injuries hey there, live at the nasdaq market site on this expiration friday. the guys getting ready and while they do that here is what's coming up in the show >> announcer: investors anxiously await to see if tech earnings could save the rally. but dan nathan says watch out. another wreck could be coming he will tell how to protect yourself plus -- >> food fight. >> mcdonald's has been eating the competition's lunch the last few months and the chart master says the golden arches like primed for a

bigger breakout next woke he will break it down and -- that pretty much sums up the move in ford this year and with the stocks' dividend in question how much worse can it get for the beaten auto jien mike khouw lafs out the trade. time to risk less and make more. the action begins now. and let's get to it because we are heading into a make or break week for tech. microsoft amazon alphabet all out with earnings. the options market is implying big moves. microsoft and alphabet could see a 5% swing either direction. amazon could move more than 6% altogether that could spark more than a $140 billion shift in market cap next week with the nasdaq down 8% from the high, how should play the space heading into the reports let's g get in the money right now and dan looks at qqq, the nasdaq 1010 etf. >> the etf that tracks the nasdaq 10 oh 3 important to

focus on weight. the top four microsoft, google we call enemy the mag an make up 42% of the weight of the index of 1090 stocks arthrothroe in facebook and you get to 50% why i think it's important to focused on the qqq right now if you look at the weakness the last two weeks in the broad market we started going down because maga started going down together and we think about earnings next week you think about the implied moves if they started going in the same direction with a technical setup that we have i'll let carter peek to it we could have a big downdraft the next few weeks if the earnings do not stack up. you know when you think about it, the nasdaq, the qqq is up about 12% on the year. some of those names are up massively apple up 30 process microsoft up 27% google up 5% but still meety. and amundsonen up a whom 50% the qq could set up as a good hedge if you wait it out to the end of the year or hold some names. implied volatility the price of

options shot up lately but the technical setup in the qqq wants me to actually buy put spreads especially in hedging conditions i have a one-rear chart i'll let carter speak to it but i see an air pocket below 170 down to 160 if we break. this is the most important one the trend seems to sit right on or below it. it wouldn't take much to get it going lower. today the qq closed at 173 look out to november expiration. november 173, 160 putted spread could be bought for $3 buying one of the november, 173 puts at 4.po selling one of november 160 puts at 1.30. breaks even at 1.70. you can make $10 with a max gain down there $3 that's the max less 2 processors of the price here for the next month with all of the earnings coming out >> you know, i like put spreads here as you pointed out options premiums are slightly elevated as they are often close to earnings season.

we put on a put spread in netflix last week and we saw what happened to the the stock this week obviously did well sold off actually back to scratch on that put spread week on week zbiet the fact that it gapped up on earnings. that weakness to me you would expect to see it actually have followed through strength after o it gapped up instead did the opposite i like put spreads here. >> that's right you have heard the two key things the great trend now in question. you saw the the chart that dan put up but you also have the circumstance where provides action day to day, hour to hour is very poor meaning great beat i base by adope, netflix the stocks did not advance. csx one of the biggest rails did not advance. banks not doing pel. industrials ppg it's like an old fashioned tape reader the tape is poor. you're not rewarded for good results. what if the results are poor >> are you concerned that some of the stocks have seen declines going into earnings and dlfr the setup is better for them. >> let's look out to next

thursday, wednesday, thursday, 24th be 25th two are reporting if we go down another 5% in the next few days doesn't set up for a great price are press on the short side that's why i bill this as a hedge here but listen risking three to maybe make 10 down about 10% the next month in the increasing volatile market with you will a the events that makes a lot of sense to me. >> and that's the other thing. when we looked basically at the peak to trough decline of 7% you risk what about 2% actually maybe even less than that to make the bearish bet here. to me, fl a risk reward basis that makes a lot of sense. you are not risking a great deal of the underlying. it's trading at 1937 closing today. three bucks to make a drexel bet that you know technically it seems like there is good reason to make. i think it's a good setup here. >> from big tech to big burgers let's talk fast food

meantime the rest of the fast food stocks getting burned the chart master here says the golden arches could shine brighter when he they report next we can. carter head over to the plasma and show us. >> sure. the thing here is that mcdonald's -- you'll see in the first chart, is more correlated to the staples than it is to the consumer discretionary sector. it's the third biggest weight in the xly but i wanted to start with in chart which shows here of course is the consumer discretionary sector which mcdonald's is in but you can see that actually it's tracking more like a staple over the past 12 months because in many ways it's a deaf security you could say it's discretionary. in many ways it's the world's calf nearia, the cheapestmeal you can get. that's a defensive element moving on, here we have the real issue. mcdonald's on the top, a great uptrend. and yet it's relative perform to the s&p peaked in 2011

now, that's a long time to underperform in fact since 2011 mcdonald's is up 60% the market up 120. that's the performance mcdonald's having underperformed is looking at though it's catching up and coming to life both because it is defensive and day to day price action technically you goes that here the long-term chart without relative the they draw themselves this way. a lot of tension in the wedge. i play for the breakout to the upside how high let's zero in on this and study this closely here is the here and now chart let's put in our lines and what we have is this tension. and you can see it it's very precise. you have what's called a series of lower highs and higher lows as you work in the apex. it's the decision moment i'm making the bet we are going to break out and we will get back to about 181. that would be an all-time high i think mcdonald's is a good

