hey there, live from the nasdaq on this expiration friday and look who decided to stick around for the big oa. the one and only b.k look what's coming up on today's show. >> the dark side clouds everything >> and nvidia shares got wrecked today. and one of the traders says, a similar selloff could happen in another tech giant he will give us the name plus -- after an historic losing streak, bullish bets on oil and energy stocks are exploding. if you want to get in on the, mike cho has a way to do it for less than $1

and apple shares have been rotten this month. but dan nathan says the stock could be gearing up for a big rally. he will tell us how to profit. it's time to risk less and make more the action begins now. and we start with apple. rallying today but still on track for the worst month in more than two and a half years the stock falling 12% shedding a cool $125 billion in market capitalization among mounting concerns over iphone demand but dan says it could be gearing for a year end rally what do you see? >> it sets up interesting. we think about what happened on november 1st when the company gave the guidance that kind of shook investors. it was also coupled with you know the fact that they're not reporting iphone units going forward. what's important for investors into 2019, they start thinking about the company not on a per unit hardware basis but average revenue peruser.

that's going to be an early 2019 play in the meantime i think apple is set up to do a good job in catching iphone units in the holiday selling. the way shes is introduced the phones that's probably in the stock. i think can you look out to december expiration. i have a chart that i think is important here look at where the stock is trying to bottom this week at the intersection of the one-year uptrend but also the gap fill from the last quarter back in august where it gapped to new highs, filled out an entire gap i think this sets up for a defined risk play over the next month. to me it's simple. you buy a call spread when the stock traded at 192.50 look at december expiration. buy the december 195/215 call sprayed paying five dollars for that and one cht december 195 calls for 6. selling one of the 215 calls for dollar break even up at 200 you can make up $15 between there.

and i like the risk/reward and technical setup basically ricking 2.% of the stock price playing for a back fill back to the gap area. >> what do you think of the trade, mike? >> i like this trade thinking about it, 2.5% on a name that moved more than that this week. that seems like a good do. it seems like the options market agrees look back to wednesday, the two most active options were november 190 and 195 calls the 195s didn't work out so hot with you people buying the 190 certainly had an opportunity to play for the bounce. that said on the fundamental basis i think we are towards the upper end of the range in terms of its valuation with respect to how it trade since releasing the iphone going back to 2009 and '10. on a valuation basis, reasonable because people are discounting whether you see iphone growth going forward.

>> you think with apple they got hit by a double whammy tried to change the way they report units but they handled it so poorly. then all of a sudden suppliers say we're cutting back, the biggest customer apple is likely cutting back what happen is here is you have a lot of uncertainty it dropped off i like the trade for a trade going into the end of the year because when you have the uncertainty markets will overreact. here i have a 3 to 1 risk ratio. not risk/reward ratio that's what i'm looking for i like it a lot. >> what would you concerned about in this trade going into december. >> the truth is unless we have a preannouncement by one of their suppliers to call into doubt to doubt the dividends to make investors think it's optimistic you have smooth sailing. when you look about the retail earnings we have gotten this

woke apple with the new high price points in the phones i think they are taking a lot of retail dollars here. to me the stock has valuation support like mike said over the last three-quarters this company has been buying back $20 billion of their own stock. none of it accelerated i see them in the past they have done accelerated buybacks i can see them accelerating below 200 into year end to get the stock moving in the right direction. >> it's not just today where it bounced. it started yesterday the the past two days it seems to be acting reasonably outperforming the market at this point. >> yeah, no, it does seem like it's found a level of support here and the other tech disappoints we see whether facebook trading poorly or stories like nvidia, these are idiosyncratic stories. in apple's case it's bolstered by the buyback going into a strong season for it one other point dan made on the higher average selling prices the margins should be good so you don't need an increase for unit sales for them to do well on the bottom line. >> let's move to oil bouncing 4% from the low earlier this week as it tries to recover from the historic losing streak.

that move sparking bullish bets in the options mechanic bob pisani at the new york stock exchange with more. >> energy a disaster biggest sector decliner on the s&p. down 13% worse than the 11% in consumer discretionary worse than technology all the drops in semi conductor. worst than industrials like caterpillar and 3m on the global growth worries and tariffs the it's taken the energy stocks to a 17 year low a measly weighting of 5.5% a fraction of the 21% weighting for technology 15% for health care 14% for financials typically these kind of big declines produce a rally oil moved up three days in a roe after dropping 25% in the last month. that's a good sign that spurred activity in the options space. it's a busy week the cme reported a daily volume trading record on wednesday.

in the commodity space the us oect are the etf for the front month oil futures contract big bullish bets big buyer of the december 13/13.60 call spreads. more than 10% above the current price. that's an interesting bet. also bets made in the equity pace, the xle, the largest energy etf also saw a buyer of 69/73 call spreads that's a move up of 7% in energy equities you can always hope. back to you melissa. >> bob thank you bob so, mike how are you trading oil? >> yeah, i mean, obviously the fundamental story for oil has been pretty weak it's one of the reasons we have been seeing it perform the way it has been. i mean, u.s. production is basically ramped right back up to record levels we just saw data out of north dakota, 1.4 million barrels out of there to put it in perspective out of that state that's a third of what iran or iraq produce daily. when you look at north american oil production that's a challenge.

