we are live at the nasdaq in times square the guys behind me are getting ready. here is what is 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 set up. plus, shop until you drop. >> and that's what the consumer seems to be doing as a number of retail stocks hit new highs. and it could spell gains for one big dow stock. dan nathan has the trade and -- >> he's so fine. >> call it the perfect match mike has a way to make money in

the online dating service if the stock goes up, down or nowhere at all he'll explain. it is time to risk less and make more the action begins right now. >> all right, welcome. we start with retail tonight, catching fire this week, the xrt retail etf hitting fresh 52-week highs as earnings season is about to kick into full swing for that group check out some of the names reporting next week. home depot, macy's, walmart, jcpenney home depot and walmart could see a four point swing in either direction. macy's could see a 10% move. and jcp, 18% you're looking at one of the names for a higher number. >> walmart, the implied move is 4% in either direction, a day after its earnings -- i think thursday, august 16th, prior to the opening. on average the stock moved 6% over the last four quarters. that spread between actually

what is implied versus how much has been moving caught my eye a little bit the other thing is, if you look at the one year chart of walmart, this is one of the early leaders in retail before the jury was out on the xrt here it had that pretty precipitous drop into earlier the summer it is up 10% from those levels 90 looks like an interesting technical level here, but there is other -- a couple of other things going on. we know amazon is at all time highs. some of it is bricks and mortar. costco trading near its all time high, target had this massive rally over the last year, up about 70%, so to me, walmart has a couple of fundamental issues if they get going on it, it is groceries, online, better in store traffic, it is margin improvement, if they guide to that, this stock is going above that technical level, one more thing, i have a five-year chart this is what got my eye, and forming the strikes on the trade of the detail here, you get through 90 here, and there is,

like, open air to about 100 bucks. here is the trade. when the stock is trading 90/25 today, look at the october expiration, give this strategy time to play out here, you can buy the october 90/100 call spread, paying $2.90 for that buying one of the october at the money -- in the money a little bit calls, 90 calls for $3.40, selling one of the october 100 calls at 50 cents, costs you 2.90, make up to 72 -- or excuse me, up to 100 bucks. there is some fundamental drivers here. >> what about you? >> i like the -- i'm making a bullish bet. i think it is walmart, substantially higher about a year ago trading about 18 1/2 times earnings but looking at 7.5% year on year eps growth. they seem to be doing a couple of things right. i like buying the october 90 calls. selling the october 100s at 50

cents is maybe the only thing i'm a little concerned about as a percentage of the current stock price, not collecting a tremendous amount of premium, but i also do agree with you that a strong rally through 100 is a little bit unlikely, more than a 10% move here this is a fairly stable stock. >> it is interesting, the level that you target, 100, that's the level from which the stock gapped down, like, you're looking for a gap. my point of view, we know this has been a big laggard look at kroger, maybe that's a -- costco, the issue is the lagging nature of walmart, sometimes that is -- or is it a problem? i'm in the latter camp i think the stock belongs here the other thing that is curious, if you look back it typically doesn't move as much as 4% to 6% it had more beta than normal. >> a couple of points about the trade, that's why i'm looking at october expiration, and defining my risk about selling the 100 call

it is not a sure thing i have a couple of months. if the stock goes down a couple percent rather than up, i can cover that 100 call in october and look to sell maybe the 95 and tighten it up a little bit, reduce the premium those are some things i'm considering when -- >> this call that you're long is at the money and the real question that you are probably asking yourself, you might ask yourself and everybody else is asking themselves, is it possible this stock could move 3% between now and october expiration i think it would be shocking to me if it didn't move that much that's one reason the valuation that you're spending here and why you would structure the trade that way makes sense you know, you were talking on the earlier show about some general potential market risk. if you happen to believe in that as well, using this as a substitution for being long the stock is a sensible way to play it. >> from a winner to loser, semiconductor stocks getting smacked around today, falling nearly 3%. texas instruments down a whopping 4%.

intel got a big downgrade today. taiwan semi, applied materials, invidia, seeing red. the space could see even sharper moves when two big names report earnings next week those are invidia and applied materials. invidia implying a more than 7% move in either direction, applied materials could see a more than 3% move. which name are you playing >> looking at the index and looking at invidia most of the names had unhappy results in terms of price action following earnings over the last week or so so i wanted to just look at our setup, what we know is that the semiconductor index returned to an inherently difficult level. talk about a double pop, meaning before you can exceed a high, you likely contend with it what we know here is that this level, right, is exactly the former high. in fact, if i were to draw some lines, today, the index closed at 1354 versus the high of

