live at the nasdaq markets on expiration friday the guys getting ready behind me here is what is coming up in the show. >> i'm so excited! i'm so excited! i'm so scared. investors are anxiously awaiting the rest of fang earnings next week there's one name in the group that could have them running scared we have details. plus ♪ fire >> energy stocks have been on fire, but there's something in the chart that suggests the run is about to cool off we'll break it down.

later -- >> houston, we have a problem. >> boeing shares are teetering in correction territory. one of the traders says it is about to get a lot worse he will give us the trade. it is time to risk less and make more the action begins now. let's get to it because next week is make or break time for tech and fang in particular. facebook, amazon, alphabet due to report earnings these stocks have been taking a beating lately, off their highs, and the options market is implying big moves for the group. facebook and amazon could see a 6% move in either direction, amazon could swing 5%. that could spark a $112 billion shift in market cap. how should you place some of these names. dan is looking at the alphabet. >> it gets kicked off after the close. you have alphabet reporting. a one thing interesting about the fang names, they're becoming increasingly intertwined in a lot of levels.

we know the regulatory risks but they competing with public cloud. there's a lot of things going on here i think google is an important one, it is important to see how the company guides and how the stock reacts there's a couple of things making me hesitant here and make me think it set up as a good short. the stock bounced off a,00 thousand it is a massive technical level of thousand sand it broke out late last year, bounced off the level a couple times now. i think the rally into monday night gives you a little bit of an opportunity for me i think it is important to go back and look at the gap when they reported february 1st their q4 results stock was down 5.5% next year they had higher acquisition cost, lower profitability, lower than people expected for a whole host of reasons. then layer in the issues facebook is having with privacy and all you got to think about is that facebook said they're going to hire 10,000 people this year, this year alone, okay, for those issues in security

google will be, too. you have the regulatory risk to me this thing, you know, you keep hearing people saying it is cheap, 26 times, yeah, they're growing earnings 30% expected this year, 22% expected sales growth it is 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. today the stock closed at about 1077 look out to may expiration the 1080 puts were offered at $39. those break even down at 1041 which is well within that implied move okay, the implied move is about 5% break even is down 3.5% and profitability below that again, i'm targeting for a break over next few days of that $1,000 level earnings catalyst. >> you are trying tofigure out whether the price of the option makes sense. first of all, you get more than the earnings capture, but think about this six out of the last eight quarters this is a stock that moved 3% or more that's approximately what you

are paying for the puts. you know, you're dealing with more than half of those, where it actually moves to the down side of course, you did identify a number of those risks. even in the businesses 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. you know, obviously we saw some strength this week, but, i mean, we've also seen some wobbliness in the prior weeks and i think it makes sense to make a bearish play. >> let's look at the an notations dan made on his chart and look at the level of support and what is the risk. >> did you hear that he called them annotations on analysis. >> yeah, that's fancy for my line. >> okay. >> the principal support is prior tops of supports we know that stock peaked in january with the market. it sold off and found support. notice the bounced off support couldn't make the new height and comes back to support and makes a slight new low we have a sequence of lower highs, lower lows. this final bounce is tepid

the presumption is it found support, but it is not really recovered. so you revisit support the third time, the presumption is it breaks below. >> last word to you again. >> last word, if expenses going up, profitability going down the earnings multiple will look fat. to me you have to remember it is a forward-looking sort of estimation here. i'm willing to say that the spending is not a one quarter phenomenon, especially given what is going on with facebook here don't think for a second we will not see google people in front of congress at some point in next couple of months. i'm not saying that's going to weigh on this report, but it could weigh on how they guide and what they guide for spending. >> moving on here. let's look add kruld rallied more than 7% in the last month, setting off november 2014 high this as oil stocks head into a big week of earnings bob pisani at breaking it down. >> that's right. it has been a big month for rotation energy as a group is up 9% for

the month, far out performing s&p gain of 2% oil service stocks like trans ocean and halliburton up over 12% as a group companies that explore for oil and gas are 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 oil service giant shlumberge said it is in balance. but the worldwide production is showing signs of weakness with production declines in angola, norway, mexico, ma lash ah, china, indonesia the production was in free fall. his conclusion, supply is coming increasingly restrict. the implication is prices will be higher unless there's a significant ramp up in production now, we'll hear a lot about this next week when chevron, exxon,

conocophillips report. the key is whether they'll ramp up 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 and with the energy chart going up in a straight line this past month, carter says it might be time to take a breather. head over and break it down, carter. >> let's look at the straight line it is a straight line. before we look at the charts, i wanted to step back and look at sort of the entire past ten years. if one is playing for meaner version, ultimately things start out with the bang. we had the bang. but it takes time, and we're likely to get a rest talking about the long-term, this is the entire period '09 to 2017 here is the winner, here is the loser. tech performed out in six out of nine, energy out performed in only three out of nine this is the total return blowout tech being up 441, energy up only 72 versus the

