welcome back we're live at the nasdaq market site on what is a crazy day and crazy week crazy day not only for the weather, but also for the stock market and the guys are getting ready behind us here here's what's coming up on the show ♪ up, up and away >> boeing shares have been unstoppable this year. but a brewing trade war and scary looking charts could have the dow stock grounded we'll explain. >> plus, the words netflix investors hope to hear this weekend. and the oscar goes to -- >> we'll tell what you oscar gold could mean for netflix's surging stock. and how you would like to make money if apple shares go

up, down, or nowhere at all? >> surely you can't be serious >> we are. and we'll teach you how to do just that using options. it's time to risk less and make more the action begins right now. ♪ i told her i loved her >> but anyway, let's get to it because it was another wild week for the markets. the dow dropping 3%. more than half the index is now in a correction. even hot the hottest dow stock over the last year is beginning to show a couple of signs of cracking boeing falling more than 7% from the high on wednesday. this stock has been untouchable and just an unstoppable money maker for the past year. you say the air might be coming out of boeing longer term. break it down for us >> well, in the sense that at some point if selling continues, it spills over into almost all stocks we've seen certain tech names that are impervious finally coming under pressure. and boeing's no different. let's start with the industrials. this is the xli.

it is very liquid etf. you can trade essentially all s&p 500 industrial stocks. and what we know, of course, is that it's been on a beautiful trend line the issue here and now i if you do revisit a line and start to bounce, you shouldn't come back to it this quickly you should go on and make a new high so the real risk is that we're setting up something of a minor head and shoulders top with a perspective break to new lows. but let's zero in on, of course, this big fellow in terms of relative performance it's really the most important thing. what we know is major sector in the market is going straight up for the better part of 12, 15 months and it has made exactly no progress relative to the s&p 500. and adjusted for beta or risk, a negative alpha proposition has been moving on. here we have boeing versus the

industrial etf xli obviously, massive outperformer. now let's look at boeing going back to '02. one of the principles of trend work is that when you're in an uptrend, you will check back, check back, check back to trend. just as when you're in a down trend often, you will throw back, throw back, throw back to trend. we have now gone longer than any point in history of the data for boeing without a check back to trend. i want to make the bet that this current 7% plus-minus selloff is the beginning of something more. here is the current two year chart. i think we're coming back to the moving average that implies 7% to 8% down from here on a seller of boeing >> unbelievable stock. all right. carter, we'll see you here in a second mike, how are you trading boeing >> boeing is an interesting case i really like the company a great deal and obviously fundamentally the story is pretty strong except

for one thing and that's valuations right now the company is probably trading at about a 20% premium to the historical averages if you think about the fact that the market is looking a little shaky here, you want to worry a little bit about the stocks that are trading at heady valuations. and boeing is one of those also, fairly expensive right now are options on stocks like boeing so we are going to look to a spread specifically -- i was looking at the may 335, 290 put spread i was looking at it. sell the 290's that's going to mitigate the infects of decay obviously, we're taking a look at this particular instance at a fairly sharp pullback. maybe more than we would normally target in this kind of time frame rather -- more like 10% is what i'm thinking in that time frame. >> interesting you chose boeing. we talked about amazon and the prior market leaders that had the runs over the last few months this is a name to make a new high before the market has, obviously. you were just talking about the

s&p down 6% from the prior highs. but at some point, this volatility band, in my opinion, is something to be traded, especially as option prices have come in since, you know, over the last couple of weeks i think where they're targeting and giving themselves a couple months to do it makes a lot of sense. but let's be clear you're choosing one of the toughest and strongest stocks in the market in university love. but that's also one reason why i think it could end up working if we go back and retest those february 9th lows. >> going after a strong stock is dangerous because strong stocks are strong for a reason. and yet when strong stocks come apart, they come apart more than almost anything. look at mcdonald's recently. that's one of the best performing dow stocks. >> what happened to that i was bringing it up on fast money. >> just a beating today. i don't know what the news is. i'm not in the news business it doesn't look good >> it looks like a spilled bag of hamburgers out there. not a good day all right. yeah, so we'll talk more about mcdonald's maybe at some point anybody with a final word on boeing >> no. i mean look this is one of the situations where you can have a

