hey, there we're live at the nasdaq market site on this expiration friday the guys getting ready behind me while they're doing that, here's what's coming up on the show >> it's got to be the shoes! >> shoes. >> shoes. >> shoes. >> announcer: actually, it's the high-level executive departures that's weighing on nike shares, and we'll tell you what it could mean for the stock when it reports earnings next week plus -- ♪ pretty much sums up what's going on with bitcoin, and that's crushed a number of bitcoin stocks, except one we'll give you the name and tell you why traders are excited. and -- ♪ tonight i'm gonna party like it's 1999 ♪

one major tech name from 1999 looks poised for a breakout next week we'll tell you how to profit it's time to risk less and make more the action begins right now. ♪ and let's get right to it, because nike shares were under pressure today after two top executives left the company amidst an investigation for inappropriate workplace behavior this comes as the stock had been on somewhat of a tear, up 15% over the past year, one of the best-performing stocks this year but with problems in the suite and earnings next week, should you short the stock? let's get in the money and dan, you're trading nike these days >> i don't know if you just short it on an outright basis, but i think the news is interesting. i think we're going to become pretty comfortable with these announcements, meaning i don't think these stocks will get sold off really hard for this sort of thing. i think it's interesting how they positioned this announcement, saying that parker, the ceo, would stay on past 2020 to kind of, i guess, you know, help serve as a little buffer here. so, the way i'm looking at this is really how the stock has

acted over the last six months or so, up about 30% from its 52-week lows may and october the implied move on earnings next thursday is about 5% in either direction, which seems pretty hefty, but that's how much it's moved over the last four quarters. so really what i want to focus on is a little bit of that premium valuation, that failure at that prior high just from late last month here, and the potential for a lot of good news to be in the stock so to me right now, i just think you have a potential for a failure right there at those prior highs. we have a one-year chart and i'll let carter talk about this, but which is that caught my eye and why i'll target a move back to $60 over the next five or so weeks. look at that $60 seems to be a great support level. it seems to be right on that up trend from those october lows. so right now, just targeting the earnings event next week where the stock was trading at $66.50, looking out to april expiration, you could buy the $65.60 put spread, paying $1 for that, buying one of the april $65 puts for $1.50, selling one of the april $60 puts at 60 cents

your risk is $1. you break even at 64 bucks you can make between $64 and $60. i like the reward here i think there's probably a lot of good news in the stock and i don't think there's a lot of things that will take it up over that breakout level. >> there's two sort of critical reasons why i think i really like the structure you've chosen and the strikes you've chosen. for one thing, we often talk about how much stock moves on earnings and that's sort of a one-day look if you look at how nike has typically behaved for the one month that follows earnings, you're looking at maybe a 6% or 7% move on average look at the strikes he's chosen, you basically are targeting that move to the down side. the other thing is, why do you want to do a spread going into a catalyst in this case, you do see slightly elevated options premiums and options will decay a little bit each day and if you look at the 65 strike you're buying, that's going to decay about $3.10 a day, if you own it and the one you're selling is going to decay about $1.80, offsetting a lot of essentially the rental expensive owning options each day, so i like the

structure a lot. >> let's look at the first chart dan had up, the issue of where the stock is in relation to where it's been. the long-term chart, we know nike has rallied right back to its highs of 2015. and in principle, a normal condition is, after rallying to a prior high, you contend with it, meaning you back-end fill. the stock's been doing this for the better part of three months. normal so, after contending with a high, you either exceed it, it will be the earnings that do it, or you back away from it, but it's a perfect setup for a very dynamic moment now, is it 50/50 making your bet? it's going to be earnings. the one thing that gives me pause about being underweight or short it is that retail is very poor, and nike is holding up very well relative to retail big moment coming. i'm inclined to bet up, butit' not going to be casual, whatever happens. >> well, it's what makes the market just short it. the question is would i be short this stock given what we know about the space in general adidas had a massive rally after

it i like the risk-reward risking $1 i probably have probably 45% probability in a week or so of being basically unchanged on this trade, if you look at kind of the deltas that are in this option structure here. if i get the direction right so, to me, i have five weeks for this thing to play out here. as long as it doesn't go the opposite way on a big gap higher, i'm in the game. all right, let's move on it's not just nike reporting next week, a slew of big names are out with earnings, including oracle, fedex, general mills, micron chartmaster says one of those stocks could break out head over to the plasma chart. >> it's all tech all the time. talking about an old-line tech that, if we've got this analysis right, is about to break out oracle versus its sector, one-year chart we know what it is, of course. oracle is the laggard, having basically underperformed its peers by 50%, so to speak, or its peers doubling it.