136218 years ago it reach we're right there and we're struggling at that level. moving forward, so a couple of relative charts and get on to invidia. the semiconductor index has gone on to make new highs, and yet the relative performance to the s&p, which you can see here, has stayed stuck, never could we make the new high. so if i were to draw the lines a different way, we also have something which would be known as a triple top on the relative performance of the s&p and just consider this, look where we are here. we're above this level on the absolute, but we're below this level on the relative. it is deterioration any way we want to look at it here is the stocks index here is the trend line and what we do know is we have bounced off this line repeatedly but the problem here is after bouncing off, we didn't make the new high, we bounce off again,

it is shallower and shallower, that's a stall to my eye so let's put invidia up here, the same circumstance, has the same lines, and it is already stalling meaning rather than looking like a bounce off the line, the ricochet, a ricochet, a ricochet, it is compressing, and to my eye that looks like the beginning of what should be something unhappy. so what i'm thinking here is that this is really going to stall out. i want to bet that invidia will do what intel did and what some other big semis act poorly on earnings >> interesting what is your trade here? >> i'm, you know, looking out about 70 days to october expiration as dan was doing with walmart, you know. options premiums do get elevated when you go into earnings, but compared to how sharply this stock has moved historically on earnings, they're not grossly overpriced, an expensive stock in dollar terms so the openings tend to be a little more expensive as well.

specifically i was looking at the october 250, 220 put spread. you can spend $12 for the october 250 puts, sell the 220s against the 345, spending about 8 1/2 bucks to make a bearish bet. i would make this point about invidia. that is that they had a lot of tailwinds coming into this period, among which was that there might have been some price support for their chips among crypto money, one could argue based on how crypto behaved that maybe that won't continue to be a tailwind they are facing some increasing competition from amd and let's face it, this isn't an extremely cheap stock at these levels if you think the business could be cyclical so i certainly wouldn't short the stock, but a trade like this makes sense if you're betting against it. >> the stocks, they're perfect, they line up what you're looking for on the youdownturn two months with a potential name that can really move i mentioned crypto, amd reported they guided crypto sales of their chips down 50% from the first half to the second vaf f

you were to see that in the stock like invidia, trading at ten time sales, next year sales, expected sales and 30 times earnings which are both supposed to accelerate in 2019, second half of the year is when people start to rerate stocks based on this stuff to me, i like this trade, could be an outright bearish bet or hedge. >> you're risking about 4% maybe a little less of the current stock price on a stock that typically moves about 7.5% just on earnings. so, you know, just why would we be using options instead of trading the stock. that's one of the clear reasons. why are we using a spread? because as we often say, options premiums tend to be elevated going into catalyst, such as earnings, and we want to offset some of the decay you're going to get so i happen to think this is one of the situations where the options market is presenting an interesting opportunity that we haven't typically gotten because of how volatile it has been in the past. >> again, microchip today, down 11%, intel on its number, most

semis, despite what they said, acted poorly >> morgan stanley yesterday had a negative note on the semis, mentioned the second downgrade of the week for intel. i hear what you're talking about. we have much more "options action" ahead. >> describe your perfect date. >> a tough one i'd have to say april 25th, because it is 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 coe will break it down. plus, calling all options action fans, reach into your pocket, grab your phone and tweet us your question @optio@optionsactn if it's nice, we'll share it on air. 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 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. 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 mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪

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(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. ♪ welcome back to "options action." seema modi is at the new york stock exchange. hey, seema. >> that's exactly right. forget f.a.n.g. stocks, a whole host of online stocks were on fire this week match, yelp, iac, tulio. look at yelp, they beat on the

top and bottom lines and saw solid growth in paying advertiser accounts. revenue guidance came in a little light, that stock is still up 30% for the week. investors swiping right on match. that stock soaring, and tinder had strong subscriber numbers. iac getting a like from wall street after earnings pointing to continued strength. ubs, jpmorgan, bmo capital raising their price target on iac. shares of twilio popping 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 is etsy, which surprised analysts, upping the full year outlook, jumping more than 10% for the week. the rally we have seen in online consumer oriented companies like

these continues to speak to the overall firmness of the consumer economy. so who knows, maybe it is time to call these the junior f.a.n.g. names scott, back to you. >> call them something, seema. thank you very much. the performance has been great mike coe, how do you bet on these? >> we'll look at math now. and specifically we'll look at selling a put. why are we looking to sell a put? buying a stock here, stock is right now trading at an all time high we might want to own it at a slightly lower price we're looking to sell options. options on the stock like match are extremely expensive. finally, when we sell options, we usually improve the probability of profit. we can take a quick look right here and we'll notice that the stock traded about 5115 or so where it closed. i'm looking at this 50 level it seems like a risky spot when you figure where it came from and the 45 level where the stock was earlier. and specifically the trade i'm looking at is the december 50

