hey, there, we are live at the nasdaq marketsite in times square we have a big show ahead the guys are getting ready behind me. in the meantime, here's what's coming up. ♪ when you wish upon a star. >> it's not just a wish. disney's shares are near one-year highs and carter worth says the charts are pointing to more when the company reports earnings next week he'll break it down. plus -- ♪ ♪ >> how would you like to get long shares of amd for next to nothing? >> yes, nothing. dan nathan will explain how to

do it. and -- as one social stock after another tumbles, traders are eyeing one in particular for next week and here's a hint. ♪ ♪ >> mike ko has the snap trade and it's time to risk this and make more. the action begins right now. >> sure does, so let's get to it next week is all about media earnings and disney in particular the dow's stock has been on a magical rally closing out its fourth straight week in the green and that's the longest winning streak in nearly three years with shares just below their 52-week highs. how should you play it into the report >> let's get to the chart master. >> what do you think >> just as you suggested and disney has come to life of late. the precondition of underperformance with nascent outperformance is often a good setup. so consider the chart here the three-year chart

this is the underperformance disney in blue and basically no progress in three years as e quites in general as measured by the s&p have gone higher and higher so if we just put a little highlight there. that is the setup underperformance, but disney has come to life of late let's move on. >> so here's the chart of disney and no judgments and annotations by me. let's put in the lines and one look at it would be as follows, a head and shoulders bottom and the inference would be that ultimately we would get to the high and that we would break out. >> another way to draw the lines would be as follows, a cup and handle, but the same proposition that we're back to a high and we're contending with a high and we're heading for a prejumpisume breakout tension at a former high and the presumption is out

okay, let's pull it back out longer term and let's draw on that and when we have is this tension. if you were to zoom in here, what's happened is that we've actually broken above the upper band of that wedge so that's the beginning. let's pull it back even further. here's really long term going back to a period where disney was dead, came to life and then is dead again. are we about to re-assert ourselves? put in the lines and again, we are just starting to move above that key upper band and what i'm thinking here is a pretty big move and i like the outperformance versus the s&p up three with the precondition of three years of underperformance and buying disney and earnings. >> all right >> mike, what do you think of everything carter said and what's the disney trade here then >> this is interesting because it was almost exactly three years ago which disney which historically traded at a premium

in the market had that earnings disappointment in the summer of 2015 and it basically lost all of its mojo. it's trading right back essentially to that exact same level and what's interesting is around that time, the company made $5 in the eps and it will do over seven now and basically you're buying the stock with 40% more earnings than it had in 2015, but you're getting it for the same price and it's trading at a discount and i like the options and premiums are elevated going into earnings and they're obviously always going to be that way and more so now than usual and it's implying the move above the 3.3% it usually does and i think we should take advantage of the elevated premium and look to sell you can collect $1.80 for that when i was looking at that today and use the premium to help finance the purchase of the october 115 calls for $3.50. so think about that for a second you have the august options and they're only double the cost >> the idea is that those

options will decay and we'll met gait the corn so it will able long-term, bullish trade you are kind of threading the needle a little bit and if carter is right and you have the right breakout >> he's positively inclined from a fundamental standpoint and they can consult above 115 if it doesn't go too far below it shlg this will be the level that it plays out, it will go from 115 to 122 near the all-time high. >> the tension is there and that's what makes a good trade it could all be a bust and go the wrong way, but the setup is right and because you do have the multiple formations and you have a pennant and a cup and handle and you have the long-term setup and again, it's up 9% in the past month, beating

the market, having underperformed it's quite right, i think, for something special. >> last word on disney >> think the critical point that i would make here is obviously, we've already had quite a move and i'm thinking half of that move is already done and that's why i'm willing it sell that option and because i would have thought it was a sharp move. >> now to the hottest tech stock of the year. that's advanced microdevices the chip stock is on an absolute tear it is up 80% in 2018 and in the highest level of more than a decade earlier this week dan you think it would be right for a breakout >> they actually guided below where a streak consensus was and it doesn't matter. when you look at a stock that's up 80% on the year like you just said act really well despite bad news it makes me feel like something's going on here. it's got a market cap and a

really great balance sheet and not a whole heck of a let of debt and just a few hundred million and the thing is doing better than intel in a bunch of areas and something it hasn't done in a long time and i think this is really important there was a time last year when these guys were growing sales in chips for crypto mining. well, the company just guided the second half of this year to crypto mining sales down 50% you've basically taken a lot of risk out of that being something that could draw the stock down and it could be a huge tald wind if it were to go up and there's somebody that wants to take it out. so i don't want to buy a stock at $18.50 earlier in the year and i want to use options to set up a structure where i'm not paying any premium and i had leverage to an upside move and i was looking at how the stock was trading at 18.5 and you can do a cause of risk reversal and use

