pg&e has allowed us to be the most sustainable organization we can be. any time you help a customer, it's a really good feeling. it's especially so when it's a customer that's doing such good and important work for the environment. together, we're building a better california. hi there, the guys are getting ready behind me. here's what's coming up on the show ♪ i'm so excited ♪ i'm so excited ♪ i'm so scared >> investors are anxiously awaiting the rest of f.a.n.g. earnings next week but there's one name in the group that could have them running scared we've got the details. plus -- energy stocks have been on fire, but there's something in the charts that suggest the run is about to cool off

we'll break it down. and later -- >> houston, we have a problem. >> boeing shares are teetering in correction territory, and one of the traders says it's about to get a lot worse he'll give us the trade. it's time to risk less and make more the action begins now. let's get right to it because next week is make-or-break time for tech and f.a.n.g. in particular these stocks have been taking a beating lately, all well off their highs. the options market is implying some pretty big moves for the group. facebook and amazon could see a 6% move in either direction. amazon could swing 5%. that could spark a more than $110 billion shift in market cap. so how should you play some of these names heading into the reports? dan is taking a look at alphabet. >> yes, it all gets kicked off monday night after the close you've got alphabet reporting. one thing that's interesting about all of these f.a.n.g.

names, they're increasingly intertwined. we know the regulatory risks, but they're all competing with like public cloud. there's a lot of things going on here so i think google is a really important one. it's important to see how the company guides and how the stock reacts there's just a couple of things making me a little hesitan it broke out late last year, bounced off that and i think the rally monday night gives you a little opportunity for me it's important to go back and look at the gap. when they reported february 1st their q4 results, the stock was down 5.5% the next day the traffic acquisition cost, lower profitability, much more than people expected for a whole host of reasons. then layer in the problems facebook is having with privacy and all you've got to think about is facebook said they're going to hire 10,000 people this year alone for those issues in security google will be too you have the regulatory risk so to me, you keep hearing people say it's cheap. yeah, they're growing earnings 30% expected this year, 22%

expected sales growth. it's priced to perfection. if they guide down again, the stock is going lower this is an easy one to me. the way you play it, define your risk into the print. so today the stock closed at about 1077 look out to may expiration the 1080 put but offered at $89. those break down at 1041 the implied move is about 5% that break even is down 3.5% then you have profitability below that again, i'm targeting for a break over the next few days of that $1,000 earnings catalyst. >> you're trying to figure out whether the price of these options makes sense. first of all, you get more than just the earnings capture. think about this, six out of the last eight quarters this is a stock that moved 3% or more. that's approximately what you're paying for these puts. you're dealing with more than half of those were moves to the downside of course you did identify a number of those risks.

you know, even in the businesses that are growing like cloud services, for example, your biggest competitor there at number one in the space, amazon. that's always a tough fight. so i think it makes a lot of sense. i mean obviously we saw some strength this week, but i mean we've also seen some wobbliness in the prior weeks. >> right so let's look at the an taknotan that dan made on his chart. >> did you hear that he called them annotations >> drawings. >> the principal support is prior tops of support. we know the stock peaked in january, it sold off and found support. but notice the bounce off support couldn't make a new high it comes back to support and makes a slight new low so we have a sequence of lower highs, lower lows. so you revisit support the third time, the presumption is it breaks. >> last word to you. >> if expenses are going up,

profitability is going down. and then that earnings multiple is going to look really fat. to me you have to remember that this is a forward-looking sort of estimation here so i'm willing to say that the spending is not a one quarter phenomenon, especially given what's going on with facebook. don't think for a second we're not going to see google people in front of congress in the next couple of months i'm not saying that's going to weigh on this report but it could weigh on what they guide for spending. crude is sitting just off its november 2014 highs. this as oil stocks head into a big week of earnings bob pisani is at the nyse breaking it down. >> reporter: that's right, melissa, it's been a big month for energy we are finally getting some rotation into the commodity stocks energy is up nearly 9% for the month, far outperforming the s&p's gains of about 2%. but oil service stocks like transocean and halliburton are up over 12% as a group companies that explore for oil

and gas like conoco phillips, they're up almost as much. the main theme here is four-year highs in oil and it may go higher because production is getting cut back slumb slumb slumberger said there were production declines in an goala, norway, mexico, malaysia, china and indonesia and that production in venezuela was in freefall his conclusion, supply is becoming increasingly restricted the implication is prices will likely be higher unless there is a significant ramp-up in production we'll hear a lot about this next week when chevron, exxon, conocophillips all report. the key is whether those big guys will ramp up capital spending to capitalize on the higher oil prices and whether

smaller players in the shale space can ramp up production as well back to you, melissa. >> thank you, bob pisani with the energy chart pretty much going up in a straight line this past month, carter says it might be time to take a breather why don't you head over to the plasma to break it down. >> let's look at that straight line before we look at the chart, i want to step back and look at the entire past ten years. if one is playing for mean reversion, ultimately things start out with a bang, we've had the bang, but it takes time and we're likely to get a rest look at these dates. this is the entire period, '09 to 2017. here's the winner, here's the loser. this is their total return obviously it's a blowout tech being up 441, energy up only 72 versus the market, 259 so this is the key column. what we know here is look at almost the perfect symmetry of how much tech has outperformed

