out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. hey there, we are live at the nasdaq market site on this friday afternoon look who decided to stick around for the show guy there with his signature oa jacket and everything. guy and the traders are getting ready. here's what's coming up on the show >> that's what tech investors did this week. and there is something in the charts that suggests even more pain for some of the group's high flyers. we'll break it down. plus -- energy stocks coming into bloom the best performing sector this month. and one of the traders says there is one name that looks

poised for a bigger breakout we'll tell you what it is. and later -- >> housekeeping. >> more than half the dow is in a correction but if you own one of the beaten names, mike has a way to clean up some of your losses for next to nothing it's time to risk less and make more the action begins now. let's get right to it. tech saw its worst week since 2011 shedding $510 billion in market cap at the center, facebook sinking 14%. there were other tech darlings causing heart break. oracle, micron, alphabet and nvidia all getting crushed the xlk tech etf off 9.9% from its high is there more pain ahead let's go to dan looking a the cracks in the chip stocks. >> let's check the etf that tracks the semiconductor sector

here it massively outperformed the 1516 months of broader tech. this outperformance that still exists this year even with the nasdaq down 3.5% i think is an opportunity here for traders to be nimble on the short side. if you are of the belief that the s&p and or the nasdaq are going back to those prior lows we entered the thooer year with optimism about m&a, exposure to new technologies, autonomous driving and ai and that kind of thing. the white house put the kwai bosch on the broadcom/qualcomm deal, i think all this protectionist stuff about the tariffs could hit this sector. i have got the say look at this chart here, the serks mh it looks like it's going back to that up trend that's been in place. i don't think i'm saying that the thing is going to crash. but i think if the s&p and nasdaq go back to those pryer

february 9 lows this is going back to the mid and low 90s. i think there is an easy way to play this on a bounce. let's say we get a little bounce on monday morning. when i was looking at the smh at 1:06 you could look out to may expiration and by the 95105 put spreads. that's your 250. it breaks even at 102, half on the downside, and you make up to 750 down to 95 dollars between now and may expiration this is looking to target a move just back to that up end trend a lot of technician would tell you this uptrend would still be in place if you had the stock at 95 two months from now. >> what do you think of dan's trade mike >> i definitely like the structure, given the fact as he pointed out the sentiment was weak in this space the end of this week. i think it's tough to press shorts here especially when you consider the big constituent

stocks i grant the kentment is store on micron i like that story fundamentally. and i like the fundamental of intel. a cheap stock. this is a way that you can risk a small amount, 2.5% of the index to make a bearish bet f. it is going to play out and there is going to be further weakness we are going to know in the next 50 or 60 days >> did you notice i'm wearing a jacket. >> i have never seen you wear a jacket before. >> this is a smart show. >> you brought glasses, which i have also never seen. >> reading glasses my question to dan would be we are talking about a vix that's north of 24 or so. and we haven't been able to sustain those levels i guess my question would be buying options in this environment, is that in and of itself a risk? >> well, i mean -- guy, when i started looking at this this afternoon, you know, the smh was trading at 106

the fact it dropped two points by the time i sent the trading idea and now the show tells you there is potential for extreme volatility to he moo i think you have a situation -- mike mentioned one of the biggest components is intel. that is a low vol name low volatility has been suppressed because of some of the larger names if the broad market goes back to those lows this thing is going to be back unchanged on the year that's really all i'm targeting here to me i think option prices seem pretty reasonable. the idea with this trade is you get a pop, we had a horrible close today. you get pop monday, tuesday, you look to put this out about 106ish. >> one of the thing i would quickly point out is that the reason the vix is elevated is because the market is moving around what we aren't seeing is that options are grossly overpriced relative to that movement specially in the indexes and the sector markets like this one. >> as tech and the broader market gets slammed energy

emerged as a bright spot, the best approximating sector this among. mike has a name in the group that he thinks is poised for breakout what have you got? >> halliburton we mentioned it in december on the long side. it is a name i still like. it has had a wild ride in the interim. it's down sharply from late january highs. that's one of the reasons why i think it represents a good opportunity here fir of all this is a domestic play the oil business is rip roaring right now. the best way to take advantage of that fact, the fact that the stock has pulled back and the fact we have higher implied volume tilts, options premiums, what guy was pointing out right now i'm looking out to may, you could sell the 47.5 put in halliburton for 235. when you get put the stock if you are at that strike price you are going to end up owning it at close to 45 dollars. that's a level we haven't seen for quite a while.