good stock but a bad stock price. and in bad stock price action. i think we have those two things to consider. and right now actually, even though options prices are slightly elevated, you're getting the movement that justifies them >> okay. moving on to a brighter spot in the markets today. and that is the smaller cap names. the russell 2,000 rallying 2%. perhaps this group viewed as a relative safe haven. trade and any kind of a trade war. most smaller companies do about 100% of the sales right here in america. stocks like dillard, del frisco steakhouse, noodles and company and amc soaring. you think the group could run into a bit of trouble coming up? >> right now on this week, you know, the s&p was down 2%. small caps, iwm, etf, tracks, russell 2,000 is down 1% a huge reversal today. a good reversal yesterday. so showing really good relative outperformance here's the thing

there's a lot of things goin on to figure out how the tax cuts from december affect a lot of domestic companies, how raising interest rates do. how strong commodity prices do how a weak dollar does i don't know personally. but the fact that it's being viewed defensively right now, the iwm for all intents and purposes leads me to believe if we're going to retest the february 9th lows, which i believe they would do, you want to tugly take shots at something like the iwm in particular so i have a five-year chart here if you look at this thing, i worked on the trend lines with my main man over here carter when you look at this thing, i really did violate that uptrend from the early 2016 double bottom low i think you can probably target a move back toward 140 over the next couple of months. so how i'm trading this here, i'm looking at the april expiration today you can buy the april 150 spread paying $2 for that buying one of the april, 150 puts for 335, selling one of the april 140 puts at 135. it cost you $2 breaks even down at 148. that's down $4 from here

but you can make up to 8 up to 140. that may be a little aggressive here i want to sell that down side put to even up a scenario where i'm risking two to possibly make eight. >> i think the market is wise. the market knows trade wars don't have anything to do with small domestic companies we know the weighting in the russell is heavy in the financials and financials with the rate environment held up well to some extent, i think the outperformance of late maybe is a wise thing on the part of investors. i think the broader point is that if all equities are getting under more pressure, this will signal >> i think that is really the issue. with respect to taking a look, $2 for a $10 wide put spread paying 4-1, we like that relationship a lot one of the other things is when people are concerned they start buying some of those wing puts you get bid. we call that skew in the options market and that's the reason that you want to buy the at the money put and sell the money one i like the structure a lot we've certainly demonstrated we can get the movement that we wanted

>> what would that skew symbolize to you >> it's the cost of insurance. and more specifically it's the cost of a sharp downward move. so when people are buying way out of the money puts, what they're really buying is crash protection >> we haven't seen a lot of that until recently now we're in a new volatility regime, seeing things move around a lot if you like to look at charts of implied volatility which is the price of options of an underlying, what you're seeing right now is the realized volatility how much the underlying is moving it is higher than the options price right now. to me, what i'm thinking about doing long premium directional trades, that's an attractive setup. that's why i like the idea of buying a 150, 140, giving myself six or seven weeks i have this thing play out i like the risk reward and literally risking what, 1.5%, 2% or something like that of the stock price. if i get it right and goes back to the fed, then is going to be a great way to trade it. >> okay. thank you very much. for more options action, head to our website or sign up for our newsletter in the meantime, here's what else is coming up on the program.

how would you like to make money if apple shares go up, down or nowhere at all >> that's incredible >> nope. it's actually one of the simplest options trades around we'll teach you how to do it plus, calling all options action fans reach into your pocket not your phone, and tweet us your question at 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?

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(sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪

trade 24/5, only with td ameritrade. welcome back to "options action." happy friday netflix hitting the red carpet at the 90th annual oscars this weekend. by the way, the stock hitting an all time high today. for more about that, let's go to julia boorstin in los angeles. julia? >> hey, brian. the red carpet is now covered with white plastic to protect it from the rain. that's overhead right now. and there is also an oscar over there. that is in a trash bag but by sunday, the red carpet will be prepped and a big day for netflix. it has eight nominations compared to just three last year and four of netflix's nominations are for "mudbound," best supporting actress, song, adapted screenplay and cinematography that is broad acclaim for a movie that netflix bought at sundance they broke into hollywood's elite ranks.