puts this is how expensive these options are. usually we don't look at selling options that far out right now, you can collect 10% of the strike by selling that put. so effectively if the stock is put to you, you'll buy it at 50, but the $5 you collect is spending 45 bucks for it, the level it was trading at earlier this year before we saw the sharp breakout we had. looking now at the probability of profit here, we can see that the chances that this thing expires worthless are about 50/50. but it is going to be 61% chance that it is not going to violate that $45 level so right here we have a situation, i like this, that's a nice chart so this is a trade where probably you have a good chance of making money, you're collecting 10% in just over four months. >> what do you think of the trade? >> i'm swiping right on this one. i'll tell you why. after such a massive gain here, you know, to do an at the money put, i know that it is 10% of

the stock price here but when you think how gappy this has been, you know it went down 20% on the facebook announcement in may. it seems like the real risk here is, you know, you have competitive sorts of things. that's why you have the move, because of the short interest this week. it seems really kind of tight to me. >> so in terps ms of the price action, it gapped up 8% to 168 that you might expect after something that was outsized. but you don't have price discovery after the first day. it is not .68. now it is 193, up 25, 26% from the prenews print. you have price discovery the presumption is, rerated to where it belongs and likely backs and fills for quite some time neither goes higher nor gives back a lot. >> the other thing, there are people who own this stock, right? the question you need to ask yourself, do i want to continue to own that stock or would i rather be short this put, collect 10% over the course of the next few months and worse case own it at a lower level and

have potential upside from here after you had a nice, sharp move. >> good point. if you were long the stock and you think there could be -- you're selling the at the money put, if you were going to buy this stock or more of it down at 45, then it makes sense to sell this right here. >> look, selling puts is not a strategy you engage in if you're inclined to be short a stock this is something you think you either are comfortable owning it, think it will trend sideways. >> up next, is it hip to buy square this week it was the stock rallied more than 3% are more gains 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 we're live at nasdaq in times square and more "options action" is right after this. 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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from america's number-one motorcycle insurer. -you know, i think you're my best friend. you don't have to say i'm your best friend. that's okay. you don't have to say i'm your best friend. 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 action" time for a look back at some of our open trade, last week, dan said shares of amd were heading higher >> the company just guided the second half of this year to crypto mining sales down 50% you basically have taken a lot of risk out of that being

something that could draw the stock down, okay and it could be a huge tailwind if it were to go up and specifically looking at october, you can sell the october 16 put at 55 cents and you can use the proceeds to buy the october 21, 25 call spread for 55 cents. >> the jacket looks familiar >> it's different. i promise. >> the stock's up now more than 2% since the start of that trade. how are you planning now >> so it just is grinding a little bit higher especially after what carter just said. some of the names are losing their leadership and one of the reasons why i sold the downside put and i sold another call is because i wanted this thing to kind of grind higher and that's 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.

carter makes us all look like -- >> 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 we're due for that 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 highs. 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 premium in this trade yet 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 is 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 i think cisco reports next week. >> they do report next week. the stock just rallied about -- the stock rallied 6% in the last week here, going in the event the august calls are kind of elevated, premium terms, if you want to set up for a rally into

the fall, this is the way to do it, you're risking 1.5%. >> our next fan asks, selling call options against a strong underlying stock say good income source, how do you find those stocks good question, mike. >> how do you find good stocks that's sort of the trick, isn't it as an investor the fact is actually selling covered calls against most types of stocks is a good idea, even if you don't choose them that well the reason is you're collecting that premium over time but the one thing i would tell you, it might be easier to pick which stocks to avoid. the ones to avoid are the ones with a lot of leverage on the balance sheets or a lot of catalyst that drive the stock in one direction or the other, tesla is one that comes to mind. but otherwise, i think covered calls are a strategy to employ in almost any stock you hold in your portfolio. >> one quick point, except for a stock like match, with 50% short interest because you own that because of the potential for these outsized sort of returns. >> time for the final call carter, you're up first. >> invidia into earnings, caution. >> five put spreads in invidia. >> danny boy

>> i would -- >> i like charting on the smh. i think that one looks like the one to put on here so, to me, but i like defining your risk in walmart >> thank you, guys, for having me have a great weekend all right. that does it for us here on "options action. we'll be back next week. don't go anywhere. "mad money" starts right now >> announcer: the following is a paid advertisement for online trading academy. you've heard it over and over again. if you want financial freedom, you have to invest in the markets. it's true that the wealth created in the financial markets has transformed more people into millionaires and billionaires than ever before. why is it that only wall street and a select few investors get richer and richer while the everyday investor lags behind? how is this possible when both