hey there, the guys getting ready behind me and a look at what is coming up next >> million dollars isn't cool, you know what is cool? >> making three times your money in less than a month going into earnings breaking it down. plus -- biotech breaking out. just like that and chart master carter worth and gains to come we'll give you the set up. fast food stops on fire except one spp here is a hint. >> big mac a quarter pounder

with cheese and mcnugget -- >> don't have a mac attack make four times your money in just two months and will serve it up. it is time to risk less and make more, "the action" begins right now. let's get right to it. it is going to be a huge week with earnings and all eyes on one big week judgment day for techs amazon, facebook, alphabet searching over a this will dollars in three stocks. and keeping it going with the sector hitting in all-time highs. which should you buy and which should you sell? >> facebook -- >> buy it everyday, the stock closed at a new all-time high today. if you look, investors isn't care they did panic in march into that april low, the stocks up 40% since then earnings coming out wednesday

afternoon, the option market applying a 5% move in either direction below the 6 1/2% average post-earnings move since they went public in 2012 you know, this is a really interesting week, this past week a lot of discussion how this company is going to deal with the meddling issues and symptom of the fake news and all of this other stuff. and they are going to have to tell a better story than they did with ceo mark zuckerberg he is going to have to clarify a lot of the stuff into the fall here is the thing, i just don't know how you buy it. i may set it at $200 or $195 that's where it broke out from the a couple of months spag gotten a little steep. if you are along the stock and thinking about short-term

protection, i think that makes sense. today, i was looking at august expiration and you can buy the august $210 190 put spread and selling one of the $190 and breaks even. 10% or so correction other the next month, if you don't get the proper news. they are going to be spending like crazy, that would be the trade. not too different than netflix. >> the fact that it is implying a lower than average move, we saw it before and netflix was a name implying a smaller than average move when you have complacent si, if the news comes out bad, you can see a sharp -- it has gone in

one direction recently the growth rate has been phenomenal i think a little set back. >> think of the angles and how steep. we have the chart we started with you'll always get a steep angle after the steep selloff. we have the news related plunge and testified in front of congress and then the ricochet look in terms of the duration of it in up-trends you have these moves that get to be three to four months old. the march/july move up 40% the odds of it going further higher are diminishing versus i can whiching back to the february 1 high which it broke out. >> one quick thing going back to the options structure. once the news comes out, we are going to see the option premiums decline further which is a reason why using a spread makes

sense. i could say sell an upside or put spread one reason you are looking to buy that, it is lower than usual. and fuif you think that a 5% mo is reasonable, would you rather be along a 20% put spread. >> thanks, professor we saw it in google, they started spending to beef up certain things they said they are going to spend on security so it is what is going to happen to the earnings growth rate and we hear how the company dproes into the valuation. if we see thelower margin, thi stock will need to consolidate no matter what the other news is i think playing for a pull back makes sensor a structure works great for people being looking

for 2 1/2% of their portfolio to protect. a handful of biotech earnings on deck chart master says there could be a biotech breakout happening carter, what are we looking at >> we have four of the five largest components in the ibb setting to report this week and it's my hunch looking at the charts of the equities and the groups at large that we are going to breakout. let's take a look. here are the names and percentage gains ibb. the top five holdings and the waitings and all the names you know and all four from here report earnings this week. and here is the chart of the etf. no lines or judgments. one judgment would be this

minor head and shoulders bottom at a high and if you breakout, you get a measured move. which is the same move the width of the shoulder. that kind of thing let's draw the lines a different way. here is the longer term chart. peaked three years ago, here is the head and shoulders and a measured move will take you to the high let's draw the lines another way. a cup in handle. if you were to move the width of the cup, that takes you right to the former high. i think this is an excellent set up and i'm thinking here, you got to get -- final comparative chart. look at ibb weighted towards the large cap versus xbi the large which is correlated

have now been flagging and not participating. take it back further watch this comparative start highly correlated and the play here is that ibb catches up with xib. that's part of the thesis. so how are you trading ibb >> as simply as you can. the september 1, 13 -- you can sell it for $1.60 and buy them for a dollar netanyahu spending 70 cents. the idea is to capture $6 upside for going approximately $6 worth of downside. a see decent move off the botto. mitigating the downside in case the earnings come up

>> yeah, interesting trade structure. selling that downside put at 113. worst case, is you belong at $113.70. if one goes wrong, you probably have the stock lower and you are probably okay earning the ib there and digest the news and the breakout the risk reward is fantastic you can make up to 530 between $119.70. >> and it is a cap issue this large cap area of biotech is a better play. >> xbi focussing on the smaller, they don't look as good. >> they've been very good and catch up potential in the big ones lagging. >> if you are doingsomething i xbi where you do have smaller names, there is more volatility and maybe not as comfortable

and a lot of top names trading. for everything "options action" check out our website and newsletter it is a revelation they have the golden arches. he will break it down. >> plus, calling all "option action" tweet us your question @optionaction if it is nice, we will retweet it "options action" sponsored by think or swim, td ameritrade

yor 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. does it look like i'm done?yet? shouldn't you be at work? [ mockingly ] "shouldn't you be at work?" todd. hold on. [ engine revs ] arcade game: fist pump! your real bike's all fixed. man, you guys are good! well, we are the number-one motorcycle insurer in the country. -wait. you have a real motorcycle? and real insurance, with 24-hour customer support. arcade game: wipeout! oh! well... i retire as champion. game hog! champion.

