hi there we're leive at the nasdaq marketsite in times square here's what's coming up. >>. >> chip stocks are getting crushed and the chart master says one name looks particularly bad heading into next week's earnings he'll give you the setup plus -- >> shop 'til you drop. >> that's what the consumer seems to be doing as a number of new stocks hit new highs and it could spell gains for one big dow stock. don has the names. and --a call it the perfect match. mike has a way to make money on

the online dating service if the stock goes up, down or nowhere at all he will explain. it's time to risk less and make more the action begins right now. ♪ all right. welcome, we start with retail tonight catching fire. the xrt retail etf hitting fresh 52-week high and this is earnings season about to kick into full swing for that group and check out some of the names reporting this week and home depot, macy's, walmart and jc penney and the market implying hefty moves as well and they could see a 4% swing in either direction and macy's could see a 10% move and the implied move for jcp, 18% you're looking at one of those names for an even higher move. >> looking at walmart. the implied move is up 4% in either direction and just a day after its earnings and i think it's thursday, august 16, prior to the opening and the stock has moved 4% and that spread between

what's implied versus how much it's been moving if you look at the one-year chart of walmart, this was one of the early leaders in retail before the jury was out on the xrt here and it has a pretty precipitous drop into earlier this summer. it's up 10% from those levels and to my eye, it looks like a pretty interesting technical level here, and there are a couple of other things going on and we know that amazon is at an all-time high and costco is trading very near its all-time high target has had this massive rally over the last year, and up about 70% and up 26% on the year near its all-time high so to me, walmart has a couple of fundamental issues that if they get going on it's groceries and online and it's better in-store traffic, and margin improvement and that sort of thing. this stock is going above that technical level. one more thing i have a five-year chart and this is what got my eye informing the strikes on the trade of the detail here and you

get to 90 here and there's open air to 100 bucks when the stock was trading at 90 and 25 and i want to look at the october expiration and give them some time to play out here and you can buy the 90-100 call spread and buying one of the october, at the money and it's in the money a little bit call and the 90 calls for $3.40, telling one of the october 100 calls, and it breaks even at 92.90. you can make up to 710 up to $100 bucks and i just like the risk/reward of this trade and it's got money and it has fundamental drivers. >> i am making a bullish bet and walmart, obviously, and it was substantially higher a year ago and it's trading at 12 tiles earnings and 7 1/2 year over year eps growth and it looks like they're doing a couple of things right selling the october 100s at 50

cents is the only thing i'm a little bit concerned about simply because as a percentage of the current stock price it's not collecting a tremendous amount of premium, but i do agree with you that a strong rally is more than a 10% move and this is a fairly stable stock. >> it's interesting, the level that you target, 100 and that's the level from where the stock gapped down. my point of view is it's a big laggard and you mentioned target and you look at kroger and costco lagging nature and sometimes that is, or is it a problem? i'm in the latter camp, and i think the stock belongs here, and if you look back, it doesn't move as much as 46% and it has more data than normal. >> i just want and the expiration, and it's one to find about the point about selling the 100 call

listen, it's not a short thing, but i do have a couple of months and if it does go up a percent rather than go up a percent i can look to sell the 95 and tighten it up a little bit and reduce the premium at risk and those are some of the things that i'm considering >> it's at the money and the real question that you are probably asking yourself and everybody else, is it possible that this stock could move 3% between now and october expiration i almost think it would be shocking if it didn't move that much which is one of the reasons that you're spending for the options here and makes sense you were talking on the earlier show about the potential market risk and if you happen to believe in that, as well then using this as a substitution for being long the stock is a sensible way to play that thing. >> from a winner to a loser. semiconductor stocks getting smashed today falling 3%, intel

got a big downgrade today, taiwan semi, applied materials and nvidia all seeing red. the space could see sharper moves when two big names report earnings next week those are nvidia and applied materials and nvidia implying a more than 7% move in either direction. applied materials could see a more than 3% move which game are you playing, cb dubs >> most of the names have had unhappy results following earnings over the last week or so so i wanted to look first at our setup. don't we know that the semiconductor index has returned to an inherently different level and meaning before you can exceed a high, what we know is this level is exactly the former high in fact, if i were to draw the line, today the index closed at