the proceeds to buy it out of the money and spugs are specifically using in october and use proceeds to by the 25, this is they make money. the calls should depreciate and on october exploration, between 21 and the yofrt case scenario is you are put or owlower. i have a couple of charts here that kind of help me inform these strikes. here's a five-year chart and it shows you how important this 15, 16 level breakout and carter spoke to that a little bit that's probably a level that i would be okay buying the stock,

okay and rolook at this chart since 2000 and if there is takeover chatter going on, this will be up 30, 35% and that's where the take-out price level is. >> mike ko >> the 16 level that dan's saying, that's the level of where it gapped up >> worst case having it put to you there is an excellent entry point if one were anticipating it, but he doesn't have to get down there the way this looks is it's about to explode up. >> this type of structure makes sense in this case for the reasons you highlighted. one of the things you didn't point out is options premiums is the reason you want to be short that call and short that put you look to sell more ongs whpts when premiums are elevated it's about $2.50 on an $18 stock. so the stock will have to move substantially if you're an outright premium buyer so using a structure like this,

if it just sits here you're likely to be more rapidly than you want >> i want to make a point of the stock up 80% of the year and what was the best-performing stock in the s&p 500 what was it called nvidia >> its that's one of the biggest competitors in different areas, ai for cloud computing and servers. there is a lot of stuff going on and i think this is an asset that's too dollar cheap if you're trying to compete with nvidia to me the price action thing speaks to something going on >> for everything options action check out our website. options action.cnbc.com. it's what i'll be reading this weekend. what are you waiting for here's what's coming up. >> oh, snap! >> you won't believe just how much traders see snap is moving when the social giant 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 answer it on air when "options action" returns. see that's funny, i thought you traded options. i'm not really a wall street guy. 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

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select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪ welcome back to "options action." snap is the last to report next week let's get to julia boorstin with a look at what we can expect hi, julia. >> michelle, when snap reports its second-quarter earnings tuesday afternoon investors and analysts will be looking for signs of momentum after user growth and revenue fell short of expectations last quarter. analysts expect snap to grow revenue 38% year over year to $twie $21 million.

that's a cent more than the company lost in the year-ago quarter. the options market is pricing in a 17% move in either direction for the stock. snap's rivals facebook and twitter have suffered since their earnings reports last week on concerns on slowing growth, european privacy regulations and the greater focus on safety and security impacting their bottom lines raising concerns that snap may sub from similar trends particularly when it comes to user growth. the stock is still down about 25%. red bush analyst is still concerned adjusting estimates to reflect updated growth assumptions for daily active user, saying downloads in the app in the second quarter suggest weaker daily user growth than he previously modeled we'll see what the ceo says about gaming and are the categories that could drive growth michelle, back over to you. >> thank for the rundown, julia. really appreciate it. so given the moves we saw on

facebook and twitter, out, should you ghost snap into earnings mike has the call to action. >> we'll take a look at doing a put calendar kind of like disney, but maybe onst steroidsn some respect as julia pointed out implying a 17% move in either direction on earnings so that means if you'll make a directional bet just doing it outright will be too expensive one other quick point and this is true also of tesla. you have a very high short interest and what that could mean is it could create some level of support if there is a disappointment and we'll play to that, as well. finally, just taking a look at the thing fundamentally, julia spoke to that and we're looking at not only the active user rates and ads and we're also taking a look at the ad cost which has also been weak and i'm going to let carter speak to that this doesn't look very good to my eye, though, and it's consistent with the fundamental pieces and one of the trades we'll take a look at here, specifically, i was taking a look at the august-january put

spread you can sell 12 puts and the january puts are almost double that cost at $1.55 so basically, you will spend 80 cents to do that by selling the near-dated option where this trade will be successful and if the stock doesn't move that much at all, it will move because of the decay. in the longer term it doesn't need to fall as much because we collected 75 cents you can see 90% chance that it hits 12 and 75% chance it hits 11, but to get to ten which is essentially where you needed to go where you would buy it outright the probability is lower and we'll improve our odds of success and factor in the interest as we take a look at this trade >> what do you think of mike's strategy it's moved on average 25% on the day following each quarter and only one of those has been up and it was up 50%. to me, the most important thing

about this trade is that mike's probably paying for less than the average move over the last five quarters and the fundamental point to focus on is users and revenues if they miss on that, the stock's going back to the lows that it traded after they disappointed last quarter, but they have a new cfo and brought the gentleman in from amazon and the way he guides will set the course, and i think that's the most important thing to watch for. >> carter, what did you think? >> you said it right there anything up into the right is good and sometimes it's as elemental as that. and it's got some gaps and it beat the earnings miss and the most recent gap is down and here's this. if your first day in life is the best day it's never good and it's basically been happy ever since. >> you pointed out that they've only had five quarters of earnings results and that they have had fairly sharp moves on the earnings and that's typical.

