the guys here getting ready behind me. while they're doing that, here's what's coming up on the show. >> don't be a -- >> good advice because despite a 100% gain this year, the chart master says now might be the time to sharapovas of square we'll break it down. plus, what do these two men have in common? they're both really good-looking but only one has a way to make money on tesla earnings. mike will break it down. and worried about apple shares

relax. because dan nathan has a way to protect your profits heading into next week's earnings for almost no money. it's time to risk less and make more the action begins right now. >> we'll get started with am the stock sinking nearly 2% today after an all time high earlier this week and the fate of the tech rally could hang in the balance of this report expecting a 4% move in each direction for the stock. that's nearly $40 million of market cap how could investors protect their profit the rest of the market kind of responded. we saw it go into other areas. today we saw a little bit of a different story here

we saw the last of the megacap that's levels where we're trading right now so when you think about earnings on tuesday afterno afternoon, that's how much the stock has moved over the last four quarters here i'm not expecting an upside move greater than that. they responded to better than expected results they had a nice gap and all made new highs but it was to the tune of 2 or 3% to me you want to focus on what facebook did all time highs back in january the lows in february at 60% drawn out and then back in april

it had a 12% drawn out that chart is interesting. i know carter flagged that $180 break out level a few weeks ago as a potential level to come back to and now we know there's technical resistance we're talking about protection you want to use options tactically and one way to do that is a collar and you'd do that by selling an apple money call so i would look out to august expiration if you're targeting tuesday's earnings here and the stock was trading up 190 today look out to the august 200 call and share one of those at $1.40. you can use that $1.40 in premium and use one of the august 180 puts. that cost you nothing. this is how this trade works out. you'd have gains from 190 up to

$200 that would be where your gains are capped and if the stock is above 200 buy back that call and keep that position in place and then you would have losses down to $180. that's the technical support area used in a long position and you want to keep that position intact. >> i like this trade and i think this is the thing that people ought to be thinking about when you see trades like this callers, the really the question going into earnings is if you expect a modest move if the earnings results are good you are still getting to participate in that. but if there is a sharp move is that more likely to the down side or upside we had the answer this week any disappointment is severely punished that's what this protects against. you own the stock if it has the modest upside you keep it but the big move to the downside

that's the insurance so i like this strategy. >> all the fragility in the market is in this particular type of stock, meaning supercap, growth names that be unto itself so we know that there's been trouble in industrials and financials we know that global equities struggled what we see after earnings is that if you were good microsoft, google, et cetera you only went up a little bit but if you bad, you got murdered that's facebook, that's netflix. you have a situation where apple if it's good doesn't deliver much but but if bad you get the outsize move to the downside that's the risk. >> carter we are talking about the he stocks 800 billion market cap stocks right now obviously apple at 940 is it harder to push them up who is the incremental buyer when everybody heads to the door at

the same time we get what we had with fischer yesterday. >> the thing about the trillion dollar -- what we know is term of sheer capita it's at the top. it's been that way for 18 months now. the top five stocks are in the 270s it's spilling over into tech and growth that's where money is hiding that's the risk to the market. what do you do with that? >> it's interesting. basically you could get called away if the stock is two hundred which are long 100 shares short one of the calls stock is matched up against the short call but, again, this is a strategy that you want to do tactically not too frequently you were not paying anything for this but you only do it if you are more worried what carter described as this asymetric ris to the down side instead of the

upside >> now the other big earnings report that is tesla shares of auto maker following 3% as famed short seller receive steve iceman shared he was short shares might remember him from the big short. this as comes up to report earnings phil low bow here is report on that. >> the earning report will get plenty of attention. and there is one primary question on the mind of investors. what will tesla say about potentially raising capital? now in terms of the earnings themselves for the second quarter tesla is expected to report a loss of $2.81 on revenue of just under $4 billion. the implied move in the options market is 7.5% either way. three things will get plenty of attention on the conference call you know that elon musk said the company doesn't need to raise capital but keep in mind they have cash burn and liquidity concerns heading into the second quarter and they did a lot of investing into the production expansion for the model 3 and speaking of the model 3, where do they stand in terms of both

