hey, we're live at the nasdaq market site it is our ten-year anniversary here at options action we've got a very big show for you. here's what's coming up. >> you did it! congratulations! world's best cup of coffee >> investors have been hot for starbucks, and carter worth says the shares are about to perk up even higher. he'll break it down. plus -- >> viva las vegas, baby. >> casino stocks are on fire, but mike says one name in the bunch is about to crap out he'll give us the trade. and -- >> look, up in the sky, it's a bird. >> it's a plane.

>> no, it's just the transports, and dan nathan says there's one name that could see an even bigger rally as trade tensions ease he's got the trade it's time to risk less and make more the action begins now. >> and we start tonight with the transports up nearly 3% today and adding to a super rally off the december lows. the transportation etf up 16% since hopes rise with the hope of a trade deal. one name could go even higher. dan, what are you looking at >> i think it makes sense to be constructive on this names that you think got beaten up last year because of trade worries specifically i want to talk about u.p.s it's one of the biggest components in the iyt and in the transport sector in general. this stock had a 33% peak to trough decline from the january 2018 highs that it made.

it's up in line with the market off of its december lows here. interesting chart. i'll let carter speak to it, but it caught my eye today i know he was talking about fedex last night the stock has caonsolidated a little bit i think it's important to go back and think about how this stock was trading on december 3rd after the g20 announcement when we supposedly had some sort of trade deal. the way i think about this is q4 is not going to be great i think you can extrapolate that and the guidance that they give on january 31st is likely to continue to be murky for q1 because there is very little clarity. but there is a trade opportunity here in my opinion here. we know that we have this march 1st deadline, a self imposed deadline about further tariffs on chinese goods i suspect one way or another based on the news we've gotten, there will be an announcement that pushes out further or something that works on that trade balance.

that should be good for u.p.s. when the stock was trading at 101.5 today, the idea would be to buy a call calendar it would be selling a shorter dated call that catches the earnings announcement and using the proceeds of that to buy a longer dated call in march that will capture what i suspect will be an 11th hour, some sort of kick the can down the road that should relieve some pressures on stocks like u.p.s he's the trade structure in particular the stock was trading at 101.5 today. you can sell one of the february 105 calls at $1, buying one of the march 105 calls for $2 it costs you $1. this is what you want to do. end of february expiration, you want the stock to move close to 105. you want the february 105 call expire worthless and you own the march 105 eye. this thing has room to run in late february, early march but i'm trying to thread the needle

i'm not buying the stock, i'm creating the options trade taking advantage of these two events. >> mike isn't san francisn san d you like these >> i like it for a couple of reasons. dan is selling that near dated call actually the longer dated options in u.p.s. are higher than they have been historically because the stock has seen a lot more volatility. but just looking at the stock itself, is it something i would wanting to own i think the answer to that is yes. over the last five years it's seen a 30%in croce in kroein and yet it's trading at a three to four turn discount to the broader market at 14 times earnings if you're thinking about stocks that you want to own, this would fall into that category. i think one of the reasons is because people think there might be headwinds coming from amazon. i think those concerns are probably overstated. even if there is a threat there from their own deliveries, it's probably not something that happens very soon.

>> right so i mean this is really identical to the fedex last night, meaning obviously the two stocks are highly correlated they have underperformed, have not bounced with the market. specifically relative to other industrials. what we know is that u.p.s. this week made a 10-year relative low to the s&p if you're looking for something that has catch-up potential, this is as good an opportunity as you can find. >> you didn't need to be watching the show for the full ten years to figure it out. >> but we hope you did. >> we hope you did but the idea here is to take all these different inputs and trade what's in front of us here and use options, use the higher premiums in front of earnings and create trade structures. i think the likelihood that we have the stock between here and 105 and not much higher is very good, so i want to sell that short dated premium and set up to own the long one. this is an options trade i'm not trying to catch a falling knife but i think there's a good opportunity over the next month and a half. >> we've got a news alert.