here's a longer-term chart that's one year. the next chart shows over four or five. there it is. same circumstance, right you've got this lag. and i want to show you where the lag really started take a look at the longer-term chart. now we're up to where it really started to get juicy basically, oracle has kept up until about about right here so, i want to zero in on this moment and see if, indeed, oracle has catch-up potential or pop potential. so, several ways to draw the lines. this is a five-year chart. one way to draw the lines would be this. the cup and handle and that usually is resolved by an up. next way to draw the lines is a wedge that usually is resolved up. one more way to draw the lines after breaking out from well-defined top, often after breaking out, you check back to the top, pivot, and start to go

again. so, now, hold your eye on that classic line right there and look at the long-term chart going back to the dotcom era, and here it is look at this it literally was a checkback right to the highs, the breakout what a setup a classic breakout to all-time highs. i hov it i want to be long oracle going into its earnings. charts speak for themselves. >> i love it, he says. wow! mike, how are you trading oracle >> yeah, so i mean, we could talk about the fundamentals all day. this is ainge options show, though, and we're going into a notable catalyst and he was making a technical setup let's look at how the stock typically trades on earnings this is a stock that, kind of like nike, you're going to see 5% to 6% moves on average. what's interesting is that when i was looking at this earlier today, you could buy the april $52.50 calls for $1.45 where these closed so those are going to break even to the upside if oracle is above

$53.95 by expiration so, if you think about the fac that it could move 5% or 6% one way or the other, so you're talking about a $2.50-$2.75 move, you're essentially getting a free look on an option that's going to last until the 20th it. now, of course, if it does go higher, you're going to have an opportunity to do a couple of things you can sell this option, if it is profitable, or you could roll into a call spread, as dan very often does in these types of trades but right now, i think this is really a very favorable price that we're seeing on one-month options going into -- >> so, mike just worked into what we talk about all the time. we say the implied move in the options market for an event. what is that that's the after-money straddle. he's buying a half of the straddle, the at-the-money call. he needs a 3% breakeven. we talk about this in events all the time it's really important. you need a lot of things just to break even you need to get direction, magnitude of the room and timing right, okay? so, these are ones where you take these inputs, his charts, they do look kind of good,

right? you know, the tech bid for these sorts of names is pretty good, too. but mike's defining his risk to less than 3% with a $54 break-even over the next month or so. it seems like a pretty good risk-reward. >> and here just in terms of technique or methodology, at least from this seat, charts, it's the exact same principle as what we're talking about with nike, right? when you get to a former high, the reason why you back-end fill, as nike did, is because there's memory at the former high people who own it or just being made whole and they sell into the move after contending with it, you can exceed it, as nike is perspectively going to do, or as oracle has already done. i think it should be for sale. >> our research indicated that maybe 70% to 80% of a stock's movement throughout the year can be attributed to their four quarterly earnings reports, right? so, if there's ever a time when you really need to think about whether the options are very fairly priced, and i think they certainly are in this case, this is it. you know, going into earnings as a catalyst and this is a stock that the street loves, which could cut

both ways, of course, you know so, i like the stock fundamentally. they're in the right businesses. but if, for some reason, it came disappointing -- we did see this over the last four quarters, a down move. >> the last two quarters, the stock has sold off, rallied into the result cloud sales had not hit expectations, and that's what investors are keyed on to me, it goes back to defining your risk in an event where you need to get a lot right to break even so the risk-reward makes sense the charts look good. >> for everything "options action," check out optionsaction.cnbc.com and sign up for the super cool newsletter rumor has it that dan reads it every night before bed so, what are you waiting for here's what's coming up next >> don't be a -- >> announcer: actually, maybe you should, because shares of square are surging, and it has nothing to do with bitcoin we'll explain. plus, calling all "options action" fans reach into your pocket, grab your phone and tweet us your

question @optionsaction. 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

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uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. so lionel, what does 24/5 mean to you?rade well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you? welcome back to "options action." bitcoin taking down this year and taking crypto stocks with it, except for one for more, a man who never gets knocked down, dom chu.