production as well as reservations there's plenty of skeptics when it comes to tesla and there's one that's talking about that and his skepticism in the last couple of days he believes this is a company that has execution problems. stock has been hovering around $300 a share it took a hit earlier in the week over concerns about whether or not it was pressuring suppliers because it's running low on cash. as always the conference call after the earnings on wednesday afternoon, that will be the main event so to speak when elon musk takes questions from analysts, as always, you never know exactly what elon is going to say. we'll be on that call and we'll have it for you next wednesday afternoon. melissa. >> phil, thank you remember last conference call elon musk, boring bone headed questions and refused to answer. that's going to be good. how do you play tesla into

earnings. >> let's see what we can figure out. lots of opportunity, lots of risk here's a year to date chart. all over the place it has no character. some people think it's good and some bad let's put in some lines and see what we can see. so the first thing that i would point out -- sorry, wrong button, there we go. perfect. now what we know is that we have found this trend line three times but what i want to focus in on is this right here what we have done now is we have broken trend you can see that we are now for the first time below the trend line that is the problem and i think that's the set up for what is going to be a pretty good break in the down cycle. next chart, longer term, no lines, let's put the lines in. here we go there's that same line and

there's that break so if we were to zoom in, again, i want to focus on the fact that for thefirst time we cracked below that minor trend line. let's put in another line here at the top and what you have is a lot of tension this is the key. if you do break above a down trend line, in principle that's bullish which is what this is. we got above the line but we failed so the problem is by drawing people in and then now undercutting the line, which is what we have done now, the real risk is ultimately we're going to now crack in a big time way this is not a good set up. i think take measures how everyone wants to do that. the short seller, this is good. >> well, mike how are you trading tesla? >> so this is an interesting one. selling tesla short has been a challenging thing to do and right now options premiums are as elevated as they have been in

two years. we're almost three standard deviations above the mean level of ill plied volatility. so the thing to do is look for opportunities to collect premiums from selling elevated options and bearing in mind that a very short interest in the stock could create some support if the stock does call after earnings so i'm looking at september the 310, 340 call spread i can sell that for $10.40 and then buying a 340 and spending $10 that's where i collect my $10.40 and the idea is if it stays below 320 i get to collect that premium and having that upside call essentially offers me some if by some surprise the stock somehow manages to regain it's prior highs. i don't think the earnings call is going to answer all the questions people have. take a look at the bond prices in tesla

exceptionally weak at this point having fallen 10% so clearly the credit markets are not overly enthusiastic and the equity markets may fall in the same direction. >> it's interesting that mike mentions the credit. i don't know if you have been paying attention but recently they have been listed on tesla and at one point this week in very thin trading it was imlying a 40% chance this this company would default on a debt payment over the last six years. that spooked investors a little bit but this is an interesting set up carter made a very compelling case why that failed break out to the upside and now above that up trend is seth up for a big gap lower and then when you consider what mike's trade is doing, mike's trade is taking advantage of the elevated options prices you play for a high probability of a small win and a decent probability of an okay win but he's not playing for the lights out trade so there's a lot of different ways i like mike's trade but if

you're as convicted as carter is you may want to consider a long premium strategy. >> this has been rangebound security and it's not been successful but there's something insidious about trauidrawing mon and that money starts to see losses it becomes an excel raaccelerand cutting below the trend line then sets you up it has that look to it. >> mike, last words. >> i would just point out, this week has clearly indicated that pipeline stocks may be more as a rule -- vulnerable than we think. there may be an opportunity to play that by buying puts but i find them to be too expensive here. >> here's what's coming up next. ♪ >> and with 100% gain this year,

it sure is but there's something in the chart that suggests now might be the time to sell. 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 answer it on air. when options action returns. (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. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect.

