hey there. on this expiration friday. the guys behind me getting ready. here's what's coming up in the show investors are anxiously awaiting to see if tech earnings could save the rally dan nathan says, watch out [ screaming another wreck could be coming he'll tell you how to protect yourself plus -- >> food fight! >> mcdonald's has been eating the competition's lunch for the last few months. and the chart master, carter worth, says the golden arches

look prime for a bigger breakout next week. he'll break it down. and -- that pretty much sums up the move in ford this year. and with the stock's dividend now in question, how much worse can it get for the beaten auto giant? mike coe will lay out the trade. it's time to risk less and make more the action begins now. and let's get right to it. we're heading into a make-or-break weak for tech. microsoft, amazon, alphabet all out with earnings. microsoft could see a swing in 5% in either direction it could spark a $140 billion shift in market cap. the nasdaq down about 8% from the high, how should you play the space in dan is taking a look at q, q, q. >> the etf

i think it's important to focus on the wait. the top four sox the maga they make about 42% of the weight of the index of 100 stocks throw facebook in there, you get to 50% it's important to focus on the q, q, q right now. we started going down because maga started going down together you think about the implied moves. if they all started going in the same direction, i'll let carter speak to it, we could have a big downdraft in the earnings don't stack up the qqq is up about 12% on the year some of those names are up massively. apple, 30% google only up 5%. it's a meaty name. amazon is up a whopping 50%. so the qqq could set up as a good hedge

implied volatility, the price of options has shot up lately it wants me to buy put spreads i have a one-year chart. to my eye, i see an air pocket below 170. down to 160 if we break. we have a three-year chart the trend is the most important one. it seems to sbigt on it or right below it the qqq closed today at 173. you look to november expiration. $3 buying one of the november 173 puts selling one of the november 160 puts at $130 down at 170. you make up to $10 between $170 and $160 2% of the next month >> i like using put spreads. options premiums are slightly

elevated, as they often are. rep we put on a spread in netflix in week it sold off. we're back to scratch on the put spread week on week. that kind of weakness to me, you would expect it have follow-through strength after it gapped up. instead, it did the opposite >> you have a great trend that is mow in question you saw the chart that dan put up you also have the circumstance where price action, day to day, hour to hour, is very poor great beats by adobe netflix. the stoms didn't advance csx. did not advance. certain industrials, ppg the tape is poor you're not getting rewarded for good results what if the results are poor >> are you concerned that some of the stocks have seen declines going into earnings? therefore the setup is better

for them >> yeah, yeah. wednesday, thursday, the 24th, 25th we have two of them reporting in if we go down another 5% the next few days, it doesn't show up as great press. i'm billing this as bit of a hedge here risking three to maybe make ten if we're down about 10% over the next month with all these events, that makes a lot of sense to me >> that's the other thing. we were looking at the peak to trough decline of about 7% you're risking about 2% to make your bearish bet there to me from a risk/reward basis, it makes sense it's trading at $173 three bucks to make a directional bet. seems there's a good reason to makt from big tech to big burgers. let's talk fast food stocks. mcdonald's outperforming with a

gain of about 6% the rest of the fast food stocks have been getting burned the chart master says the golden arches could shine brighter next week head to the plasma and show us >> sure. mcdonald's really more correlated to the staples than it is to the discretionary sector i want to start with this chart. here, of course, is the consumer discretionary sector, which mcdonald's is in it's tracking more like a staple over the past 12 months. in many ways, it's a defensive security you could say it's discretionary. it's the world's cafeteria the cheapest meal you can get. moving on. here we have the real issue. mcdonald's on the top a great uptrend. and yet, it's relative performance to the s&p peaked in

2011 now, that's a long time to underperform since 2011, mcdonald's is up 60%. the market is up about 120 i think that is the opportunity. mcdonald's having underperformed looks like it will catch up and start to come to life. because it's defensive p and day-to-day action proves that a lot of tension in the wedge. i'm going to play for the breakout to to upside. how high let's zero in on this. and study this more closely. here's the here and now chart. let's put in our lines what we have is this tension you can see it it's very precise. you have what is called a series of lower highs and higher lows as you work into the apex. it's the decision moment i'm going to make the bet that we're going to break out and we'll get back to about 181. that would be an all-time high