>> you "fast money" and "options action" folks are punny. i certainly do get knocked down, but i get up again that's me. as crypto prices broadly have been heading lower of late, the small and microcap stocks that tried to ride the wave by either putting blockchain in their names or changing business plans to focus on crypto haven't fared that well. so, they went up and in the case of say a stock like blockchain, that's resolving downward a stock that hit over 46 bucks a share around the time bitcoin prices peaked in mid-december is now trading around 8 bucks a share. then you've got longfin, whose ceo came on "fast money" tried to talk his stock down, a stock that went public around 5 bucks a share, got up to nearly $143 a share on blockchain optimism now it's closer to 50 bucks. even more established companies like overstock.com rode that crypto wave higher and has now lost over half its value since hitting a near-term high in

january. the one standout has been mobile payments processor square. it is working on incorporating some elements of crypto into its platforms, but some will argue that square goes beyond just a crypto play. in any event, melissa, bitcoin prices falling that's also having an effect on assets elsewhere in the market they're all getting dragged down alongside it back over to you. >> dom chu. square has been up 200% in the past year alone, but if you missed the raleighm, relax, because professor khouw's got a way to get in. he's at the plaza with his call to action. hey, mike. >> all right, we'll look at selling a put spread why might we want to look at this number one, selling a put spread is a trade that has limited risk, defined by the two strikes that you're both long and short. secondly, this is a trade where you are collecting premiums, so this is putting time on your side and finally, this depends probably more also on the strikes and expirations you choose, you get a higher probability of profit. so, let's take a quick look

here we can see, as melissa was just referring to, the stock has had quite an enormous move so, to get in and start buying the stock right at this level, you can see that it's come a long way awfully quickly so, what goes up could potentially go down. we're going to try to participate to the upside, get time working on our side without taking all of that downside risk specifically what i was looking at was the april $55-$50 put spread you can select by buying the $50 put against it for $1.30 and limit your risk. that's 40% of the distance between these strikes. now, importantly, we were talking earlier about if you see an identifiable catalyst, you might want to own options. in this case, their next earnings is actually going to be reported on may 2nd, so these options are going to expire before then, which is one of the reasons we happen to like this trade, since that would obviously be probably the biggest and most important near-term catalyst we see. we get to collect some premium before that happens. >> what do you think, dan? >> i like the trade idea

i think the third point is most important, the high probability of success he's got basically a 50% chance of being profitable or losing money, that sort of thing, but if it does nothing at all, just sits here, he's collecting as that option dekays that he's short at the in e. so, it's going lower and it goes higher, you have an opportunity to take a quick profit without a lot of risk, so i like the trade. >> as charts go, it's parabolic. the issue is, does that last forever? for now, it's lasting in almost all tack we know boeing was parabolic, no more, mcdonald's, stocks that were up. so, at some point it comes down. hard to know when. but surely, if you're long, taking profits -- >> we started the segment talking crypto stocks. square is not, but you can buy bitcoin on it. analysts that have done work on this company that's expected to do $1.3 billion in sales this year think it's like a $30

million revenue opportunity this year so if you're buying square because you think it's a crypto stock, you're buying it for the wrong reasons. i want to be clear about that. >> the question i would have is even if this does start to run out of gas right about here, are we expecting a sharp sell-off or do you expect it to trade a little bit sideways? because our break-even, 53 bucks -- >> that's why that's so smart. because if you think about it, there are very few ends that are straight up and then straight down that only comes in a biotech, where you get sort of an act of god that makes it drop. >> binary event. >> usually a great run stalls like in anything, a sports season, anything and you stall so it wouldn't be like that. >> right, because the options market right now is implying there's probably about a 65% probability that the stock is going to close above $53 by april expiration, so that's the chances that you either break even, make some money, or make all of the money, right? so, certainly better than a coin toss. >> do you think most investors are in square because of the

crypto because they tried to talk that down on their last earnings call they're very clear about it. >> i think they're very smart. they have a cash app that's amazing and is growing like wildfire why wouldn't you have it to invest in cryptocurrency, so they don't want to be known as that what's important, look at how bitcoin, the largest cryptocurrency, has done this year and look at how square has done they're totally uncore are lated. to me, the market's telling you it's not a crypto stock. i'm just saying, don't buy it because you think it's a crypto stock. still ahead, boeing posting its worst week in more than two years, shedding a cool $15 billion in market cap. so, is boeing's incredible run done the traders will weigh in. plus, got a question for one of our traders of course you do tweet us @optionsaction. if it's not mean or laced with profanities, we might read it later in the show. live at the nasdaq market site in new york city's times squares. don't go anywhere. 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. 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.