relative to the s&p and how much energy they're almost identical numbers in reverse at this point we're getting a little bit of mean reversion it starts out with a bang, is a little too steep right now and that's why i think you bet for backing and filling or in a way being short volatility the sector of 31 stocks, exxon and chevron coming up. 1.45 trillion, 6% of the s&p it can't really help the market itself, it's too small here we go the etf xle, as we know it failed almost precisely where it rallied to and now we're reapproaching it watch the relative strength line to the spy, straight down. even as it rallied, yes, we were making new gulows for the first time in basically five years, we have broken above the downtrend line

so it's very young now the here and now let's go to the chart. here's the wedge and this straight line, again, this is not random computers look at these kind of things, chartists look at these kind of things it is right -- we're almost at the top of the line. my hunch is that you write calls or sell -- you know this kind of thing because we're likely to work into the apex further i think it's going to go quiet here after strangle. >> mike, what's your trade >> if you sell a strangle, then you're selling a call uncovered and a put uncovered. but you can get a similar profile using a calendar spread. essentially you're also playing in the near term for a range bound action so what i was looking at was the may, january, 73 puts the spend $5 to buy them and sell the mays

against it for $1.50 so you're spending $3.50 for this trade. the idea is that you're looking to collect the decay on the mays that you're short between now and may expiration the most risk that you have is that it moves wildly in one direction or the other and you spent $3.50. but i don't think that's going to happen. you own those januarys which are pretty far out in time you're not going to see those trade to intrinsic value very easily so this is trying to do a short strangle or short straddle type of a trade without taking that risk. >> without the risk, which is unlimited. and think about the percentage move you're talking about something that's up 14% in just a matter of 15 sessions, almost bigger than anything in the market. that's the bet, that it starts to consolidate those gains and go nowhere. >> right but -- so here's the thing may, the short will expire in a month or so and you're going to cover that short put and take a little profit, this and that or whatever i see that chart and hear what we're talking about and i say almost every sector seems like a

sell on the news, even good news i want to buy that may put and you can sell that and have a vertical put spread. so if i think it's going to break to the downside, i'm willing to risk 1.5% of the stock over the next month and a half didn't we used to do a segment like this? >> yeah, yeah. we had different trades. >> so that is a bet on a different kind of price action the trade we were doing here, which is also a put spread, you're proposing a put spread and i'm proposing the put spread if it's the same expiration, you're betting it's going to move down and do that between now and may. i'm making a different bet which is at least between now and may it's likely to consolidate maybe it will go lower thereafter and we can work with that. >> but in some instances depending on the fundamentals, we say this is going to resolve itself. >> right, but we're not quite at the apex yet so i'm thinking we're going to work further into

the decision point and that's the time frame -- >> we want to see who's good trade, who's bad trade >> it's amazing. all right. for more options action, check out our website and you can sign up for our super cool news letter it's how mike gets all his great ideas. actually that's where they go to that news letter so what are you waiting for? here's what's coming up next think that was dramatic? wait until you see what one of the traders says could happen to boeing shares when it reports next week. plus, calling all options action fans. reach into your pocket, grab your phone and tweet us your question at options action if it's nice, we'll swaner it on air when "options action" returns. 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.

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." the best perform dow stock over the last year is hitting some turbulence next week boeing shares falling back into correction territory, down about 9% from its february high, shedding a cool $16 billion since topping out just under 372. so if you're worried things could get worse, how should you play the stock heading into its report mike is breaking it all down in a call to action. >> yeah, so we're going to talk about selling a call spread. why would we do that one of the reasons is risk this has less risk than selling naked calls as a way to profit from a downward move secondally, it has a relatively high probability of profit that's typically true for short

premium options trades finally, the nice thing about a trade like this, you can do this on a stand-alone basis or if you own shares and are not inclined to sell them, you can do that here too so you can see boeing has been on an absolute tear over the last year. we have obviously seen it sort of start to level off here and even start to trend downwards a little bit i think a lot of people also felt the valuation might be getting a bit ahead of itself despite the fact they have a nice backlog of orders so i was looking out to june sell the 350 calls for $9.75, collecting a nice premium there, but obviously to limit our risk, we're going to buy the 355 for $8.05 and collect $1.70 to do that trade we'll realize profits as long as boeing stays below 351.70, which is actually a decent bit above where it is right now. so taking a look at the probabilities, hey, notice this guy is wearing the exact same shirt.