i think mcdonald's is a good play here, offensively and defensively. >> mike, how do you play that? >> the tension he's referring to appears that the options market is expecting a little bit of that the earnings and the implied move at just under 5% is higher than the average move for mcdonald's. options premiums are higher than they normally would be going into earnings. when i see higher options prices, what i'm inclined to do is try to find ways to sell them this stop doesn't typically move a whole lot. i was looking at the 165 puts. you could sell them for about $4.25. the decembers. and the nice thing about this is that obviously, if the stock lingers right here it typically doesn't move that much on earnings, you get to collect the premium. if you have the stock put to you at 165 net, net, you're closer to buying it for $165 i think if it goes up, you get

the premium, as well the tape being weak like it was this week. to me, i'm being a little more defensive. rather than going out and buying calls, i'm looking for ways to collect premium here and buy the stock at a discount if it doesn't get the rally you're talking about. >> what you're saying about trading with the staples they caught a bit over the last couple of weeks. it's shown relative strength now we have fundamental news let's say the earnings are not enough to break it out above that level, the stock could come in a little bit. mike is still going to make money. the bad scenario, companies that have missed and the stocks are down 10% on their way doto go dn to 20% >> this is -- >> i was going to say, wendy's is unchanged on the month. starbucks is up on the month yum is unchanged

there's a defensive element to some of the stuff. that's why i wanted to put the trade on you have that plus the fact that it could just be a good number and ascend on its results. >> people do like the fundamental story. they have been making changes over the last couple of years. everything they said they were going to do, refranchising, cutting sgna expense, they have hit every one of them. they're talking about 95% franchising by next year or thereabouts. that helps reduce the risks that companies like this would otherwise face fund mentally, i like what they're doing. we'll call the valuation reasonable at about 20 times forward. to me, we look for opportunities to sell premium. when options prices have been as low as they have been. we haven't seen many, i like doing that >> for everything "options action" check out our website. you can sign up for our news

letter i hear t today's edition has the winning lottery numbers. here's what's coming up next >> you get a car, you get a car, you get a car! everybody gets a car >> not if you own shares of ford because that stock has been stuck in reverse mike coe says the damage could be done. he'll explain. plus -- calling all "options action" fans reach into your pocket grab your phone. tweet us your questio question @optionsaction. if it's nice, we'll answer it on air when we return i don't know what's going on. 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,

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boom! mad skills. education to take your trading to the next level. only with td ameritrade. welcome back ford shares stuck in reverse down more than 30% and the problems just continue we're in chicago with all the details. hi, phil >> today, morgan stanley put out a note this added to concerns that ford is adrift and has no direction in the future. adam jonas has a couple of key points he cut the company's rating of ford down to equal weight from overweight cut the price target from $14 to $10. he summed up their view about the lack of transparency by saying we see limited progress regarding the company's restructuring plan remember, they canceled an analysts' meeting set for

september where the company was supposed to outline it's plan. well, since then, it's had little to say about when it might either re -- reschedule that meeting or -- what the restructuring ultimately will be as a result, shares of ford continue to be under pressure. there's growing chatter amongst analysts about speculation this company could potentially cut or eliminate the dividend at some point in the future as it looks to conserve cash and finally, i want to show you this wall. because this chart says it all about ford's leadership over the last four ceos, going back to 2001 there sit is. only alan mullally sees shares of ford grow if you go back to before 2006, bill ford, the chairman of the company, ceo under his leadership, it lost half its value we know the story about mark

fields jim hackett. the stock is down 22%. melissa, i've got an lot of feedback from people who looked at the chart and they said, wow, since 2001, this stock hasn't done anything. the last 20 years, the stock is down 67% ford reports earnings after the bell on wednesday. >> we'll be watching phil, thank you. phil lebeau in chicago ford shares down 30% how should you play the stock heading into earnings. professor coe is at the chart >> first and foremost, the implied move on earnings next week perhaps not surprisingly is above average. and what that also tells us is that options are expensive and finally, one of the other reasons i might look at a strategy like this i think to my eye, and we need carter's input, the stock looks

a little bit oversold. he also, phil was just talking about in addition to the incredible weakness we have seen and this is only a one-year chart. he was talking about a period significantly longer he was talking about a potential dividend cut looking at the options markets, what we're seeing is there is an implied dividend cut of about 50% in the jan 2020 market let's look at the structure of the trade. when i was looking at this earlier today, you could sell the november 8th strike puts you could collect 20 cents for those and then buy the january eight strike puts. that's a net debit of 18 i was in there today i got a little bit at about 17 cents. the idea here is we're trying to collect the elevated near dated options premium. expecting some of the worst in the near term is over. but giving us a way to finance