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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 has been a bad day for jack dorsey took square down along with it let's get to dom for the details. >> hey,dom. >> the market giveth and taketh away for everyone. if you're jack dorsey it may hurt more today. twitter had a facebook-like day falling sharply after disappointing investors with it's user counts and forecast. from the end of last year through the highs we saw in mid june shares had doubled in value for twitter. not bad for dorsey who is the ceo and co-founder of the company but from those highs mid june through today the stock lost around a quarter of its value. that hurts but that may be made up for a bit by square stock which has had a tough couple of days as tech related stocks sold off. but the company he's also chief executive of and founder of

managed to hit a record high in trading before joining the rest of the market in negative territory. on a year to date basis it's still a double the shares started off around $34 and change and even with the two-day losses it's still a massive gain so they're both doing pretty okay but in a strange twist, square is doing so well that it's now worth around $28 billion compared to twitter's $26 billion market cap yes, square is now worth more than twitter twitter earnings in the book and a big catalyst on deck, though, earnings for square, wednesday after the closing bell and options traders already pricing in expectations for a 7.5% move up or down in that stock tied to the report but fair to say one is still maintaining solid upside momentum but one of them left chart watchers wondering if there's more down side ahead back to you. >> thanks a lot dom. our own chart master says shares

may come to an end. >> let's talk about the definition of an up trend. this is a guideline. it's literally up to the right ever higher, never too hot never too cold in fact, if we were to put in a line we can see this here. this is a well defined trend line so what i'm thinking is that we know that up trends will have check back where we will get back to trend and we're due for that right around now so let's just zero in on this more specifically and take a look at these. these are the draw downs that had stock has had. i'll put my zoom on here the stock dropped 15 it dropped 12. it dropped 8 it dropped 8 again it dropped 10, 29. and so i would just point out that it's perfectly normal to have a giveback. let's put our line back in stock closed at 6985

just to come back to trend which it has done about ten times. 62 plus minus is where the trend line comes into play that's about 11% and wouldn't mean a thing doesn't change the great stock doesn't change the angle and i think that's what is coming. >> mike, what is your trade on square >> the september 65-55 put spread, $3.20 to buy those 65 and then sell 55 for 80 cents. that's less than a quarter of the distabs betwence between the in this case and this is a way to mitigate the fact that they're elevated right now this is a way to place a short bet without taking material risks to the inside. >> we have to take a quick break. much more options action after this. >> options action is sponsored by think or swim by t.d t.d. ameritrade. 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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the 1980s and 90s he sexually harassed them. four discuss forcible touching and kissing during business meetings in what appeared to be a practice routine some say he physically threatened them or threatened to derail their career. and he became hostile when they rejected his advances and believe their career suffered as a result the current and former employees of cbs said such behavior extended to important parts of the corporation including cbs news and 60 minutes. one of the most distinct programs he said throughout my time at cbs we have promoted a culture of respect and opportunity for all employees and elevated wil to top executive positions across the company those are mistakes i regret them immensely but i always understood and respected and

abided by the principle that no means no and i have never misused my position to harm or hinder anyone's career this is a time when we are all appropriately focused on how we help improve our society and we at cbs are commit to being part of the solution. there's been no misconduct claims and no settlements against him in his 24 years at the network. earlier today the board said it would investigate these allegations. cbs shares now trading flat after dipping 6% during the day today. melissa. >> just skimming through the article, it's very long but the allegations are, i think, is that there's a broader culture of sexual harassment and sexual misconduct at cbs that was not only perpetrated by him but it was permitted to penetrate through the entire company. >> yeah. melissa. i'm still reading through this here but what it lays out in the first couple of pages is sort of a contrast between his recent

actions. he helped found a commission on eliminating harassment and advancing equality in the work place which is chaired by anita hill between that and the culture at cbs. a culture of intimidation of women who spoke out or who resisted his advances. so going through it here, obviously this is a time when there's been a lot on me too and times up and it says here in the article that the women came forward before the lawsuit between cbs and national musement so they're not mitticly motivated when it comes -- politically motivated when it comes to the politics of that. >> the latest on cbs down about 1%. coming up your tweets and final call (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.

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 time now for the final call.

>> so call spreads into tesla earnings. >> tesla and square. >> dan. >> yeah i agree with that. square and i think apple sets up. >> our time is expired i'm off for two weeks. have fun mad money starts right 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]