that said, looking across the globe, look at opec, they are under pressure when you see oil prices drop to these levels. i wouldn't be surprised if we saw coordination by other producers talking about production cuts that could create a boost if i look for a bounce more likely to look for it in the commodity much oil than the stocks a lot of stocks carry debt that's a risk especially if oil is persistently low for a period of time. it's interesting to me because bob pointed out a big bullish spread we saw in uso earlier i liked that trade for the most part the way most people shutdown look at this is look at december 28th, the weekly options look at the 12.5 to 13.5 call spread spend 35 cents for that. bear in mind, the options premium tend to skew to the up side

commodities they skew to the upside pu won't get the three to one pay ou tthat beakers was talking about earlier in call spreads and commodity pace this is a way to play for bounce in oil without a lot of downside risk and without getting into a lot of heavily levered oil names. >> dan. >> looking at this trade it's interesting the uso trading at 16 a month ago it's kind of stabilized here a little bit and mike's not really playing for a huge move to the upside. this is a scenario where it's interesting that mike chooses to use a spread you know that out of the money 13.5 call is 1% of the stock price at that level. i'd almost wait and see if you get that move back towards 13 or something. and then look to spread it by just just owning the 12.5. just because it's been so volatile if you get the direction right you get the trade right. >> and the opec meeting in december. >> we looked on a company in las vegas day. lots of rumors maybe opec was

disintegrated. to me is it seemed a negotiating tactic i won'y be surprised to see if cuts were on the table we can't read demand into it you got a good risk reward of buying oil here. buying the uso i'm long uso itself. >> mike why do you anticipate it will happen with a opec. that might be a catalyst you might have to amend or adjust the trade as you go. >> that's true the point dan made is not bad. if one was so inclined and you were ready and prepared to manage a trade like this buying the 12.5 calls and then looking for opportunities to spread against it, that might make sense but the reason we look at a spread here is because we have the upcoming catalyst. that catalyst is elevating options. both in the energy spaced stocks as well as the commodity that's a reason we are looking for a spread the other thing i would make a

point, the 13.5 level. that 10% pop that's saying we get a bear market rally. i'm not ready to call a bottom on oil prices. >> for everything "options action" check out or website and sign up for your news letter if you do i'll be your best friend here is what you're waiting for coming up next >> announcer: nvidia struck investors today. >> ever see something like that? >> and one of the traders says a similar storm could be brewing for another tech stock he gives us the name 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 will answer it on air when "options action" returns. "options action" is sponsored by think or swim, by td ameritrade. 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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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. welcome back to "options action." a storm taking down nvidia today. the stock plunging 19% for the worst day in a decade after reporting earnings last night. nvidia down now more than 40% from the all-time high last month. dan nathan sees similar dark clouds over another big tech name dan head over to the plasma. >> let's talk about what happened here other than the megastorm in new york. nvidia closed down 19% today the company now has $100 billion market cap look how much was shaved off by one poor earnings result here. so to me i think you really have to think about is this a canary in the coal mine for broader tech we know that nvidia their chips touch a lot of technology.

but it's important to think about what are some other tech stock stories that have unusually high sentiment the way nvidia did this is the one-year chart of nvidia this was important october 3rd making a new all-time high. up nearly 50% on the year. downdraft here down nearly 50% from the highs from 52-week highs to 52-week lows in less than five weeks that's bad stuff for a very, very highly thought about story as nvidia. let's go to the five-year chart. this is important. this thing was a ten bagger the last couple years. when it broke a couple weeks ago it kept going, i don't know where it stops tp. it makes sense to think about similar stories. let's go to adobe. they guided nick willing 2019 sales up to 20%. good news investors liked it

still down from there. when we look at this stock here look at it sitting here on 235 down 15% in correction territory. this is expensive stock just like nvidia trading about ten times the sales and 30 times expected earnings. i see a gap down to 200 on disappointing results on december 13th. let's go to the five-year chart i want to overlay the two of these over the last five years kind of similar price action massively outperforming the nasdaq and s&p the whole which the orange is nvidia we saw what happened there that's adobe here is the thing. adobe still up 36% on the year down 15 from the high. december 13th the earnings event. i do not if i own this stock want to be sitting around waiting for some sort of disappointing guidance now and then. i might think about as a hedge or if i'm looking to kind of kill some whales here i may go

after this one on the short side when the stock traded today at 239 look to december expiration catch the earnings announcement. you could buy the december 235 put spread paying $8 for that i like the risk/reward risking eight to possibly make 27 if you have a move like nvidia. this is not a high probability bet but it could be a good hedge like i said before if you see any continuation in high growth, high valuation tech, continuing to go lower this is a name you want to be in to the short side. >> mike, what do you think of the trade? >> yeah, well, i mean you're sort of discounting the probability. let's think about this for a second this is a name that historically moved about 5% the day they announce earnings.

