hey there, we're live at the nasdaq markets on friday the 13th the guys getting behind me, and while they're doing that, here's what's coming up on the show >> flying a 747 is the in thing. we want to know why. >> because it's a cool-looking jet. ♪ come fly with me. >> but after a toured run, boeing shares are hitting turbulence and it could spell trouble for one group of stocks. we'll tell you how to profit plus talk about a bank job >> you put as many hundreds, 50s and 20s as you can pack into it. >> that's how bank investors felt today the result could spell trouble for one stock next week. we'll explain. and -- >> it's happening. >> you bet it is, because netflix are set to report earnings on monday

we'll tell you how big a move options traders see it having. it's time to risk cash and make some more. bank earnings officially kicked off this morning with citigroup, jp morgan chase and wells fargo. >> it was a big week not only for those three. five of the top 11 biggest financials reported this week, it's not a good week for them and the presumption is there's more to come let's put it in context, and i think it's important the absolute high, the 2007 bull market 2007, two lines. the market and the bkx.

i mean, imagine that more than a decade and your results, owning the bkx is less than 1%. versus, of course, the market. the thought is that one could play this for catch-up in fact, of late, it's not only not catching up, it's playing the market on a here and now basis. let's roll through some charts and try to figure it out together here's the index i think you can draw the lines this way a well-defined trend line. often the bet is, and the bet that i would like to make, is that you bounce off that line. but individual equities one at a time are undercutting. citi has already done it and certain others, and i think there's more to come the presumption is the whole

index is going to break. here's the same chart, and this is telling same chart, but look at relative performance. it peaked right after the election, and all of this advance in banks and how, quote, good they've been, no, they haven't been good. they've been below market performance. adjusted for beta risk, much less than market performance let's go to the index itself and look at morgan stanley this is one of the ones that almost has started to break. you can see it here just below the line the presumption is is, even though citi has done that, morgan stanley is done holding the line as an individual opponents break, the presumption is the hole will break. morgan stanley is on the radar here, and i think that will -- goldman, too -- break next week. >> how are you trading, morgan stanley? >> we have a bit of a dilemma here because a lot of financials on a lot of metrics don't look

particularly expensive we had pretty good results this week we had reasons to believe that businesses like morgan stanley, we saw good growth we see more deal flow this year. that's obviously on top of all that, they look relatively cheap, relative to the rest of the sector outside of that, they -- next week it's about 3 or 4%. that's less than average what else is moving less than average the last 30 days everything is volatile to me when you see a combination of that weakness and the office coming in at less of a%? in june, you would spend $140 current stock price. that's one of the reasons why we like this trade. to me i don't really see how you

could be overly optimistic after what we saw this week. >> i think the most important thing about this trade is mike can obviously make a pretty decent fundamental case for owning this stock here on valuation and maybe some of the cattle resee and you have this did he tell up going into the long bow. actually you're not. >> i like the risk and reward of the trade, and mike says, that's what jp morgan, city >> they thought it would take

the markets around can we stop talking about this >> it is when yields expressed today. it's just a common sense market. if something reports good results, and it can't move higher -- black rock did it, it was a great. our athlete isn't performing, that's the big number. it's the action in and of itself today that says something isn't right. >> bank of america would be the way to play it but they're just

not playing like that's the bet you should be making >> morgan? >> hey, melissa. general electric as expected restating its earnings results for 2016 and 2017 tied to that revenue recognition role that took effect this year that requires companies to basically change the way they're accounting for revenue on long-term contracts. in light of that, here's what we've got from gt. we have the cumulative earnings impact is $8.4 billion those were reduced by 13 cents and so far for the most part in line with the avoidance. they altered 260 pounds, 2017 by negative 2.2 billion

but the company, in addition to these required accounting changes, have made some new changes to the stock so pension accounting and other things it is accounting for. in light of that, it is taking another and a for revenue versus its previous reported numbers for 2016 over to you. >> what do you think >> this was expected, let's be clear. everyone was anticipating a restatement.

