it is all setting up for the perfect options trade. we'll tell you what that is. it is time to risk less and make more the action begins now. >> let's get to it next week is the busiest week for earnings season and megacap tech will be center stage, facebook, amazon, microsoft, apple, all set to report representing more than 40% of the nasdaq 100 check out their implied moves. nasdaq could see a swing enter either direction the options market expect the a 5% move for facebook and microsoft and 4.5 for alphabet and 4% for apple it could represent a more than 180 billion shift in market cap. how should you play the space and which names do you buy let's get to carter, the master. >> i thought we would look at all as an aggregate and drill down on one, google.

just names you have heard, as big and important as it gets all on deck. let's look at a few scharts here and t and try to figure it out i want to talk about how important. the top five stops, buy plamarkt cap plus netflix you are talking about 40 mirs% e s&p. those five stocks are valued at 3.7 versus 3.4, the bottom 250 you are basically trading at the same valuation, with a much higher growth rate would you put money in the bottom 250 losers, so to speak, things struggling like foot logger or chipotle or sluggers row for the same price this is the place to go. this is an aggregate of those six stocks, $3.7 trillion. it is a beautiful up-trend

the line draws itself. it is bounced off this line like clockwork. it is a testament to the importance of charts what i'm thinking is more to come also, there is this. now, if i were to look at that basket on the top, same chart but look at its relative performance to the tech sec ter, the thinking can be that perhaps these are crowded. too many people have put too much in. how come they have made no progress in two years. they are not crowded they have not outperformed in the last 24 months they are just breaking out to new highs. that's key let's go on to google. all right. lines, here they come. trend line, and it has been beautiful. this has been quite precise. off the top, off the bottom, off the top, off the bottom, bos tom. i'm thinking at a minimum, we get to the top another 10%, 12% let's do the relative chart. here is the same thing putting

our channel one more time. what we have got, again, just to get to the high, 10% here is key. google, has been underperforming the tech sector, underperforming for almost two years it is just now starting to outperform and break above trend. that's a key setup play google long into its number >> make, how are you trading alphabet >> carter hit on something interesting. if you bought mcdonald's trading just shy of 25 times forward earnings 23 times for google, a name that has been consistently delivering double digit revenue and eps it is in good businesses and building a bigger motor. when you are taking a look at a stock like this, to buy 100 shares is going to cost you over $100,000 it is obviously very expensive to get into a round lot. you are going to see slightly elevated options premiums going in i think the way to play this is to buy a call spread i was looking at february 11th,

85 call spread you can make a bullish bet and take a bullish position in google with a valuation, i think, even though still looks quite attractive for less than $3,000 >> how do you like the trade >> you are buying a stock or a call spread that gives you the right to buy the stock at a certain point in time, at all-time highs it is up 13% i would say that the sentiments is quite bullish here. it is going to take a pretty significant beat and raise to keep this stock going higher this is the way you want to play it if you are coming to the game right now. i don't think you would want to be buying the stock. i think there are some other things to think about. if we. >> narrator: are in this blowoff phase, it makes a strong case to stay with these names. if some of these secular shifts that alphabet has been investing in are going to start to play

out and you may start seeing that in their guidance this year some of these things may start to play off. they are expected to go over $100 million in sales. to me, i'm in the camp where i would probably wait for a pullback you may never get one the way this market is going >> it doesn't seem like there is a pullback opportunity anywhere. if you were looking for one, you would probably look for names that are going to possibly show some weakness. you are taking a look at relative value weighs. how much am i paying for earnings and growth compared to a lot of other stocks in the s&p. this one looks kind of cheap >> if you think about the setup, if you have something that's acting well but underperform founderperforming for almost two years, and then starts to outperform, you have convergence and early sftate

convergence. >> is there a way to lessen the cost of this trade >> we did that by selling the upside call. options on a stock trading $1200, the option are going to be also expensive. we are dealing with options. that 1185 call is a $35 option this does lower the cost somewhat that's about as bad as you are going to get biotech breaking out this week as a grugiers up for big earnings meg terrell is back with more. >> biotech just closed out its best week since september and it is on pace for its best month since july, 2016 a couple things are at work. first, of course is mna. investors are wondering if every monday is going to be merger monday that will be a key aspect to watch in some of the coming weeks biggest earnings to pfizer on tuesday and amgen on thursday and gilead in the next week.