1354 and it reached a high and literally, we are right there and we're struggling at that level. >> moving forward, the semiconductor index has gone on to make new highs and yet the performance to the s&p has stayed stuff, never can we make a new high and if i were to draw the line a different way, we also have something which would otherwise be known as a triple top with the relative performance of the s&p and consider this, look where we are, here. we are above this level on the absolute it's deterioration any way you want to look at it finally, here is the soft index and the trend line and what we do know is we bounced off this line repeatedly, but the problem here is after bouncing off, we didn't make the new high and we

bounced off and it's shallower and shallower and it's ultimately a stall at least to my eye and it's the same circumstance and it's got the same lines and it's already stalling, meaning rather than looking like a bounce off the line and the ricochet, it's compressing and to my eye that looks like the beginning of what should be something unhappy and what i'm thinking is this is really going to stall out and n video will do what intel does and what other big semis ask poorly on earnings. >> what's your trade here, mike? >> i'm looking out about 20 days to the october expiration. >> options premiums do get elevated when they get into earnings and compared to how sharply the stock has moved on earnings they're not grossly overpriced and the options tend to be more expensive, as well.

specifically, i was looking at the october 250, 220 put spread. you can spend $10, and sell the 220s for 3.45, and you're spending about 8.50 to make a bearish spread and i would make this point about nvidia. they had a lot of tailwinds coming into this period among which there might have been some price support for their chips among crypto mining, one could argue based on how crypto has behaved that maybe it won't continue to be a tailwind and they will face some increasing competition and let's face it, this isn't an extremely cheap stock at these levels especially if the business could potentially be cyclical. i think a trade like this make sense if you fand a bet against it >> it would line up up with what you're looking for and $8 with a potential name, and you mentioned crypto amd reported, crypto and they guided crypto sales down 50% to

the second half and if you were to see that on the stock like nvidia that is trading at ten times sales and 30 times earnings which both are supposed to decelerate in 2019. the second half of the year is when people start to re-rate stocks based on this sort of stuff. to me, i like this trade and it could be a bearish bet or a hedge. many you're looking at the current stock price that typically moves at 7.5% just on earnings >> why would aren't you be using options? >> why are we using a spread, most specifically and we want to offset some of the decay that you're going to get. so i happen to think where the options markets are presenting an opportunity that we have not seen in the past. >> microchip today down 11% and intel on its number, most semis,

despite what they've said have acted poorly in response to their numbers. >> morgan stanley, i think it was yesterday in a negative note and you mentioned intel. i hear what you're talking about. we have much more options action coming up. here's what's coming up. >> describe your perfect date. >> a tough one i'd have to say april 25th because it's not too hot, not too cold >> or, how about making money on the online dating site match if the stock goes up, down or nowhere at all, mike ko will break it down. plus -- calling all options action fans. reach into your pockets, grab your phone and tweet us your question at options action if it's niece, we' if it's nice, we'll answer it on air when "options action" returns.

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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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 seema modi is at the new york stock exchange. >> forget fang stocks, like facebook, amazon, and all have seen significant gains and take a look at yelp and the service beat on the top and bottom line and saw solid growth and the revenue guidance did come in a little light and it's still up 30% for the week and investors swiping right on match that stock soaring more than 30% as tinder delivered strong subscriber numbers and the

street seems to be less concerned about facebook taking market share away from match when it unveiled its own dating product and an announcement facebook made at the fa developer's conference in may. iac pointing to continued strength and bmo capital all raising their capital on shares of iac and plus shares of trulio popping 25% after the cloud communications company boasted a surprise profit compared to an expected loss and cited growth in voice and messaging products and then there's etsy which surprised by upping its full-ier outlook and that stock jumped more than 10% for the week and the consumer-oriented companies like these continue to speak to the overall firmness of the consumer economy so who knows maybe it's time to call these the junior fang names. scott, back to you >> we should call them something. seema, thank you so much the performance has been great >> mike ko, how do you bet on

these. >> we'll take a look at selling a put and why are we looking to sell a put the stock is right now trading at an all-time high and we might want to own it at a slightly lower price. options right now on a stock like match are extremely expensive and finally, when we sell options we usually improve the probability of profit and we can take a quick look rid here and we'll notice that the stock traded at 51.15 or so is about where it closed and i'm taking a look at this 50 level and that seems like a risky spot when you consider where it came from and i'm always looking that the 45 level which is where the stock was earlier and specifically the trade i'm looking at is the december 50 puts and this is how expensive these options are and urgely we don't look at options that far out and you can collect 10% of the strike by selling that put you'll buy it at 50 and independent of the $5 you collect you're spending $45 at,