we can clearly see this is one of those situation where is we are going to be capitalizing on the hire options premiums. capitalizing on the fact the stock is lower than it was in a way you are hoping you do get put the stock in this case. >> i think i was on that tv show talking about halliburton. >> on the long put. >> my concern back in december was a valuation concern. we had a conversation about it now if you look halliburton is going to earn close to 3.50 nextee now you have a reasonable valuation, 13.5, 14 times forward earnings in an environment where oil looks to be going higher for a number of different reasons. i like the play here. >> i was going to add one other point, too, which is let's just say for the sake of argument that halliburton treads sideways or goes a lubt higher testimony worst case is you are going to collect the put premium, between 4 and 5% of the current stock price in less that two months. that's a good rate of return especially when you look at the fact that many of the names that

began the year higher are sideways or a little bit lower. >> dpan what do you think of mike's trading. >> the most important ones for this trade, it is an options trade is the fact there is a high probability of a small profit in this trade that's really what i think mike is going for he's not banging the table and saying buy halliburton here. he's saying i i think it has gotten to the level where options are take advantage over the next five or six weeks in this name. i like this strategy, especially when there is uncertainty in the broader market or certain sectors. this is a great way to dip your toe in the water trying to get long or get some long exposure without being too aggressive. >> yeah. that's basically the whole idea here we are trying to improve the probability of profit. this one has a high probability of profit, custom is nice. and of course we are always happy to just collect some premium over time if we can. and that's what this trade is going to do if this stock goes

sideways >> for everything "options action" check out our website. while you are there sign up for our newsletter it's so good that guy can't put it down. >> i read it -- >> with your reading glasses what are you waiting for here's what's coming up next >> more than half the dow has crashed into a correction. but if you own one of the crumbling stocks, relax. because mike khouw has a way to fix your broken trade for little to no cost plus, calling all "options action" fans reach into your pocket grab your phone. and tweet us your question if it's nice, we'll answer it on air when "options action" returns. >> logical so lionel, what does being able to trade >> announcer: "options action" is sponsored by think or swim by td ameritrade. ll... 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? 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. no more than 100 milligrams as it affects how well brilinta works. brilinta helps keep platelets from sticking together and forming a clot. in a clinical study, brilinta worked better than plavix. brilinta reduced the chance of having another heart attack... ...or dying from one. don't stop taking brilinta without talking to your doctor, since stopping it too soon increases your risk of clots in your stent, heart attack, stroke, and even death. brilinta may cause bruising or bleeding more easily, or serious, sometimes fatal bleeding. don't take brilinta if you have bleeding, like stomach ulcers, a history of bleeding in the brain, or severe liver problems.

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only with td ameritrade. welcome back to "options action." the wild market swing sends, the dow into a correction and ahandful of once high flying names are reeling. what are some of the biggest dow downers. dominic chu, who is never a downer, has the details. hey dom. >> well, accentuate the positive and eliminate the negative latch on to the affirmative and don't mess with mr. in between like you said we wanted to look at the blue chip stocks that stumbled as of late. out of the 30 dow members half of them have not only hit a 52 week high is he far in 2018 but they have also fallen from those levels by 10% or more. among the names on the list. boeing, along with caterpillar have become parameters for the overall trade and tariffs headlines, especially when it comes to what happens in a hypothetical trade war with china.