the acadecaacademy seems to get the resistance to crack the business model, netflix wants to release movies in theaters on the same day that they were released on netflix. netflix is also nominated for two documentaries. as well as foreign language film "on body and soul" and a short documentary called "heroin." amazon drew only one nomination this year. the best original screen play for "big sick. this after last year amazon had seven nominations and three wins, two for manchester by the sea and one for foreign language film the salesman. now the new oscars attention to netflix could help it lure fil makers that want reassurance that netflix can help them earn traditional hollywood acclaim as well as global reach now netflix said in the last earnings it will spend as much as $8 billion on content this year the goal of half of that content being original that investment seems to be paying off with faster than expected subscriber growth and stock up 115% over the past 12 months

crossing the $300 mark today to hit a new all time high. it is worth noting that netflix is the only f.a.n.g. stock out there this week. >> great stock good luck with the weather never have to say that in l.a. good luck with the weather this weekend. >> all right so as julia noted, netflix is up 50% this year. that's the best start to a year for netflix since 2012 the stock is now worth more than general electric can you believe that guys? wow. so mike is at the plaza with a call to action on netflix. >> okay. so we'll take a look at using a call spread and we're taking a look at buying a call spread typically speaking, this is a trade that you want to do when you think that a stock could move fairly sharply. and netflix is certainly demonstrated it can do that. the other thing i'm taking a look at here is what you just referenced which is that the stock is trading near an all time high. and as it does this, we're also

seeing a name that, sure, it's worth more than general electric perhaps in several other companies, it's a pretty hefty valuation. so why don't we take a quick look at the chart. we can obviously see that it's had a very sharp move here to the upside this right here came as it seems to so often when people get a favorable surprise out of earnings and that's one of the reasons why i am not inclined to fade the stock as i am on so many others right now the trade i was looking at, the april 290/340 call spread, can you buy the 290 calls for $18.83 sell the 340s against it a net debit of $15 on a spread that is $50 wide this is the kind of trade that that you're going to be interested in doing if you're looking to continue to press a bullish bet when the market is looking a little wobbly here in a stock that has a very high valuation and finally demonstrated they can move very sharply. >> all right dan, do you like mike's trade? >> if you're bullish on it you do the stock closing all time high.

really important to remember this stock is up 27% since the intraday low on february 9th and you know mike just talked about this thing or you just mentioned that it has the same market cap as ge it's at $130 million market cap. you know what disney's market cap is $155 billion they thought that disney was going to buy netflix so at the end of the day, if you're playing this with a long side, there is something else going on other than maybe they're going to win a couple oscars maybe it's gone from them being a target of -- >> netflix will buy something big. >> that's what i'm saying. i don't know it makes sense >> we know it's steep. i'm not saying that's a bad thing. the question is this you know the precondition for really great weakness is, preceding weakness mcdonald's is rolling over for weeks and then gets in real trouble. in 1987, the stock market was down 18, 19% before it plunged to make a new high day after day

in this tape that is not just random they're real performers and real individuals that are saying, you know what? i'm going to hold this you can say they're being naive. but that relative strength is so impressive, i'm inclined to say let it run >> and this is after a washout so weak hands did get flushed. >> that's right. >> on a different note, a little related to netflix, is there any concern of any of you just jump in that the market is too concentrated and just a few couple stocks, amazon, netflix >> so the top five stocks right now are the same value about $3.7 trillion as the bottom 250 in the s&p but that is not that rare condition. if you look back at certain areas on big banks have been that way we know the names. they're all performing amazon, google >> the largest companies by definition because they are the largest companies are going to have -- >> i mean large, i had a trader, a hedge fund guy tell me last year sort of tongue and cheek but meant it, if you think the market is going down, just short netflix and amazon and walk