larry kudlow speaking to reporters about the government shutdown moments ago let's get to eamon javers at the white house. >> reporter: that's right. larry kudlow still speaking here in the white house driveway over to my left i want to bring you up to speed on some of the comments that he's made so far kudlow saying in response to a question about the economic impact of the government shutdown, larry kudlow saying you are going to get a temporary glitch in the numbers in terms of the economic impact on the economy, though kudlow insists that the economy is doing very well he also says we're going to beat 3% gdp in the fourth quarter when that number comes out, so kudlow painting a very rosy picture of the economy, despite the fact of the government shutdown he says the president hates these stories of hardship of federal employees who are going without paychecks. he says he wants to get a deal but he also supports the president and believes he's doing the right thing in terms of pushing for that border wall. he says finally calmer heads will prevail ultimately. and then he was asked an interesting question, i thought, about the debt ceiling, whether

or not this negotiation over the government shutdown portends bad things for the debt ceiling coming up later in the year and kudlow said maybe we should get rid of the debt ceiling altogether that indicates we could see problems in that negotiation as well. >> no questions on trade to kudlow >> no. we asked him about the china tariffs issue. he said that the chinese want to negotiate because their economy is weak. he said the president is in the driver's seat on that. i asked him about reports that the president supports a $1 trillion infrastructure plan that they're working on that behind the scenes here at the white house. kudlow declining to confirm those reports. >> all right, eamon, thank you eamon javers with the latest. moving on, while the year-end meltdown took down the markets, one name stayed above the fray starbucks is trading around 5% off its all-time high. the chart master says shares could perk up even higher when the company reports earnings next week.

head over to the plasma, carter, and break it down. >> perk up which has to do with percolating. imagine being down 3% or 4% in the month of december. starbucks managed to do that in one of the worst decembers on record relative strength very impressive okay, starbucks chart, no judgments, an taknotations by m. let's put some in. that gap up right here that you see, that was an earnings beat and what the stock has done is pivoted right back literally to the point of the beat and has started to come to life. that's one way to draw the lines. let's look at another way. not only did it come back, remember, to those tops that i drew, it also came right to support and it has bounced here

repeatedly, repeatedly, repeatedly another way to draw the lines would be as follows. put in the wedge a lot of tension a lot of reference points. my bet is again that this is going to be resolved up and out. this is about, again, a one-year chart. let's look at the long-term chart and put this in perspective. this goes back all the way to 2006 that also is a lot of tension. we toyed with breaking out once. we got a little bit higher again. we toyed with it again a lot of tension here. the presumption is that on its next earnings, it gaps again as it did last quarter and the clock enclosure clears all of these hurdles. i'm a buyer. >> mike, what's the trade? >> paraphrasing yogi berra, there's too many starbucks stores, nobody goes there anymore, exempt of course me,

apparently you know, it's interesting, with the higher implied volatilities that we see and the higher volatility in a lot of places, this is not one of those stocks that we see the elevated options premium so we can keep this simple april 65 calls were trading around $2.50 think about that for a second. so you're going to be risking a relatively small percentage of the current stock price to buy a call that struck almost exactly where the stock is now you have quite a lot of time, about three months for this to play out from my point of view, could this stock move three bucks one way or another, about 5% of the current stock price? i think it could very easily i think we can keep it simple and look for opportunities to spread it if we do get a rally. >> this has been consolidating here it hasn't participated but just in the last week and a half and i don't find that troubling because it showed really good relative strength. if this thing starts to move

higher back towards those prior highs, the simple trade dpigive you the opportunity to spread it by selling a higher call in april expiration and making a call spread. i like this idea it's simple, less than 4% of the stock price and you have months for it to work out. >> and we're talking about the fundamental story here, right, mike if there is a china trade deal, this is potentially a stock that could also get a little bit of a boost on back of that given their presence in china? >> it could get a little bit of a boost on that. you know, we think of this as a fairly mature business but if we're going to take a look at the fundamentals, bear in mind that this is a company that has more than doubled its eps over the course of the last five years it is still a growing business, even though maybe not as fast as it once did. so when you look at its multiple at 24, 25 times forward, it's justified boy ty the kind of grh we're seeing a catalyst like that could propel it further. >> carter. >> as patterns go, this is a well defined setup