boeing is around 13% below its recent highs caterpillar, meanwhile around 15% below its recent high. on the fast-food front, you have got mcdonald's it's around 12% below levels and home depot, which had been one of the bigger beneficiaries of the recent rally, is now 16% below its recent highs the biggest pullback of them all is retailer walmart which is now over 20% below its recent highs. those are symptom of the stocks that had positive trends just recently but now have stumbled rather significantly ones to watch. back over to you. >> dom chu in the newsroom if you own one of those stocks don't worry, mike khouw has a simple strategy to help you recover some of your losses. est he's at the plasma with the call to action >> some of the most common questions we get on the options side is i own a stock higher than where it is right now is there an option streaming to help me out.

i can't go back in time but we might be able to help you a little bit by making more money if the stock recovers. this is an environment you are going to see higher volatility higher options premiums. these are strategies you want to employ provided that your fundamental story hasn't changed and you still like the stock and the final thing you want to do is of course you could always add to your stock position but what if you don't want to risk a whole lot more additional cap tachl we will look at home de t depot,which is off sharply one of the interesting thing, i think this is a good stock that may have gotten ahead of it self into late january. obviously we can see that it's fallen back fairly sharply if you look at a longer term trend. i think this story is still a good one it's trading at about 18 times earnings and it's growing the top line at anywhere from 6 to 8% and it's the best operator in the space. what's the trade. >> we are simply going to look out to may what you can do is buy one of the 180 calls.

spend 445 for that and then sell two each of the 9 190 calls for 160. so you are collecting 320. all in you are going to spend 125. you can add this to your long home depot position for every hundred shares if it rises by 125 you are going to make the premium you spend. between 180 and 190 you are going to double your profits the reason this is important is often when the stock falls as shortly as it has done it will hit resistance when it is gets back to that prior high. remember the stock topped out around 200 this is a way to lever your gains without taking a lot of kremtal risk. >> dan, what do you think of mike's strategy? >> i love the trade structure. here's a stock that's down 17% since mid to late january. so mike is really looking to take, you know, figuring out how to double up a nine point gain

between 181 and 190 if you get that move over the next month or two. to me i like the idea. and you are taking advantage of high implied volatility which is really helping finance this leveraged overwrite for all intents and purposes i like this trade idea especially in a blue chip name like home depot that some may feel has been unfairly thrown out, baby with the bath water. >> do you feel that way guy adami? >> i don't like that i'm surprised. that's a lazy. baby with the bath water is lazy dan knows he regrets having said it dan i'll give you a pass because you are in san diego and it's late. >> you don't want to throw any babies anywhere. >> no. >> it is an expression. >> there are no babies being thrown in the making of this episode of "options action." >> it is trading at a market multiple it got over its skis when it was trading at 22 or 23 times earnings but the story hasn't changed at these levels to me it is a

compelling story. >> yeah, we are probably going to get better than 14.5 operating margins out of this business we are seeing great droetd they are going to get a one time boost out of big ticket sales after recent storms. they are beneficiaries after that sort of situation and they outperform lows year after year retail stales per square foot 230 versus 360 they are a efficient operator. i like them a lot. >> home depot is also moving into a seasonally strong period. we could hear guidance on the conference call about the weather. they like to plant. >> it's almost mulch season out there. actually not in minnesota. because they still have snow pete goes out and gets 15 yards of mulch and he's doing his thing. for all you spring gardeners, where are you going? >> >> home depot. >> all the contract oorgs. they have a bigger contractor

business than lowe's 40% of sales. >> facebook had one of its worst weeks since going public, 14% down is there even more pain ahead for the social media giant we will tell you how bad it could get. got a question, sent us a tweet to our traders will do their best to answer themt e athend of the show don't go anywhere, we have got much more "options action" right after this >>announcer: "options action" is sponsored by think or swim by td ameritrade 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.

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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 take a look back on one of our winning trades. two weeks ago, cohen carter said it was time to unfriend facebook that worked out pretty well. >> on "options action," it's how we maintain our social status. risk less so we can make more. and that's exactly what khouw and carter did with their bet on facebook carter thought it might be time to ditch the social media giant.