yothis july 16th - 22nd, enjoy wa free week of epix on us.ou". just say, "epix" into your voice remote. that's a full week of all-you-can-watch critically acclaimed shows and hit movies, on your tv, online or on the go with the xfinity stream app. we're on to something. come on. and it's all on us, and it's all week long. so you should probably start canceling your plans. you've got some serious watching to do. 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 "option action" there's one name sitting out on all of the fun. let's get to kate rogers for the details. hi, kate. >> melissa, fast food stock this year looking different among the best performing, shake shack, chipotle and dom minots. the former ceo of ta co bell

chipotle expanding the delivering strategies and dunkin announcing his retirement and dave hoffman who was the president took over his place. starbucks on the other hand, down 11% as shults left he is spot one name that's been setting out is mcdonalds, the world's biggest fast food company and so far in 2018 it is down around 8% as it prepares to report earnings next thursday to focus on value and promotion, they want to see if that continues to boost the brand another thing to keep in mind, value wars are in full effect. any announcements around that is critical and breakfast important part of the day for

mcdonalds and keep an eye on china to see if there's impact with the trade war with u.s. back over to you. >> thank you carter and mike made their way over for an option action tag team coming in and giving in a trade. chart master, take things off. there's more pain ahead for mickey ds. >> mcdonalds not on here yet s&p and what we know double the performance is the nasdaq let's add mcdonalds and it makes the nasdaq look like a piker in the pantheon. of late it is topee. first, compared to peers and we just heard the lead, this is

great performance. you see the names and you have been to these restaurants, 30, 40, 50% gains across the board cheesecake factory and denny's is the one struggling is the one that's the most important in terms of its place in the american landscape so now, look at the current one-year chart mechanic donalds is not hi, it is starting to stall and &p an nasdaq and the winner long-term is the one that is losing. pi put it on the chart, just coming down to trend would get you a pretty good from here. the head and shoulders top would get you a pretty good selloff from here and one other look at the lines.

consolidating, some might say it will breakout. that's not a bet i would make. i think it is going to break down that's the premise and my main man. take it away >> all right so it is interesting we have mcdonalds coming up and reporting earningsment the implied move is about 3.3% slightly higher than they have we're going to use the spread to mitigate the higher options. i was looking at the september 155 and downside and spending 365 for the 165 and sending the 155 for $1.15 and one quarter of the distance between the $10 and selling the downside put, the break even is going to be here rather than down at

$151.35. we are improving the odds and targeting 145 in 60 days. >> i'm jealous so here is the thing mike, it looks like 145 you are targeting the up trade and i like the width and a quarter of the wid for the spread carter, at some point when it gets back to the up trend, let's say you are right and something fundamental. wouldn't you expect that to shoot to the downside? >> we have to get to the drown trend before overshooting. we're targeting the intermediate low on the chart and that's where we are headed. from there, it can get worst this is a returning stock for quite some time. >> we were talking sg and a cuts

and breakfast. these are shifts you can do one time and get a boost the long-term secular trend was not in their favor in terms of top-lend sales and growth and that can have head wins here. >> up next netflix falling 8% this week, that's great news. and plus have an options question for one of the traders? send us a tweet, maybe we'll answer it later. we're live in times square, more "options action" in a few "options action" in a few minutes. ""options action" brought to you by think or swim, td ameritrade. 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.

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purchase the essilor ultimate lens package and get a second pair of qualifying lenses free. essilor. better sight. better life. 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 at the open trades, last week mike bet that netflix's amazing run was done here is how he cashed in how we make instant hits and risk less to make more that's what carter did on the netflix. carter thought it looked extending heading into earnings. it has downside risk and the chart master might be right but it could be risky.

if you get this wrong t is painful. shorting netflix or any stock can lead to infinite losses. so instead he bought the august put for $22 falling below the trade or below $373 and spending $22 to bet against netflix, don't freak out. mike has a better way to do it he sold two for $12 each or $24 total and between the $22 he spent on buying the 395 -- mike is taking in a total credit of $2 meaning mike sees immediate profits below the 395 put. there's a tradeoff and because he sold more puts than bought,

he could be forced to buy netflix or $370 even if it goes way lower. he want it is to go to the 370 level by expiration. with the $25 he made and the $2 credit he received by selling them, mike wouldn't see losses until netflix hits $343 and below that he will see losses to zero. >> why are you keeping this curiosity door locked. so to protect himself he bought it for $7 and created the put fly. between the $22 he spent buying one put, the $24 he collected and the $7 he spent, spent a total of $5. to make money, he needs netflix to fall below and below $390 by

august expiration. but the cap is $350 and below that level protected against losses it is a complicated strategy, but we have seen stranger things happen and since the time of the trade, netflix shares are down 7% meaning mike's trade is looking good so now streaming into "options action" to find out one thing. what will carter do next so mike, what are you doing next >> well, it was about a clean double when the stock was trading around 370 and i think we can take profits and move on to the next one. we got big moves out of earnings. >> so one day drop in netflix in two years. reality it was a bad week and did not recover and a likely path is lower. >> all right up next we have the tweets and the final call from the options

pits tnchs "options action" sponsored by think or swim by td ameritrade. >>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 and time to take your tweets jim asks when is it appropriate to turn options into shares what are the advantages and disadvantages. >> if you buy it at a lower level and don't want to try to cover it and noi you don't have transaction costs. the other is if you are long deep in the money calls in stocks that pay high did i havi. >> time for the final call the last word from the options pits >> ibb, short -- >> mcdonalds, the 155 to 145 put

spread. >> everyone on facebook, the put spread gives you protection. >> all right it looks our time expired i'm melissa lee, check out our website i will see you next time "mad money" starts now if you are one of the millions of americans who suffer from muscle cramps in your legs or feet, relief is finally in sight. hi, i'm dr. drew pinsky. and today i'm here to share some news that got me excited when i first heard about it. it's called theraworx relief. this life-changing product is clinically proven to quickly relieve the discomfort of muscle cramps and also prevent muscle cramps before they start. now the word breakthrough gets tossed around easily these days, but theraworx relief is the real deal.