play offensively and defensively. >> mike how do you play that. >> yeah, you know, that tension that he refers to it would appear that the pgs ohs market actually is expecting a little bit on that. not just bus it's expecting earnings but the implied move right now at just untd 5% is higher than the average move for mcdonald's what tells us is that options premiums are higher than they normally would be even going into earnings. and when i see higher options prices what i'm usually inclined to do is try to find ways to sell them. this is not a stock typically moving a whole lot what i was looking at what is the december is 1657 puts when i look at them earlier you could sell them for $4.25, the decembers. and the nice thing is that if the stock lingers here -- and it tip ke doesn't move much owner earnings you collect the premium up if you have the stock put to you at 165 net-net you are buying it closer to $160 and obviously if it goes up you collect all the premium as well. i think especially the tape being weak like this week and

maybe this will be completely countered trend if the market rolls over but to me i'm being more deafive rather than buying calls i'm looking for ways to collect premium and potentially buy the stock at a discount in it doesn't get thele rally you are talking about. >> you know what you're saying about the state your names obviously staple cut a bit the last tum weeks and it's showed relatively strength now we have the fundamental news important carter is identifying the 155 to 170 raenl is important por the trade let's say the earnings aren't enough to break it out above the level. the stock could come in mike still makes money on the trade pl the bad scenario is we have seen companies that have missed and the stocks down 10% on their way down 20% that's when you don't want to be sure short a put. except if you buy prior to earnings this is a trade sflup starbucks is up on the month yum is unchange. there is a defensive element to some of the stuff.

and that's really i think why i wanted to put the trade on, because you have that plus the fact that it could just be a good number and ascend on its results. >> yeah, i mean people like the fundamental story here they've been making a lot of changes over the course of the last couple of years every single one of the things that they said they were going to do whether cutting sgna expense, refranchising they hit every one and still on track actually to continue that. they are talking about basically 957% franchising by next year or there base that helps reduce risks that companies like this would otherwise face so fundamentally i like what they are doing the ralgs is we call it reasonable at 20 times forward so you know to me i think we look for opportunities to sell prel premium when options prices have been as low as they have been for a long time we haven't seen many and i like that here. >> for everything "options action" check out the website. while there you sign up for the news letter. i hear today's edition has the winning rotary numbers

the billion-dollar jackpot it's there. here is what's coming up next. ♪ you've been called. >> not if you own shares of ford bus that stock is stuck in reverse. but mike khouw says the damage could be done. he will explain. plus calling all "options action" fans, reach into your pocket, grab your phone and tweet us your question@"options action." if it's nice, we'll anne it on air. when "options action" returns. i don't know what' >> announcer: "options action" is sponsored by think or swim by td amer tad. trade. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job.

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action." ford shares stouk if reverse down more than 30% and the troubles keep mouning for the auto makers heading into the earnings report. phil lebeau in ch chicago with the details. >> morgan stanley today put out a note adding to the concerns that investors had that ford is adrift and has no direction in the future adam jonas, the the amount coming out with keep points. first of all he cut the company raid rating of ford down to equal weight from overweight cut the price target from $14 town to $10 and summed up the view about the lack of trarptty by ford saying we see limited progress limited progress regarding the company's restructuring plan remember, they cancelled an analyst meeting scheduled for september where the company was supposed to outline its plain plan for restructuring the business and investing in mobility solutions in the future since then it had little to say about when it might reschedule off meeting or what the restrurpg ultimately will be and as a result shares of ford continue to be under pressure.

keep in mind there is also growing chatter amongst analysts about speculation the company could potentially either cut or eliminate the dividend at some point in the future as it looks to conserve cash and finally, i want to show you guys, this wall. in chart says it all about the ford leadership over the last four ceos back to 2001 there it is. only alan malaly has seen shares grow under his teen yur back before him bill ford, the chairman of the company he was ceo and under his leadership, the lost half the value. we know the story about mark fields magic hack et who has been in the leadership control at ceo since may of of 2007, the stock down 22% melissa i've gotten a lot of feedback looking at the chart on extend it out on twitter and they said wow, the since 2001 the stock hasn't done anything

and 2 years down 67% ford reports earnings after the bell on wednesday. >> we'll be watching phil, thanks so request the ford shares down more than 30% this year and the stock's dividend in question how should you play it cutting into earnings professor khouw at the plasma with call to action. >> look at doing a put calendar in ford and here are reasons why. first and foremost, the implied move on earnings perhaps not surprisingly is above average. what that tells us is that pgs ohs are expensive. particularly the near dated options versus the longer dated ones and timely one of the other reasons i might look at a strategy like this is to my eye and obviously we need carter he is a input on this the stock looks oversold he also -- phil was talking about in addition to the incredible weakness that we have seen and this is only a one-year chart but he was talking about a period significantly longer than that he was also talking about a potential dividend cut looking at the options market what we see is and see there is