they have billions of dollars of cash to spend. the second thing driving it is abbvie's earnings report what the company said about taxes. abbvie says its effective tax rate will be 9%. analysts had been expecting 20%. >> jared holtz is telling me investors are keeping a closer eye on this for any similar commentary of tax benefits they are boosting gilead for their results for hepatitis "c" drugs. it says a 32% market share brian abrams calling this a positive indicator for market stabilization in terms of number of patients treated as well as pricing. all of this leading biotech to get seriously close to its 2015 high here is where the warnings start to come in damian is pointing out some of the activity in the space is causing investors to worry the sector is taking a turn for the absurd

they point out the state of the union address next week. it could throw some cold water on the group in addition to pfizer and amgen reporting, wednesday will bring reports from eli lilly and v vertez >> dan had called it the best chart ever on ""fast money." >> i say on a relative basis it is very constructive. we are in a market that is seemingly making new all-time highs on a daily basis we have seen a lot of rotations, in some groups and out of others when you look at pickup we have seen in biotech, we have seen the exact rotation, the xbi, the s&p biotech index, which is more equally weighted, has made new all-time highs it is through those mid 2015s highs. the ibb, amgen, biogen, celgene, gilead and one other, make up 5% this is playing some catchup, new 52-week highs.

those 2015 all-time highs are about 10% away that's the constructive nature i see. i like my lines here, carter if we are going to continue to make new highs, this is going to play catchup because of the weighting of these five and their valuations i think you want to look at market expiration. this is at 52-week highs i like using options to define my risk here implied volatility is relatively low. i looked at march expiration when the stock was trading, the utf, 11775 you could buy it 120130. call spread, buy one of the par 120 calls for 255 selling one at 25 cents that gives you that price of 225. that's your max risk i am targeting that and defining my risk and i may get the entry wrong. it is at a 52-week high. if you think they are going to have continued momentum, this is

wait to play it. >> what did you make of those lines? >> what we are looking at is the equal weight versus the ibb, which is market cap weight if the equal weight is making new highs, the big names are holding this back. the ibb was 50% in terms of outperformance versus the xbi. the large ones are coming back and the lines come into play if it throws to the high, you have about a 12% move to get to that i any it wthink it was the 20th where you get 153. >> a call spread makes sense an index is unlikely to have a huge move. it could have a substantive one. the other thing is take a look at how celgene behaved after they announced that acquisition. the m & a deals are going to help out the acquired and the acquirers as well. the top five names are not expensive when you take a look at the ibb i like the structure

>> for everything "options action," you can check out our website. sign up for our super cool news letter more than 100,000 of you have already done that. what are you waiting for here is what's coming up next? how would you like to make money if boeing shares go up, down, or nowhere at all? >> surely, you can't be serious. >> we are serious but don't call me shirley professor will break it all down >> reach into your pocket and not your phone and tweet us your question at "options action. if it is nice, we will 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

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. 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." it is a bird, a plane, no, just boeing they are up another 16% gaining nearly $30 billion in market track and on track for its best january performance since 1988 the top dow stock contributing roughly 20% of the dow's 2018 gains. the company reports earnings next wednesday the options market implying a 5% move in either direction or a measly $10 million in market cap. how should you play it >> we are going to take a look at selling a call spread

this is one of the things you are going to look to do when you see elevated options premiums. because we have earnings coming up, we are going to see options premiums higher. when you do credit trades and option, they have a higher profitability of profit. you are going to make some money. you are selling a call spread rather than naked calls because it limits your risk. taking a look at the stock, it is on a straight line up we were talking about this last week when we were comparing it to netflix i think the valuation here is getting a little bit ahead of itself as much as i like the company, i don't like the stock that much what i'm looking to do when the stock was trading about 342.5, i could sell the february 342.5 and buy one $10 higher and i was going to collect $4.15 to do that trade. that can only be worth $10 i am getting almost half of the value of that call spread. i am going to make that money if

the stock stays here or drifts lower. if it goes higher, i am facing $5.85 in potential losses. that's where i'm capping that risk to the up side. >> what do you think of the trade? >> if you don't think it is going to continue to rock higher, it has a high probability of making little money if it stays put. there is a strong likelihood there is some giveback it comes to expectation on the year in astraight line they are going to have to put up a big one for people to look past whatever benefit they get from taxes that relates to its eps. >> put it in the context of google it is up 40% this is up 102 it is double the performance of facebook, microsoft, apple it is as extended as another stock that had some trouble this week, caterpillar. it came out with great numbers and yet it wasn't enough stock faltered down today and down yesterday it has priced in almost