we got one what we do need to see is sort of a kitchen sink, let's throw everything out and start fresh i think people are starting to believe that and maybe it's in a bottom formation here. >> ge is going to report 2016 reporting. then the week after that we have boeing i actually think the industrial space is really interesting. we talk about ge every day on this desk. it's the lowest stock in the market, it feels like. one of the highest stock is boeing it's down 10% from its highs of the year

it's still up 12%. i think this is a really interesting space, i think the industrial that's right in the middle of the 20 that's why i want to research how good delicate stocks are boeing makes up about 8% of that honeywell and ge, the two. obviously there is a little bit more room to the upside if the thing was to pop a little bit, but i want to play for a move above 70 over the next month or so, because i think whatever good news we have in this sector is in this sector, and when these companies report over the next few weeks, they'll go lower. i was looking at xi when i was trading at 7 and a quarter you could buy the 74.69. you can make up to $4 between 73 and 69 to the down side. i'm targeting that prior low at about 70 there i really like the risk reward here because i have participation down a buck and a

quarter, and i have a multiple of what i'm risking that i could make if i get the direction on this trade right >> what do you think about industrials, carter? >> i'll put it in this context the market is still above its february 9 flow. honeywell is below 3m is below. united tech is low i think that's just a preview of coming attractions >> i'm not even going to bother asking about ge, then. >> we got ge's trades at this. >> you have some big components of this that have been hard to hit. the structure of the trade makes perfect sense. >> when we talked about boeing, that's how we started this conversation jp morgan reversed 5% from its pre-market, they're going to hit

their numbers in china this stock is going to be on its way back to the low end of the range and it's going to take the whole sector with it >> for other action check on our website. while you're there, check out our super cool newsletter. don't be the only one not reading it in the meantime, here's what else is coming up. don't be such a square >> good advice, because square shares have been flattened but there's one event that could soon save it plus, reach into your pocket, grab your phone and tweet us your question at optionsaction. if it's nice, we'll answer it on air when "options action" returns. "options action" is provided by think or swim by td ameritrade as 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. your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™ liberty mutual insurance.

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 "fast money. streaming giant netflix reporting earnings after the bell on monday the stock is up 60% and predicting big moves to come all the stranger things in the options market, we have dom chu. hi, dom. >> i don't know if orange is newt black, melissa, but i do know how netflix has traded in recent memory, and it's been a roller coaster ride. all that in just a little bit. according to data provided by thompson reuters, the company is expected to report .64 a share on $3.7 billion of revenue subscriber growth and

international streaming growth numbers will be the big metrics to watch that brings us to the anticipated trading action over the course of the past eight earnings reports, netflix stock has been a bit of a coin toss on a positive or negative day following earnings you got four up and four down. during that span, shares have moved up or down by an average of 8.5% with double digits up or down in five of those eight reports. as of now we are seeing the markets at 10% moving in either direction. melissa, traders will be looking to see if they can remain unbreakable in the wake of netflix earnings, whether their name is kim my schmidt or not. back over to you >> thank you, dom chu. if you want to change netflix into earnings, how can you put the odds of success in your favor?

mike is here with a very special call to action hey, mike. >> we're going to talk about how to use probabilities, but the thing i would point out is we still have to keep some of the other fundamentals we want to pay attention to in mind where is the stock going to go, up or down the second thing is, how much is it going to move, a little or a lot? and finally, how much can you make on your trade we'll take a look at netflix we can see that the stock is actually not that far off its highs and this is, i think, kind of a coin toss here which way it could go we've had some good and bad earnings results, but i don't really like how the market feels like here based on how we closed out the week specifically i'm looking at the april 310 spread i'm spending $10.93 for a trade that could go to $35 now we'll take a look at some of

the probabilities. here's a good-looking guy. so 98% chance that the stock gets to the strike that we're buying, the 310s 79% chance that it gets to the break even, okay and it's a 36% chance that it gets all the way to that strike where we make the most money but think about this this is better than a 1 in 3 chance and it's going to be worth $35. if it gets there, we spent just over 10 to do that, all right? so we can basically say 36% times 35%, i think this trade is worth $12.75, and i'm only paying $10.75 for it so i like the odds of this trade. i think this is the way you make a play on netflix turnings >> we don't talk about probabilities that often and we should more so, but one of the