implied dividend cut of about 50% in the january 2020 options although the options market isn't seeing something happening sooner than that let's look at the structure of the trade. when i was looking at this earlier today you could sell the november 8 strike puts, collect 20 cents for those and then buy the january 8 strike puts for about 38 cents a net debit of 18. vukd bought them cheaper i was in there today i got -- i got a little bit at about 17 cents and the idea here is that we're trying to collect that elevated near dated options premium, expecting that maybe some of the worst in the near term is over but giving us a way to finance the purchase of that longer dated put. it looks pretty dismal for the business it seems the company has lost it's way a little bit. and it's depend on the one good but basically the only product which is the light duty trucks. >> what do you think. >> i like calendars i see what mike is trying to do

in a name like this in free fall and they have mountains of debt and there are a lot of things that could be announcements this that they could make that could send it lower, not likely much higher any time soon, do you worry about trying to thread the needle, selling november 8s even if the stock goes down you may not get the move you want by having the put calendar on. >> that's a good point one of the things i would point out is the stock was $8.5 today. being only $50 cents away from the $8 strike. seems close. don't forget it has to get well through the strike probably down to 7.5 or maybe lower before you see losses on the trade. frngly a move on of a dollar on $8.57 stock. you're talking about a 12% move between now and november expiration i think the risk actually of us going below a$7.5 between now and november expiration personally i think that's slightly you know -- it's not high but we should refer to carter on that one.

>> levels. >> mike used the phrase oversold and that's a circumstance at present. i would point out two things the stock is trading right now 20% the 150-day moving average and if you look back over the last six, eight years, that's happened five times. and every time it is bounced at about this juncture. the second thing i point out if one locked looked at the closing price you say ford is zoun a penny. but the real story the 8.50 process 8 spot 19 almost four% and reversed and close well to me it put in a important day to day intermediate low you could get a bounce here on the earnings >> have we seen the worst for ford do you think this years. >> the issue is this you are talking about a stock down this much and reversed something is wrong with the business and probably is goes lower long-term. in fact i would say almost distinctly so but tactically a better buy than sale. >> up next, the party in the pantry, the consumer staples

sector closing out the best week since 2011 is this the bing of the bigger rally? we explain let's check the cramer cam you see jim with the paypal cfo after the stock soared today captivate full interview at the top of the hour. live at the sd inaaqn times square more "options action" after this break. what do you look for when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪

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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 pgs ohs action action. time to look back at open trade. last month dan said the beaten down consumer staple sector was gearing up for more pain. >> look at the uptrend since 2011, broke earlier in the year when things got bad. it got rejected there. i want to play over the next couple months or so for a move back below $50 here. you could very simply look out to november expiration by the november 54 puts paying the 90 cents are cents for those break

even at 53.10 fwp the xlp following the blow out earnings the closing out the best week in seven years. dan what are you doing with staples now. >> that uptrend i thought it would get rejected it hasn't broken it was trading at 52 the trade was put on when the xlp at 54. the november 54 puts have one month expiration have a third of the value. it's important we get asked the question all the time i wantson you want to use the 50% premium preem stock. up 9% let's see how it acts next week but keep it on the tight leash. >> it's proctor related damage it's not that that staples are winning it's people are hiding in a squishy team. i think the longer term trade is intact. >> mike said twitter's troubles were far from over last month. >> obviously we have had in huge almost 40% decline but the other thing i would ask you to watch is over here and

here, and that is if you are a holder of the stock you wonder where exactly is the bottom. ifts looking at the 30 put at the money $29.85 you would spend for that and then selling the 22 put against it for 5 a cents net-net i'm spending $2.30 >> shares of the social media stock falling nearly 6% since the time of the trade. twitter reports earnings thursday mike what do you do now. >> obviously we have a cattle. i want a bearish bet on it but we can take money offer the tame table 30 trike futs roll them down to 28s. take in a dollar doing that net-net you are in the 28/22 spread for 1.30. >> i'm hard pressed how we are not seeing downgraded guidance relevant i have to to how they police the site and some of the revenue opportunities around advertising and the election and to me i think you wait the kwob in the low 20s. >> bad chart sometimes that's all that matters it's a bad price action.

broken chart more risk to the downside than there is opportunity for up side. >> all right up next, thtwtse ee 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. ♪

i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions.

sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ pgs ohs action time to take tweets. this is from chand ray who says i keep hearing the phrase that options are implying a move up or down. >> we calculate the variance and go to the simple answer. in most cases the stops have weekly options go to strike that's closest to where the stock is trading add up the call, add up the put for the expiration the following week that's krping earnings put it together over the stock price and that's going to give you the expect the percentage move approximately. >> all right and there is also the video in which professor khouw explains it we will pot post-that on twitter. final call professorer carter.

>> mcdonald's on the longside. >> mike. >> i like selling the 165 puts in mcdonald's in earnings. >> qqq 30% of the nasdaq 100 reporting wednesday and thursday qqq makes sense. >> big week for earnings that does it for us you next friday. . my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull mark 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 are on the fence, they want to make money. my job is to entertain or teach you. tweet me at jim cramer this, this is the most treacherous update that i can recall we have more