everything >> does the price action after earnings make you rethink the direction or trajectory of the stock. >> it was in line with many. it had good numbers. >> does that mean that the trend is broken, in other words? >> it hasn't quite broken yet. it is how it starts to break i think boeing is what is next >> when you think about how the company is operating, results might look that way. this is a company that sells its product years in advance we are not likely to get huge surprises. things like tax cuts might be a potential benefit that would be priced in. people have discussed a weaker dollar that might be a possibility. they are not going to sell more planes i don't see how they are going to blow their doors off of already high expectations now. >> you can repeat this story for so many other stocks in the market right now, ones that have had bottom left. >> we could also google that

net flicks was not that steep. it is the preceding 12 months that makes you that much more at risk when you are only up 40%, that's the greater risk >> you are only up 40. >> let me make one other point implied volatility in boeing is as high as it has been since the first quarter of 2016. mike is looking at this saying i don't know it is going to careen lower. if you did, you would put puts or short the stock outright. the options are giving you that $10 wide and a 50/50 shot. you like the odds of getting a little money on the short premiums side. >> a lot safer than shoring the stock. >> check out stocks of intel, an 18-year high does it have more room to run? the traders will weigh in. got a question for carter, mike, or dan we know you do tweet us right now if it is a good one, we will

answer it later in the show. 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.

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 time to take a look back at some

of our open trades last month, dan said there was more room to run for intel >> the stock has had this massive rally. some of the fundamental moves they have had are paying off you probably want to set up with a short-term call calendar you want to finance the purchase of longer-dated calls. when the stock was trading at 4460, you could sell one of the january 47 calls for 30 cents and buy one of the february 47 calls for 80 cents >> and he was right. intel going absolutely nuts today. the stock surging more than 10% to a 17-year high. what do you do now, dan? >> know what they say about the blind squirrel this is underperforming the sector and the broad market. it is a cheap stock. the fact that it was able to gap despite what we know about some of the glitches, you stay with it you have to roll this up and out. you are lying this february call it is worth 330. there is a good chance they

consolidate again. you take the profits in february and maybe roll it out. i this i this stock fills the september, 2000 gap to the 57ish level. you are probably going to need another catalyst to me, that is out to march or april and i would buy a call spread >> if you look at dan's entry points, it had the gap 13 weeks ago, earnings. on the pullback, on the chart there, dan stepped up for the trade. now, it has a second gap gaps come in twos or threes. you rarely beat one and miss you miss several times this should be the beginning of a follow-through move. 50, close, one up, 55 sxwchlt their movisxwchlt. >> two weeks ago, facebook was headed higher. >> you can put in this line, the prior high >> exactly the prior high. we are back to that level. i think it is going to be contained. again, we have this trend line my hunch is that it it weakness to take advantage of rather than

weakness to stay away from i want to step up and buy some facebook >> i am looking at selling the february 180, 175 put spread it was trading around 180, you could collect $2.15 for that >> facebook shares have rallied more than 5% since then. how do you position yourself with earnings coming up next week >> this is a situation where we have already made half of the money you could make in this trade. we collected just over $2. you could buy it back for $1 this was a winner. we can move on and wait and see what earnings brings >> we filled the gap we are back to an inherently difficult level. exactly that >> up next, tweets and the final call from the options bid. 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. time to take your tweets the first is

terraguchi >> do you use technicals >> i'm not a technical guy >> you often tag team with carter >> i focus on the technicals if i have this guy by my side >> you like to do your own technical anal si technical analysis >> where is it going to get resistance that's what i use technicals to do >> that's a combination. our next tweet is from watching your charts. this person is asking about amd. would you buy some february 9th '14 calls to fill a gap on earnings >> the chart is something i would call a bearish to bullish reversal it does have a gap to fill i would be long whether you do it for an outright call or perhaps the guys have a strtgy >> you are asking for a call

that is a dollar out of the money. to me, that's not a great probability. >> carter? >> google earnings on the long side sgchlt wi >> mike? >> buy call spreads in google and sell them in volume. >> dan >> what he said. >> i am melissa lee. see you back here next friday. our time has expired the following program is a paid commercial presentation for total gym fitness. [music] everybody work out. feel the energy. build a better body. the best you can be. another body easy as 123. oh. ahh. better body as easy as 123 with total gym. i feel fab