things that's interesting is to me probability has a lot to do request conviction, too. how convicted you are on a trade is how far you're going to reach. in this situation, mike is buying a very high probability put, and he's selling a much lower probability put on the end of his put spread, and that's really the way to do it, because he's basically saying, i think there is a low probability that goes through to the down side here, but i really want to kind of capture that mid-range here, and you're trying to put the odds in your favor here, so i like the way you're thinking about it if you're convicted, then you have a very high probability of success. >> if you don't know how much a stock might move going into a catalyst like earnings, the actions market is going to tell you that we're expecting about a 10% move, so about $30 that's kind of how we select those strikes. and the other thing i would point out is that in this particular instance, we're dealing with options that happen to expire one week from today. so it's basically going to be win, lose or draw. we're going to know that by the

end of this week >> sometimes inflexion points are very identifiable. we could break out or if it's off the trend, it's an undercut or balance to me it's 50-50, and sometimes things are 50-50 it might not be what you're thinking, but from that point of view, there are dropoff earnings >> it's tricky carter probability or your probability? >> with the coin toss, if the move is 10%, this is still a good trade if it's a 50% chance that it makes a move of 10%, still a winner we'll give you the name from hot to not we'll tell you how high it could get. more "options action" right after this (indistinguishable muttering) that was awful. why are yo 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. vof hundreds of families, he'se hmost proud of the one the heads he's kept over his own. brand vo: get paid twice as fast with quickbooks smart invoicing. quickbooks. backing you.

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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." it's time to take a look back at some of our open trades. last month mike thought square had quite a way to run, but it

didn't quite work out that way it's our main motto, risk less so we can make more, and that's what mike tried to do with his bullish bet on square. mike thought square still looked pretty good and that's when things got ugly. >> that's right, melissa and let me tell you exactly how it all went down i like square, but buying 100 shares would leave my wallet empty. so to make a different kind of bullish bet, i decided to sell the 8.55 put for $55 if square stayed above 55, i would get to keep all that money. as long as it stayed above 51.70 by expiration, i would see a profit but i could be forced to buy square at $55 even if the stock falls to zero. to limit my risk, i then bought the 50 put for the point spread. i thought it would put points in my favor the $1.30 i spent buying the lower priced put and the 3.35 i bought for the 55 put, even if

it falls below 55 put, i won't see losses by more than the $2 i took in for below $53. below that level, losses do kick in but they're capped at the lowest strike put i took back. i found a way to make money if the stock goes up, down or nowhere at all >> you're a genius >> you're right about that, but this time i got it wrong how bad was t melissa? >> since the time of trade, the stock has fallen 12% now options fans all over the world are wondering one thing. what will mike do now? >> so mike, answer the question. what do you do now >> actually, there isn't much we

can do this has gone against us badly enough, that if you try to cover this trade you may salvage 41 cents. there is some chance that the stock rebounds and i'm not selling that chance just as cheaply. dan made a bearish call on the banks last week. how are you managing this trade? >> i think it was $71.30 today it's like $26.45 they lost half their value here. we have money senators and now we'll have investment banks next week i think if you stick with this trade, you'll get out of this thing at least for flat. coming up next, final call from the options pits. e reporti. 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. even when nothing else is. keep her receipts tidy, brand vo: snap and sort your expenses with quickbooks and find, on average, $4,340 in tax savings. quickbooks. backing you. ♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪

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? time now for the final call. >> final call for morgan stanley. throw goldman in there, too. >> i think you can use put

spreads in morgan stanley. >> i think you can roll those out toward may, even >> it looks like our time has expired. i'm melissa lee. check out the website, optionsaction.com. jim cramer starts now. the following is a sponsored program paid for by my pillow do you find yourself sleeping too hot or too cold, not getting the support you need to help relieve painful pressure points or struggling just to get comfortable? then get ready for a revolutionary, new sleep experience. introducing the my pillow mattress topper, the next generation in sleep innovation from the company that brought you the world's most comfortable pillow. [applause]