the longer dated put it does look dismal for the company. it seems the company has lost its way a little bit it's dependent on the light duty truck. >> what do you think >> i like calendars. in a name like this in a free fall they have mountains and mountains of debt. there's a lot of announcements they could make that send the stock lower, do you worry about trying to thread the needle. selling november 8s. you may not get the move you want by having the put calendar on >> it's a pretty good point. the stock was about $8.50 today. being 50 cents away from the $8 strike may seem like it's close. it will have to get well through that strike, probably down to $7.50 before you see trades like that a move of dollar is a nearly 12%

move between now and november expirations. i think the risk of us going below $7.50 between now and november expiration, i think that is slightly -- it's not that high. we should probably refer to kaert on that one. >> mike used the phrase oversold gnat's a circumstance at present. the stock is trading 20% below the 150-day moving average if you look over the last six, eight years, it's happened about five times every time, it's bounced at about this juncture. the closing price, ford is down a penny. the real story was, ford having closed 8.50. it was closing at eight spot 19. it reversed and closed very well it looked like an important day-to-day, week to wooek lull you could get a bounce on the earnings >> have we seen the worse for ford this year >> you're talking about stock

down this much something is wrong with the business and probably it goes lower long term i would say almost distinctly so i think tactically, it's a better buy up next, the party in your pantry the consumer staples sector closing out the best week since 2011 is this the beginning of a bigger rally plus, let's get a check with the cramer cam you have the full interview at the top of the hour. we're live at the nasdaq in times square more 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.

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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." time to look back at our trades. last month, the staples sector was gearing up for more pain, said dan >> look at the uptrend since 2011 it just got reject there had i want to play over the next couple months or so, for a move back below 50 bucks here you could simply look out to november expiration by the november 54 puts paying 90 cents for those. those break even at 53.10.

the xlp soaring today. the group, procter & gamble are closing out the best week in seven years. >> the trend still hasn't broken it was trading at 52 it was put on when the xlp was at 54. they have lost about a third of the value. it's important we get asked this question, you want to use a 50% premium stop 12% of the xlp let's see how it acts next week. keep it on a tight leash >> not so much staples are winning. but people are hiding there in a squishy tape i think the longer term trade is impacting. mike said last month twitter's troubles were far from over >> obviously, we have had this huge, almost 40% decline i would ask you to watch this over here. and here

and if you're a holder of the stock, you're wondering where is the bottom i was looking at the 30 put. $2.85. selling the 22 put against it for 55 cents n net/net. >> shares of the social media stock falling nearly 6% since the time of the trade. what do you do now >> we have a catalyst. i want to have a bearish bet on. we can take a little bit of the money off the table. take the 30 strike puts, roll them down to the 28. net/net, you're in 28, 22 spread for $1.30. >> i'm hard pressed to see how we're not going to see a downgrade. how they're policing their site. revenue. i think you wait the skin could be in the low 20s. >> and sometimes, that's all that matters

broken chart more risk to down side than opportunity for upside up next, your tweets and the final call 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. ♪ welcome back to "opgs action." time to take your tweets chandra says, i keep hearing the phrase, options are implying a move up or down after earnings >> we'll go to the simple one. in most cases, the stocks we're looking at have weekly options go to the strike closest to where the stock is trading add up the call, the put the following week, capture earnings, put it together over the stock price that gives you theexpected move >> there's a video in which professor coe explains that to you. we'll post it on twitter time for the final call, professor carter

>> mcdonald's on the long side >> i like selling the 165 puts in mcdonald's. >> qqq 30% of the nasdaq reporting. qqq at the money put spreads makes sense. >> that does it for us see you next friday, 5:30 p.m. eastern time - [announcer] the following is a paid advertisement for the philips smoke-less indoor grill. authentic grilled taste, virtually no smoke. the innovators and engineers at philips love to grill. but they know from experience that you can't always grill outside, so they reinvented how to grill. anytime, anywhere, and anyplace you want. this is the latest kitchen innovation from philips. the smoke-less indoor grill. it brings the best of the outdoors, inside, with authentic grill flavor at the flip of a switch. whether or not the sun is shining, there is snow on the ground, or it's raining all day long. grilling season is always open.