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 a look back at some of our only trades two weeks ago, khouw and carter said boeing's amazing run was done >> one of the principles of trend work is, is that when you're in up trend, 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 the history of the data for boeing without a check back to trend i want to make the bet that this current 7% plus-minus sell-off is the beginning of something more. >> i was looking at the may put spread, you could sell the $2.90s against it for $6.30. >> they were right boeing shares fell nearly 7% in the past week, its worst week in more than two years. so, now what, mike >> so, well, first of all, the trade is up modestly, i would say at this point. obviously, we were targeting a sharper move down and we are giving ourselves a lot more time for that to play out so, my inclination, actually, is to stay in a bearish bet here. of course, the puts we bought, those 335s, are now in the money. so, one thing you certainly could do and i would do myself if you're in this trade is sell

the 335s, roll down maybe to the 330s, so you're at least looking at an out of the money put spread, but we have all the way until may. that's going to capture earnings we have plenty of reasons to stay in the trade. >> right and if you put the context, the sell-off into the context of the preceding move, it's gone from 90 to 350, we've given back nothing. so in principle, if this is trouble or the beginning of trouble, it's likely not the end of trouble. >> do the odds tip in their favor because of the potential trade war in tariffs >> it's funny, this is a situation where this stock hasn't caught a bounce where other sectors did after they were hit hard with the announcements coming back and forth over the last two weeks. this has lost almost $20 billion in market cap. when you think of the market cap gained by steel and aluminum stocks, it's de minimis compared to what this one has lost. to me, i wonder to you, carter, because it seems there was a fundamental reason that kind of sparked it, does that give you more conviction that you'll see $300 in the near term? >> always in the sense that while i don't look at the fundamentals or funnymentals, as

i call it, it's usually something like that that starts to cause the break in the chart. because otherwise, good trends don't stop. up next, your tweets and the final call from the options pits 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

so lionel, what does 24/5 mean to you?rade well, it means i can trade after the market closes. it's true. so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise.

right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you? welcome back to "options action." we have breaking news on qualcomm jackie deangelis is in the newsroom. >> we are hearing in the press release, paul jacobs, former ceo and board member of qualcomm, will not be renominated to the board of directors because of the notification to the board that he's made a proposal to acquire qualcomm so, take a look at shares of qualcomm trading up. >> jackie, thank you jackie deangelis in the newsroom is this likely do you think this is a possibility, dan >> well, i think it opens the door to a lot of other things, especially we were just talking about during the break when you look at qualcomm's balance sheet, their licensing issues with apple that are likely to be shored up some time in the near future, this is a

really cheap stock, especially when we've seen $300 billion of m&a in the semiconductor space so at some point, these guys are going to get in play i don't know who it is, maybe intel. broad can't do it, but at some point, they probably will. >> when we touched on this last week, one of the things we talked about was this is trading about ten times ebitda that's sort of a measure of free cash flow. guys will be issuing a lot of debt that's what you care about is cash flow. they have a lot of it. somebody could conceivably make a run at it. >> and a major laggard turning a corner, so opportunity. time for your tweets how do you calculate probabilities of underlying prices based on option prices? for example, the 63% chance of square above $53 by april? >> hopefully, your brokerage platform can give you some of those probabilities, but if you can't, one of the things you want to look at is the delta of an option that's a sort of back of the napkin way to see what the probability is that a stock will be at that level or beyond it by expiration.

>> carter, final call time. >> buy oracle. >> mike. >> put spreads in square. >> and i like the put spread. >> our time has expired. i'm melissa lee. for more "options action," head to optionsaction.cnbc.com. don't go anywhere. "mad money" with jim cramer is next - [announcer] the following is a paid advertisement for the philips smokeless indoor grill. authentic grilled taste. virtually no smoke. the innovators and engineers at philips love to grill, but they know from experience that you can't always grill outside, so they reinvented how to grill. anytime, anywhere, and any place you want. this is the latest kitchen innovation from philips, the smokeless indoor grill. it brings the best of the outdoors, inside, with authentic grilled flavor at the flip of a switch. whether or not the sun is shining, there is snow on the ground, or it's raining all day long, grilling season is always open. now you can have fresh and tasty, perfectly grilled steaks,