which is the level we were trading it before we saw this sharp breakout right here. >> just taking a look right now at the probability of profit here you can see that the chances that this thing expires are about 50/50, but it's going to be 61% chance that it will not violate the $45 level and right here i have a situation. >> i like this that's a nice chart. >> so this is a trade where you will probably have a good chance of making money and you're collecting 10% in just over four months >> what do you think of this trade? i'm swiping right on this one and i'll tell you why. after such a massive again here, to do an after-money put, i know that it is 10% of the stock price here, but when you think how gappy this has been, it went down 20% on that faceback announcement back in may it seems like the real risk here with 50% short interest is, you know, that you have these competitive shorts and that's why you had the move because of the short interest this week

it seems kind of tight to me >> in terms of the price action, and they had results the stock was 155 and it gapped up 8% to 168 and that you might expect after something that was outside, but you don't have price discovery after the first day and it's not 168 and now it's 193 and we're up 25, 26% from the pre-newsprint and the re presumption is it's been pre-rated and it likely backs and fills for quite some time. >> the other thing i would point out is there are people who own this stock, right? the question you need to ask yourself and do i want to continue to own that stock or should i collect this over the course of the next few months and own it at a lower level and still have a potential upside from here after you had a nice, sharp move >> i think it's a good point, if you were long the stock selling an after-money put it's one way to add a potential yield and if you would buy the stock or more

of it, it makes sense to sell it right here >> selling puts is not a strategy that you engage in. this is something you either are comfortable owning it and you think you'll tread sideways. >> up next, is it hip to buy square this week it was the stock rallying more than 3%. are more gain ahead? stick around to find out, plus got a question for one of our traders? send a tweet to @optionsaction we may actually read it later in the show ua are live at the nasdaq, times sqrend more "options action" is right after this. 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?

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plus, get $300 back when you buy a new smartphone. xfinity mobile. it's simple. easy. awesome. click, call or visit a store today. 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.

what's going on. so at some point when we get further, maybe above 20 close to the 21 strike i think you take in that short, 16-put strike in october and you ride out that call spread. >> you didn't feel like wearing a tie tonight?

>> carter. >> two weeks ago, big guy, carter and mike said shares of square were heading into some trouble. >> this is a well-defined trend line and what i'm thinking at this point is we know that up trends will have a check back where we will often get back to trend and what we will do for that right around now. >> the september 65, 55 put spread, you would spend $3.20 to buy those 65 and then sell the 55s for 80 cents >> the stock did fall, but managed to rally back and now up more than a percent since the time of the trade and what are you going to do now? >> it was nice, about ten bucks and now it's recovered and what's interesting is the recovery has not permitted the stock to make new high i think they'll stick with it. >> i'm going to guess that it's possible that some people who had this trade on might have taken some of the pockets when we saw the initial draw down and

there's not a whole lot of people yum in september and i would be inclined to stick with it >> the one thing about the cult stock like this which is square. when you get a quick drawdown and right back up there, it kind of speaks to strength, right the fact that it's a one-day decline on the news and then bring it right back and to me it's kind of hard to own put premium from here on out in my opinion. >> up next, your tweets and 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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(indistthat was awful.tering) 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. we're back and it's time to take your tweets our first fan asks thinking of selling the august 44 calls and buying the october 44 calls on cisco. give us your thoughts, dan it reports next week. >> it does report next week. you kind of read my mind >> he did? >> yeah. he did in the last week, going into the event the august calls are elevated at a premium term and so if you want to set up a rally

into the fall, this is the way to do it you're risking 1% of the stock price. >> selling call options against the strong underlying stock is a good income source how do you find those stocks it's a good question >> how do you find good stocks that's the trick isn't it, as an investor it is selling covered calls against most types of stocks is a good idea even if they don't choose them that well and the one thing i will tell you is it will be easier to choose which stocks you want to avoid and they have a lot of catalysts that sharply drive the stock in one direction or another and tesla is one that comes immediately to mind, but otherwise, covered calls employ almost any stock that you own in your portfolio >> it would make one quick point with 50% short interest and you own that because of the potential for these outsized sort of returns. >> time now for the final call >> carter, you're up first. >> caution >> put spreads with nvidia >> danny boy

>> you have one? >> no, i was just starting on the smh. >> i think that one looks like the one to put on here to me, but i like defining a risk in wal-mart thaw guys for having me. have a great weekend that does it for us here on "options action. don't go anywhere. "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's 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 my job is to educate and teach you. so call me at 1-800-743-cnbc or tweet tweet @jimcramer the dog days of august are upon us that's when earnings season goes