away they have taken the market up. >> you don't do it -- >> am i making sense >> it's like picking a point in the air and saying this is the time we were talking about the iwm. the entire market cap all 2,000 stocks, it's own the same as the top six, seven stocks in the s&p ultimately, equities are determined by the largest names. >> let me ask more directly. if amazon rolled over, could the whole market -- >> sure. >> could the nasdaq go up if amazon didn't? >> of course the nasdaq went up for a couple years when apple was going sideways the higher we go, the parabolic move in january, december and january just couldn't be sustained. the thing about the qqq, the top five holdings. it's apple, alphabet and facebook at the end of the day, all the stocks are going to probably act pretty similar in a down draft >> okay. up next, amid all the recent market turmoil, apple has been soaring. the tech giant up 10% in the past month

that is great news for dan plus, got a question about this crazy stock move send us a tweet to our address we may read it later on in the show you are watching "options action" live at the market site. don't go anywhere. we'll be back. 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. and i recently had hi, ia heart attack. it changed my life. but i'm a survivor. after my heart attack, my doctor prescribed brilinta. it's for people who have been hospitalized for a heart attack. brilinta is taken with a low-dose aspirin.

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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 it is time to look back at one of our winning trades. last month dan thought apple found a floor. here's how he made money >> options action, it's how we trade like tech geniuses risk less so you can make more and that's exactly what dan did with his bullish bet on apple. dan thought apple was about to make a comeback. but just buying the stock, 100 shares would put him back more than $16,000 >> good lord that's a lot of money! >> you got that right. so to make a different kind of bullish bet, dan instead sold the march 150 strike put for $1.60 credit now that $1.60 is the most he can make on intratrade

but in order to keep all that money, dan needs apple shares to stay above that 150 strike by expiration but it gets even better. that's because even if apple shares trade below the 150 strike, dan can still make money. in fact, he would see profits so long as apple stays above that 150 strike minus the credit from the trade. or above $148.40 by march expiration >> everybody getting this so far? >> maybe this will clear it up dan can do something not even the greatest apple genius can do, make money if apple shares go up, down, or nowhere at all let's not get too excited. there is a tradeoff. and below that $148.40, dan could run into big trouble that's because by selling that put, dan could be first to buy apple at $150. even if the stock goes all the way to zero. but nobody puts apple in the corner and since the time of the trade, the stock has rallied nearly

10%. making dan's trade a winner. and now, options fans all over the world have been waiting in line to find out one thing what will dan do now >> joe jackson that was a musical package. you made us some money what are you going to do >> the stock had gone down from $180 down to $160 much i was looking at the expiration and saying i think can you take in 1% by selling the 150 put over the next five or six weeks looked like a good high probability bet. that put that was sold at 160 is offered at a dime. i think you take that in but what do you do with a stock here that's the sort of strategy. if you did that every couple months, think about that as a yield enhancement strategy or when looking to dip your toe in the water and taking premium on a stock you want to own, that makes sense. i like that strategy after the

stock sold off after the news was out. >> i mean obviously, it probably bounced a little harder than you anticipated. given how the market had performed there, this is really a good high probability type of bet that you can make. as we pointed out at the time, you know, apple, because it has so much cash on the balance sheet, these are the names where put rights can make a lot of sense. especially in the conditions we had. volatility moved higher. premiums were elevated you basically have that balance sheet at the bottom supporting it >> up next, your tweets. and the final calls. 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 at holiday inn express, we can't guarantee that you'll be able to contain yourself at our breakfast bar. morning, egg white omelet. sup lady bacon! fruit, there it is! but we can guarantee that you'll get the best price when you book with us. holiday inn express. be the readiest.

(sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, only with td ameritrade. time for one tweet do you recommend selling covered calls on stocks to narrow your range? >> absolutely. i love selled covered calls. not as a hedge, as a way to bring in a little yield. we have probably the best environment for that that we've

seen in a while. >> final call? >> sell boeing >> sell boeing >> put spreads boeing. >> yeah. i like iwm march put spreads >> all right a couple calls on boeing and iwm puts thanks for making it easy. i'm brian sullivan don't go anywhere. "mad money" begins right now >> this is a paid program brought to you by the international fellowship of christians and jews, presenting the plight facing god's chosen people today so that you can be a blessing to them through your prayers and christian love. >> and it was right here in those ravines jews would be brought. they were walked for kilometers. ♪ comfort my people... >> each of them went through unbearable darkness. ♪ comfort my people...