>> i am a seller of facebook here if you are long and got great gains take your money off the table. >> hmm, mike thought carter is my ride or die but just shorting the stock could lead to social suicide >> no! >> so to make a bearish bet mike instead sold the april 185 call for 5.70 now to keep all that money mike needs facebook shares to stay below that 185 strike price. mike won't see losses until facebook rises above that call by more than the.a5.70 he collected or 180.70 by expiration remember, there is a trade-off because above that 190.70, mike is still subject to internet losses >> you have no friends >> relax, mike has this covered.

so, to limit his risk, he then bought the april 195 call for 1.90 and created his bear call spread now between the 5.70 he collected by selling the lower strike call and the 1.90 he spent on buying that higher strike call, mike gets to pocket 3.80 on this trade that 3.80 is the most mike can make on the trade. to keep all of it he needs facebook to stay below the 185 call by april expiration above that, he starts to see losses but they are limited to the difference between the strike of the call that he bought and the strike of the call that he sold, minus that credit. or above 188.80 by april expiration meaning, mike can do something even the most popular power couple can't do, make money whether facebook drops, stays flat or even rallies slightly.

>> did we just become best friends? yep. >> since the time of the trade, facebook shares have fallen 10%. now "options action"s fans all over the world want the know one thing, what will khouw and carter do now ♪ if you be my bodyguard -- >> you might have noticed that carter is not on the desk tonight. he is in utah with his kids for spring break but he did send us a video. >> have a great show. >> hi cnbc. >> high cnbc, that says it it all. facebook, keep selling market not good. great weekend. bye. >> that was carter and his son brewster mike you heard what the chart master said, keep selling facebook >> we are clearly had news we didn't anticipate. worse for facebook than even we anticipated. volatility is higher this is out of money you can roll the trade down at this point. >> brewster, is he like royalty. >> he has fine lineage.

>> carter with braxton and brewster >> do you have anything to say about facebook >> i have something to say. >> all right. >> valuation is reasonable advertisers aren't walking away. it's easier to mine fwoin than it is to delete your facebook account. you would push back and say engagement is going the wane maybe. >> do you think it's going to bounce back? >> i think it will because people are stuck on -- i am stuck on band-aids because band and's stuck on me. >> did you see elon musk deleted his spacex and tesla facebook pages. all you need is a kardashian to do that and who knows where you will end up. >> i think the sell hof we had in the broad market in february did traders a disservice because we had that b reversal let's go back to apple it went from 180 down to 155 and rally back and made a new high into early march if you are expecting that sort of move now with facebook after it's down 10% on the year and it's also down from the mid 180s

i think you are mistakenbecaus what happened here now to mike's point from before is there is serious fundamental news it's going to take weeks, months, maybe quarters to play itself out. to me, facebook is not the trading vehicle that you should be looking for for a snapback or a v reversal to buy the dip in social in my opinion not at least until we get more clarity about regulation and what this company is going to do and how much it's going to cost to do them and how much it's going to wei othr rgs ghn eimain to get their situation under control. >> up next, tweets, and the final call >>announcer: "options action" is sponsored by think or swim by td ameritrade 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?

(indistthat was awful.tering) 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! mad skills. education to take your trading to the next level. only with td ameritrade. time to take some tweets this tweet is what is your take on nike after earnings i bought a 65 put out to april before earnings. dan, what do you think you have got an open trade on nike. >> that was the trade i did last week i think you take it. you got bailed out here with the market good quarter, good guidance for

market america you move on from that one. >> final trade. >> stock recovery, home depot. >> guy, thanks for being here. >> thanks for having me and thank to all the oa fans for being gracious. >> our time is expired i'm lia messlee we are off nextk don't go anywhere. "mad money" begins right after this my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica a lot of people want to make friends, i'm just trying to save you some money my job is not just to train but educate and train you. call me or tweet me @jimcramer all i can say is thank god it's friday in a week where the dow