market, 259. this is the key column what we know here is look at almost the perfect symetry tech has out performed. they're almost identical numbers in reverse at this point we are getting meaner version can it last over time? sure it is too steep right now, so i bet for backing and filling. first of all the sector of 31 stocks, you know the big names 1.45 trillion, 6 pearls of the s&p. it can't help the market itself, it is too small. here we go the etf xle which captures the sector, a perfect double top as we know it failed almost precisely to where it rallied to and now we're reapproaching it watch the relative strength like to spy, straight down. meaning even as it rallied we

were making new lows and then for the first time in basically five years we have broken above the down trend line that's how things start. so it is very young. now the here and now let's go to the chart. here is the wedge. 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 you write calls or sell -- you know, this kind of thing, because we're likely to work into the apex further i think it is going quiet here at surging >> mike, what is your trade? >> so he's saying to sell a strangle of course, if you sell a strangle then you're selling a call uncovered and selling a put uncovered. that means unlimited risk to the up side if you are wrong and all the way down to zero if you're wrong to the down side 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 put. you could sell the mays against it for 1.50 so you are spending $3.50 for the trade. basically you are looking the collect the decay on the mays you are short between now and may expiration, and the most risk you have is that it moves wildly in one direction or the other and you spend $3.50. 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 what we call intrinsic value easily this is trying to do a short straddle type of a trade without taking that risk. >> without the risk. >> right. >> and then about the percentage you are talking about something that's 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 here is the thing. so may, the one you are short, will expire in a month or so

at some point you will actually, you know, cover that short put you will take a little profit, this, that, whatever i see that chart and hear what we're talking about. i say almost every sector seems like a sell in the news, even good news. i say i want to buy the may 73 put for $1.40 and sell the may and have a vertical put spread after the massive ramp it depend what you are trying to do if i think it is going to break to the down side, i'm looking to risk 1, 1.5% of the stock over the next month and a half. didn't we used to do a segment like this? >> yeah, yeah, but we had different trade. >> so that is a bet on a different kind of action. >> totally. >> the trade we're doing here, which is a put spread, you're proposing a put spread as am i, the difference it is the same expiration, you betting it moves down between now and may i'm making a different kind of bet, that between now and may it is likely to consolidate maybe it will go lower thereafter and we can work with

it. >> show the triangle and in some instances we say this is going to resolve itself. >> but we're not quite at the apex i think we will work into the decision point. >> we're going to see who is good trade, bad trade. >> classic amazing. check out our website, optionsactions.cnbc.com. check out the newsletters. that's where the good ideas go, to the newsletter. what are you waiting for here is what is coming up next [ speaking foreign language ]. >> think that was dramatic wait until you see what one of the traders says could happen to boeing shares when it report next week. plus, calling autopsy options actions fans reach into your pocket, not your phone, and tweet us your

question @optionsaction. if it is nice, we'll answer on air when "opitons action" returns. >> logical "opitons action" is sponsored by think or swim by td ameritrade a. 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.

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 "opitons action." the best performing dow stock over the last year hitting some turbulence ahead of earnings next week. boeing shares falling back into corrections territory, down about 9% from february high, shedding a cool $16 billion since topping out just under 372. so if you are worried things

could get worse, how should you play the stock heading into its report mike coe is over to break it all down and a call to action. mike. >> hi there. we're going to talk about selling a call spread. why would we think about selling a call spread? one reason is risk this has less risk than selling naked calls as a way to profit from a downward move secondly, 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 is you can do this on a stand-alone basis or if you happen to own shares and you're not inclined to sell them and you want to collect a little premium against it, you can do that here, too you can see boeing has been on an absolute tear over the past year we have only sebviously seen itt to level off and trend, and the valuation might be getting ahead despite the fact they have a nice backlog of orders you can sell the 350 call for