i only have a couple of them, i guess. so one of the things i would also point out, what are the probabilities that we're looking at here? so one set of probabilities is what are the likelihoods that it hits one of those prices i'd leave you with one final probability, which is what are the chances that it's going to be above that 355 strike at expiration we see that as about a 30% chance, which means that there's a 70% chance that it's going to be well below that and that's one of the reasons why we think the probability of profit is pretty good here. >> what do you think, dan? >> i like the trade. i think he's really targeting that implied move which would be in that 350ish range there if he's bearish or thinks it doesn't react well to even good news, then this is the right trade structure to do it option prices are very elevated into this and this has been trading like a tech stock here so to me i actually think that they're going to have to really have a big beat and raise for this thing to get back up towards those highs so i like the trade structure. >> this in principle was a stock that's highly cyclical that kept

up with growth stocks and was a sign of multiple that over time shows it does not deserve. we're talking about $100 two years ago, it's up to 350. upside limited if any. in principle unknown, but plenty of downside. >> what are your biggest concerns, mike, to come out of the earnings report? >> well, i mean we have a couple potential issues, but i mean really one of the things that's important when you look at this as an industrial compared to some others an this is a reason why it hasn't rolled over harder is the fact that they do have a big backlog and there is secular tailwinds, if you'll pardon it, for single aisle aircraft and that's basically their strength. so the long run is still good. the yes is whether or not the multiples that we see in industrials like this one are justified if the market is going to show any weakness, flattening yield curve, those types of things, those would be reasons i'd be concerned. general electric shares surging today after its report but the stock master called the

bottom on the stock two weeks ago. he'll tell us how much higher it could go. plus do you have a question for one of the traders if it's nice, we'll read it later on at the show we are live in times square. much more options action right after this (indistinguishable muttering) 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! mad skills. education to take your trading to the next level. only with td ameritrade.

what do i want to be when i grow up? i want to be someone who ... makes the world beautiful ... and builds up my neighborhood. i want to be someone who helps others ... and teaches them new things. every year, comcast employees and their families come together on comcast cares day to give back. it's a celebration of their year-long commitment to their communities. what do i want to be? i want to be someone who cares. 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 look back at our open trades two weeks ago-ca there was a bo call on ge. >> here's what's interesting again it's continued lower over the last weeks and months. the actual internals have moved higher i think i want to stick my neck out and take a gamble that this very important, now less important stock is now maybe so bad it's good. >> i was looking at the june 14, 15 call spread earlier today you could buy those for about 50 cents, sell

the 15s for a quarter. >> they were right it was a case of so bad it's good ge's shares are up 10% since then, so, mike, there's a lot of time left on this trade. what do you do here? >> we do have some more time we also have more than doubled the original investment that we made it's worth about 55 cents now. that lower strike call is now in the money. and i think we still want to have optionality here. i would roll this out and up, go out to july 15, 16, about 30 cents or so. >> it's almost like the energy move you get a big move off the low so days, weeks, take your money and run. >> what are your thoughts here >> my thought is very similar to the thought i had a couple of weeks ago. it was really interesting, obviously the trade made a lot of sense and mike looked out of the money. the stock was trading just above 13 his break even was 14.25, almost up 10% what we said at the time was this was a great example, the

thing is so beaten down that you can look out of the money because if you get it right, it's going to move like that not only was the trade great, the technicals were great, i think you continue to roll it up and out and you can reach a little bit too. >> the sentiment is so poor that when you're going to get it moving in different directions it's probably going to be a sharp one. this is a fairly levered balance sheet so the equity can swing quite violently as a percentage. just last week dan bet on an industrial breakdown >> i really want to fade this move here. you can see that downtrend here. obviously there's 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 below 70 over the next month or so today i was looking at the xli when it was trading at 74.25 you could look out to the may expiration and by the 74/69 put spread paying $1 for that. >> well, the xli is up around 2% since that call. what do you do now, dan? >> so that was kind of my inclination there, it did move up a little bit so i paid $1 for

that $5 wide put spread. i want to stick with this thing because i was looking back beyond ge and honeywell and really wanted to target boeing next week and that's how i'm playing it now it just got rejected at the down trend this put spread is now 65 cents. i want to stick with it. >> what does xli look like, carter. >> reject it at the downtrend. >> those annotations were correct. >> mike? >> this is funny now we actually have a two-way trade on since we're bullish on ge but bearish on the space but i obviously agree with it. >> up next, tweets and the final callrothoponpi fm e tis ts 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.

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 time for some tweets our first one is from a fan who asks wouldn't an iron condor strategy on xle be better?

>> that is a great question and a great trade structure. one quick point i would make is that a calendar spread like the one we have, only two legs, it's easy to trade around that. if you are inclined to do iron condor trades this would also be a good strategy. >> our next fan asks what strikes would you buy for an apple trade into earnings? that's an interesting one, dan. >> really good question because vol is spiking right now and things having nothing to do with the earnings, obviously related to the earnings, so buying options premium is really hard you may want to consider selling the may 155 put because those are really pumped up worst case scenario you put the stock at 155. >> time for the final call the last word from the options pitt carter, what do you say? >> i want to make a bet that energy is dead flat in the weeks ahead. >> mike? >> do that sand sell call puts in boeing. >> i think google is going to be very controversial i think playing long premium into this one makes a lot of

sense and sets the stage s y back here next friday for more 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 other people want to make friends. i'm just trying to save you some money. my job is not just to entertain but to educate and teach you so call me at 1-800-743-cnbc or tweet me @jimcramer. like, look, we can handle a brutal