if they have an ipo usually it's the first few earnings results where you will see the most violent moves and it doesn't matter if it's a big company like facebook or a smaller one like snap. this is a consistent pattern that over time investors become more acclimated to the stock and their expectations are basically more measured and you don't see big gaps which is why you have a 17% implied move and it may look small in a historical context. >> for the viewer, this is a volatility trade for all intents and purposes so the worst-case scenario, the premium that you have at risk and you're selling the short data and what's the worst-case scenario how can that get wiped out if you had some crazy sort of move >> if it gapped slightly higher. the worst case is 80 cent which is is not huge >> got it. okay still ahead, tesla posting its best week in five years up more than 17% so it the stock finally back on track? plus, you've got a question for one of the traders

send a tweet to @optionsaction if it's nice we might read it later in the show. we are live at the nasdaq in times square and there's more options action right after this break. see that's funny, i thought you traded options. i'm not really a wall street guy. 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

well, it'sonce again.eason >>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. welcome back to "options actions," it's time to take a look back at the open trades cohen carter said tesla was going to stall out >> 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've done now, the real risk is that ultimately we're going to now kra being in a big kind of way. this is not a good so theup. >> the 310 and 340 call spread i can sell that for $10.40 >> all right so that one didn't go exactly as planned. tesla had its best week in five

years. mike, what do you do with that trade now? for those of you that follow us on twitter and you should, the day after those earnings results came out, we waited for the stock to open and see how it traded it actually started to trade higher than it did overnight that to me was a signal that we were clearly wrong on this so i closed the position at that point, and it has since gone significantly higher i don't think the fundamental story has changed that much. in the short term, it's a voting machine and the market and in the long run it's a weighing machine and it hasn't been determined yet. >> cracking in a big way and it popped in a big way, but when you go up 23% all you can do is go back to where you were a month prior and simply return to where it was in the first trading day of july. my hunch is to stay short if you can do it. >> what do you think >> this is a real battleground stock here and i think it's a trader's delight i think you're getting these opportunities and the levels are

very well defined. 280 on the downside and 360 on the upside and have a ball and trade it, you know >> two weeks ago, done, you said it was time to unfriend facebook >> the options market has $30 million in market cap and you're thinking about short-term protection for the breakout level, i think that makes sense. i was looking at the august expiration at 210, and you can buy the august, 210, 190 put spread for buying the august 210 puts for seven bucks >> facebook did do a face plant. the stock plummeting 16% since your call, dan how do you manage this one now >> tesla overshot its implied move and that was a $45 billion market cap before this, facebook was one of the largest stocks in the world above 700 billion and it lost 720 the next day and those are unexpected sort of moves and this was the 210190 put spread

and the stock traded as low as 170 or something like that and it's through all of the strikes and it's trading like stock, basically, the puts and you have no reason to take this on. you take this on and move on it's price discovery the magnitude of the drop and dropping below 170 and today we are right where we opened on the first print after the bad news >> it belongs here and anticipating it, brilliant and now that it's happened, sometimes stocks belong where they are and that's the case here and facebook is the fair price. >> speaking to fair price. i look at it and it's an interesting candidate for possibly selling puts or candors or something like that because i feel it's found a new level here and further weakness from here i'm discounting that somewhat and this might be one of those things that if you happen to own the stock if you could have covered calls if you're not interested. >> all right coming up nextyo tetan the final call

oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪

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only with td ameritrade. it is time to take a tweet we have a question from cnbc's super fan ivan mckay who says august is historically a dead month for volatility and we are seeing lower vol what's a good options strategy if you think there could be a surprise volatility spike in august what do you think, mike? >> i think that's a great question and i would actually take a look at the september options and august is typically the most expensive time to rent if you're getting a house in the hamptons and it's the cheapest time to rent if you're buying options. i would take a look at september, somewhere between the 275 and the 280 strike puts and those things will cost you less than 1% of the current level of spy and obviously, if you're thinking vol could spike you are expecting the s&p could drop. >> mike reversed the whole hamptons thing at the break. [ laughter ] >> all right final call time.

carter >> disney, long, like it for a breakdown. >> calendars in disney. >> amd calls for reversal. >> all right that does it for us here on "options snow why because jim cramer and "mad money" starts right now. my mission is simple, to make you money i'm here to level the playing field for all investors. there is 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 make 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. this is the most confusing part of earnings season and when you throw in the fang craziness, the apple and the tensions with china, we go