9.75, collecting a nice bit of premium. obviously to limit we are going to buy 355 for 8.05. we collect $1.70 to to that trade and we'll realize profits as long as boeing stays below 351.70 which is a decent bit above where it is right now. 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 point out, what are the probabilities we are looking at here one set of problem pablt is what are the likelihood it hits one of those prices? i would leave you one final probability, which is what are the chances it will be above that 355 strike at expiration? we see that as about a 30% chance, which means that there's a 70% chance it is going to be well below that, and that's one of the reasons we think the probability of profit is pretty good here. >> what do you think, dan? >> i like the trade. i think he is targeting the

implied move which would be in the 350 dish range there if he is bearish or it doesn't react well to even good news, then this is the right trade vehicle tour to do it. option prices are very elevated into this print and this thing has been trading like a tech stock. to me, i actually think that he have to have a big beat and raise for this thing to get towards the high 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 we show does not deserve talking about $100 two years ago, up to 350 upside limit if any, and in principle unknown but plenty of down side. >> what are the biggest concerns in your view, mike, to come out of the earnings report >> well, i mean we have a couple of 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 is, of course -- and this is one of the things that is probably a reason why it hasn't roll over harder, is the fact that they do have a big backlog and there is secular

tail winds, if you'll pardon it, for single aisle aircraft which is basically their strength. the long run is still good the question is whether or not the multiples we see in industrials like this one is justified, if the market is going to show weakness, flattening yield curve, those types of things. those are easons i would be concerned. >> general electric surging after earnings report. the chart master called the bottom on the stock two weeks ago. plus, got a question for one of the traders, send us a twiet to @optionsaction and if it is nice we will read it later in the show more "opitons action" right after this well, it's earnings season "opitons 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. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. even when nothing else is. keep her receipts tidy, crowne plaza. brand vo: snap and sort your expenses with quickbooks and find, on average, $4,340 in tax savings. quickbooks. backing you.

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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 "opitons action." time to take a look back at some of our open trades now, two weeks ago cohen carter made a bold call on ge. >> here is what is sort of interesting. as again it has continued lower over the last several weeks and months, the actual internals have moved higher. think i want to stick my neck out, take a gamble that this very important, now less

important stock is maybe so bad it is good. >> i was looking at the june 14th-15 call spread earlier today you could ball the 14 calls for $0.15, sell the 15th for a quarter >> they were right it was a case of so bad it is good ge shares are up 10% since then, so, mike, a lot of time left on the trade. what do you do here? >> we do have some more time, but we also have more than doubled the original investment that we made we made a quarters, worth about $0.55 now. the lower strike call is in the money and i think we want optionality here my inclination would be roll it out and up you would be taking some of the money off the table, to july. >> almost like the energy move you get a big move off the low and you should get consolidation before you ultimately advance further. if one stays weak, take your money and run. >> what are your thoughts here >> my thought is similar to the thought a couple weeks ago

it was interesting, obviously the trade made a lot of sense. his break even was up almost 10%. what we said at the time is this is a great example, the thing is so beaten down you can look out of the money, because if you get it right it is going to move like that. so not only was the trade great, the technicals were great, continue to roll it up and out and reach a little bit, too. >> this is a situation where the sentiment is so poor that when you're going to get moving in different directions, probably will be a short one. always we pointed out it is a fairly leveraged balance sheet so the equity can swing violently as percentage. just last week dan bet on an industrial breakdown. >> i want to fade this move here you can see the down trend 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 and a quarter. you could look out to may expiration and buy the 74, 69

put spread, paying $1 for that >> well, the xli is up 2% since that call. what do you do, dan? >> that was my inclingation. it did move up a bit, so i paid a dollar for that put spread i want to stick with the thing because i was looking beyond ge and honey well and i want to target boeing. it got project at that down trend. i want to stick with it. >> what does xli look like >> reject at the down trend. >> exact reply. >> those an notations were correct. >> drawing fwoold lines. >> mike? >> yeah, no, this is funny now we actually have a two-way trade on since we're bullish on ge but bearish on the space and bearish on boeing. but i obviously agree with it. >> up next, tweets and the final call from the options pit. (indistinguishable muttering) "opitons action" is sponsored by think or swim by td ameritrade had a coach in high school.

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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 time for some tweets first one is from a fan who asks, wouldn't an iron condor strategy on xle be better. mike. >> that is a great question. of course that's a great trade structure. one quick point i would make is a calendar spread like the within we have, only two legs. it is easy to trade around that. if you are inclined to do iron condor trades this would be a good strategy to employ here. >> next fan asks, what strikes would you buy for an apple trade into earnings? interesting one, dan. >> really good question because ball is spiking in his name for things having nothing to do with the earnings print, obviously related to the earnings but buying options premium is hard you may want consider selling the may 155 put because those are pumped up. that way worst scenario you put the stock at 155 but you have taken a couple of bucks in trade. >> time for the final call last word from the option pit. carter braxton, what do you say? >> i want to make a bet it is

flat. >> calls spreads in boeing. >> yes, i think google will be very controversial i think playing long premium into this one makes a lot of sense. could set the stage. >> all right looks like our time has expired. see you back here next friday nor more "opitons action." in the meantime, "mad money" with 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]