that dan made on his chart and look at the level of support and what is the risk that it brings. >> did you hear he called them and notations? >> yeah. >> look at that. the principal support is prior tops of support. it spiked in january with the market it sold off and found support. notice the bounce off support couldn't make the new high it comes back to support and makes a new low. a sequence of higher highs and

lower lows the final balance is tepid it's found support but it's not recovered. the third time is it breaks. >> last word if expenses are going up, profitability going down and that earnings multiple will be look really fat. to me you have to remember this is a forward looking estimation here i'm willing to say the spending is is not a one quarter phenomenon especially given what's going on with facebook. don't think for a second we are not going to see google people in front of congress in the next couple months. i'm not saying that will weigh this report but it could on how they guide and what had he guide for spending. >> crude rallied sitting just off its november of highs. oil stocks head into i big week of earnings. bob is breaking it down at the nyse. >> that's right. it's been a big month for energy we are finally getting some rotation into the commodity

stock. energy up 9% for the month outperforming the s&p's gains of 2% oil service stocks like transocean and halliburton are up over 12% as a group companies that explore for oil and gas like devin and con know cole phillips up almost as much. the main theme here is four-year highs in oil it may go higher because production is getting cut back ef slummer shea reported earnings this morning. the oil market is now in balance are the ceo as a words production declines in many countries like angola, norway, mexico, malaysia, china and indonesia. that production in venezuela was in free fall his conclusion supply is becoming increasingly constricted. the implication is that prices will likely be higher unless there is a significant rampup in production we hear a lot about this next

week when chevron, conoco phillips, all report the key is whether the 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. and 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. >> the straight line i just wanted to step back and look at the entire past ten years. if one's playing for reversion, ultimately things start out with a bang it takes time. we're likely to get a rest i think. look at these dates, this is the entire period '09 to 2017. here's the winner, here's the loser. tech has outperformed in six out of nine, energy only three out of nine. this is their total return it's a blowout, tech 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 symmetry of how much tech has outperformed relative to the s&p and how much energy they're almost identical numbers. in reverse so at this point, we're getting a little bit of -- can it lastover time? sure it's a little too steep right now. you bet for backing and if iing or short volatility. the sector 31 stocks, the big names, exxon and chevron coming up $1.45 trillion 6% of the s&p. it can't help the market, it's too small. here we go the etfxle is a perfect double top as we know, it failed almost precisely where it rallied to and now we're reaapproaching it 37 watch the relative strength line to the spy, straight down even as it rallied, yes, 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. 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 -- almost at the top of the line. my hunch is you write causes or sell this kind of thing. we're likely to work into the apex further i think it's going to go quiet here after surging >> mike, what's your trade. >> he's saying to sell a strangle if you sell a strangle you're selling a call and put uncovered. you have unlimited risk to the upside if you're wrong but you can get a similar profile using a calendar spread.

essentially you're also playing in a near term for a range bound action i was looking at the may, january 7 three-putt spread. spend $5 to buy the january mutts. basically the idea here is that you're looking to collect the decay on the maze that you're short between now and may expiration 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 the januarys you're not going to see those trade to intrinsic value easily. this is basically trying to do a short strangle or a short straddle type of trade without taking that kind of risk. >> without risk. which is unlimited think about the percentage move. something that's up 14% in a matter of 15 sessions, almost bigger than anything in the market that's the bet that it starts to consolidate gains and gun nowhere. >> here's the thing.

may the one you're short will expire in a month or so. at some point, you're going to cover that short put take a little profit or whatever i see that chart and i hear what we're talking about and i say almost every sector seems like a sell in the news, even good news i say i want to the buy that may '7three-putt for $1.40 and sell for 40 cents after have a vertical put spread after this massive ramp if i think it's going to break to the downside, i'm looking 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. >> that is a bet on a different kind of price action the trade we were doing here which is also a put spread, we're proposing put preds. if it's the same expiration, you're betting it's going to move down between now and may. i'm betting at least between now and may, it's likely to

consolidate. maybe it will go later. >> the perfect tryingal. in some instances depending upon the fundamentals, we say this is going to resolve itself. >> we're not quite at the apex i'm thinking we'll work further into the decision point. >> see who's good trade and who is bad trade. >> it's amazing. part of the "options action," check out our website, while you're there sign up for our super cool newsletter. it's how mike gets all his ideas. what are you waiting for here's what's coming up next >> [ speaking foreign language >> think that was dramatic wait till you see what one of the traders says cos happen to boeing shares when it reports next week. plus, calling all "options action"s fans. reach into your pocket, grab your phone and tweet us your

question at "options action. if it's nice, we'll answer it on air when "options action" returns. >> logical 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.

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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." the best performing dow stock over the last year is hitting some turbulence ahead of earnings 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 think about is heing a call spread? one of the reasons is risk this has less risk than selling naked calls as a way to profit from a downward move secondly, it has a relativel 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 and want to collect premium against it, you can do that here, too so you can see boeing has been on an absolute tear over the past 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 the trade i'm looking to do here, 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 huts any hits any 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 and 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 question is whether or not the multiples that we see in industrials like this one ar 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. >> still ahead, general electric shares surging today after its earnings 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 accepted us a tweet @optionsaction 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?

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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

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. welcome back to "options action." time to look back at our open trades two weeks ago there was a bold call on ge. >> here's what's interesting again it's continued lower over the last several 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 14 causes 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 we paid a quarter. 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. my inclination would be to roll this out and up. you'll be taking some of that money off the table. you could probably 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. if i can push it out, presumptively the lows are in and it could go higher >> 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 buy 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 i paid $1 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 we're bearish in boeing but i obviously agree with it. >> up next, tweets and the final call from the options pits 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. but you've taken a couple bucks in premium >> 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. >> looks like our time has expired. >> see you back here next friday for more options action. meantime "mad money" with jim cramer starts right now. the following is a paid program for traeger wood fired grills. sponsored by traeger. but be warned, it contains footage of delicious, wood fired meats, seafood, vegetables and desserts. you may find your stomach growling, your mouth watering, or that you have an uncontrollable urge to order your own traeger wood fired grill. what is traegering? traegering is this, that and those. traegering is fire and smoke, roast and grill, bake and barbeque. it's the rich flavor of american wood, sw