it's interesting because here you have several woks before the trade expires. that's all you need the stock to move to the downside for you to break even after that it's all gravy. when i look at this, the chances it moves 5% one way the other over the course of the next three weeks or so that seems like a pretty easy bet to make when you think about shorting the stock or putting on this put spread, putting on the put spread makes sense. it's surprising to me the options proposals are as low as they are going into earnings especially give. the sharp moves we have seen adobe and nvidia are in different business areas but we have seen situations where people thought all the damage was done and it turns out the price action was telling us something very valuable in names like amd and nvidia they might be telling us that in adobe. >> a lot about sentiment here. >> it is if we are talking sentiment $230 levels really important for adobe. that's been support since about the middle of october. and dan drew the triangle which the smart technicians call a

triangle of death if you break through the bottom it could go to 200. >> carter is not here you can draw lines you want on that plays and nobody challenges. >> you carter has endorsed the triangle of death on this show. >> thanks, dan facebook face plants the social stock sinking 3% and hitting a fresh 52-week low. is there any hope in sight for the stock we have the details. have a question, send us a tweet to @"options action. much more "options action" still ahead. >> announcer: "options action" is sponsored by think or swim by td ameritrade. free access to e. 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.

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so lionel, what does 24/5 mean to you?rade well, it means i can trade after the market closes. it's true. so all...

evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you? welcome back to "options action." time to look back at open trade. last week carter and mike said chip maker nvidia was cracking on earnings. >> we are on the line. again the bet is we undercut the line the drop in general we know peaked before tech at tech

peaked in many ways relative to the market in jun as a sector. it's just not a good setup. >> i was looking out to january. you could buy the put spread spending $15 for the 200 puts selling the others for $4. >> well nvidia tanking nearly 19% just today and more than 20% since the time of the trade. now you may have noticed that carter is not on the desk tonight. he got stuck in the snowstorm but he sent as you post card as he makes his way back to new york city he writs for well for nvidia that's it a big roll over foreshadowing a problem. the problem was exposed. a good option of price action leading fundamentals a good test that can't be real i mean, it's going to take him a week to get back here. mike how do you manage the trade? >> well, my flight was cancelled. you notice i'm not in new york i'm thankful i didn't get diverted nvidia was a trifecta of bad news we got down to the 160 level

nearly tripling the money get a chance to take this off at $30 on monday that's what you want to do. >> what do you think, bk. >> take it off on monday something down 20%, i mean, yes earnings weren't as great as possible but you had the move here right so especially when you talk about options, again they're going -- there is that time expiration there so you want to take your profits as soon as possible. i don't necessarily foresee a big rebound in nvidia. >> how about you? >> this was a great, great call. i think last week when we discussed it i think it was important. i thought if the stock got down to 160 or so you have a lot of people very bullish on the story we it's much higher saying i like it here too because now expectations are much lower. i do think you take this trade off. i think you have a couple more down days closer to 150 people are buying this stock. >> all right now last month dan made a contrarian call on facebook ahead of earnings. >> since the ipo it's a pretty nice -- pretty consistent uptrend there that it just broke and went through that most recent support it's a pretty dicey time i think

to try to kind of catch a falling knife in this name i could do the november/january 160 call calendar -- >> well the stock is down 4% since the trade. dan, the first leg of the trade expires today what to you do? >> this is an important -- this is an options trade. i could tell i didn't want to buy it and it gets worse and the technical get worse and the sentiment gets worse but at this point you're left long a january 160 call for 270 it's worth about 120 i don't think you sell it here that break even on january is up about 15% or so and the way this stock is moving you could see money flow into it in january. and that's the trade here. it's kind of set it and forget it you own it you will out of the money call. >> what do you think about the premises. >> maybe i don't know i would just cut my losses and move on. it's not to say that facebook can't trade higher but i think they have a lot of headwinds until you get a handle on the costs around the way they have to run their business now, i

think it's going to be difficult for the catalyst to move these things higher. i'm a seller, cut losses, move on. >> all right coming up next, the >> all right coming up next, the tweets and the final call.rch, 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. ♪

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 we have time for a tweet. our viewer asks what do you think of buying the tesla november 30th 360 calls to play for a move to 370? mike, why don't you take that. >> well, if you are playing for a move to 370 you're bet to break even if it goes there by expiration if you make a bullish bet in tesla buying calls the way to do it i won't be buying the stock here. >> time now for the final call mike, kick it off. call spreads and uso the way to play for a small bounce. >> brian kelly, good to have you here. >> great thanks for having me here you know for me, the dollar is the new vix. a lot of people don't like to

talk it about it, but if that goes lower the market could go higher. >> dan nathan. >> apple if you want to be contrarian play for a year end rally call to for december call spreads. >> see you back here next week on friday at 5:30. "mad money" with jim cramer starts right now (announcer) you work hard to give your children something to build on. i was always trying to think "how am i gonna get her through college?" i wanna have a mechanism in place to make sure that my daughters are well taken care of. i hope to leave my children with something to help them get set up. (announcer) don't let it get eaten away by unexpected fees and legal expenses. my husband did not have a will and everything went away. when my father passed away,

he did not have a will or a trust.