break out, pull back, the wedge. all odds point to higher. >> check out optionsaction.cnbc.com sign up for our news letter. read it while you're snowed in this weekend so what are you waiting for? here's what's coming up next investors are hitting the jackpot with casino stocks but mike coe says one is about to bite the dust he'll give us the trade. plus, calling all options action fans. we're celebrating more than ten years on the air and more than 50,000 twitter followers all hands on deck and reach into your pocket, grab your phone and tweet us your question at options action if it's nice, we'll answer it on air when "options action" air when "options action" returns. 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, 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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boom! mad skills. education to take your trading to the next level. only with td ameritrade. welcome back casino stocks hitting the jackpot. with las vegas sands earnings next week, should investors keep betting on these stocks? let's get the call to action with mike. mike >> yeah, so this is an interesting situation. there may be no sector that better sets up for using options than some of these names i was looking at las vegas sands. this is a stock that over the course of three weeks plummeted a little over 20% and then over the ensuing three weeks rallied back more than 20% it's obviously moving around very, very sharply we have earnings coming up they're essentially the first one to report. i think one of the big unknowns for a lot of these names, and las vegas sands despite the name las vegas actually gets most of

its revenues from macau. we're going to take a look at a put spread we often talk about the earnings move and talk about it as a one-day move i'm taking a look at how much this has typically moved in the month around earnings. why is that? we just had an options expiration the next one is in february. that's approximately the length of the trade the average move for las vegas sands around earnings in that month is about 10% or more going back about 10 years. the next thing i would mention here is that this is a situation where we obviously have seen the stock rebound very sharply off of its lows. of course the market has done exceptionally well but unlike some of the names we talked about earlier this show, this one isn't seeing really growing revenues again, we do have this unknown in macau finally because of this volatility, options premiums are quite expensive. i think the way to play this, i was looking out to february, the 57.5-52.5 put spread

i could spend $1.30 on that. the question you have to ask yourself is, is this a stock that could over the course of the next month move t10%. i think maybe it's come a little bit too far too fast. >> dan, what do you think of the trade? >> i like it he's defined the range it came back to, so 52.5 on the downside target makes sense just a tad more than a quarter of the width of the spread, i like that. i like targeting the event so to be i think this makes a lot of sense i think it's important to remember when you're doing long premium trades into events, you've got to get a lot of things right to make money what's important that mike also said, he's targeting the next month, not just the event so i like the way this thing sets up. >> here's the thing, action this week was not impressive. lvs, wynn, mgm, all underperformed the market. that's not what you would want as a setup going into earnings

i think this is a dull group and i'd rather take my shots elsewhere on the long side. >> obviously we're talking about the china trade war, these groups in general, mike, really unduly -- not unduly -- they are influenced by what is going on with every headline. >> yeah. and actually this isn't -- it's not the trade war that's the only headline. one of the things that really hit these casino stocks in macau, they were putting a lot of pressure on vips and have had to look for alternate sources of revenue. they're trying to go to a mainstream gambler that has higher margins but much lower revenues it's a real question mark whether or not that's going to translate to a better bottom line for them as they try to transition after seeing basically pressure from china to prevent a lot of the vips going over there and some of the admittedly sketchy things going on around that. still ahead, netflix falling last night after a 30% rally in the first few weeks of the year. is there a bigger drop ahead we'll explain.

we're live from the nasdaq in times square much more "options action" right after this 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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♪ you're not gonna say it are you? welcome back to "options action." time to take a look back at a couple of trades >> the stock is up 45% since christmas eve. it's up 26% on the year. i think it's important to note that this company or this stock actually topped out way back in late june and had a 45% peak-to-trough decline there you could buy the february 330-270 put spread. >> the stock was lower on the back of earnings today but higher than the time of the trade. >> this week it closed at 339. this put spread which was $60 wide cost $15. that was a quarter of the width of this spread and now with the event out of the way, the option premiums have come in and the stock is at

the same spot but we lost one week and extreme value because of the earnings event. now it's worth a little more than $10 so we say this all the time and we really need you to focus on this when you have a long premium trade go below 50% of what you paid for it, depending upon how much time is left, the probability dramatically increases that it becomes a total loser. at some point between now and maybe like 7, 7.50, you've got to cut this trade and move on. last week mike and carter bet financials could fall on the heels of big bank earnings this week. >> when you're in a downtrend and you walk along a line, once you break that line, rallying back to said line is an inherently difficult level i'm a seller of xlf. >> hedge your bets a little bit. i was looking at the march 24-22 put spread you could buy those march 24 puts for 67 cents.

sell at 22 for 22 cents. >> the xlf up around 6%. mike, you have some time for this to play out, so what do you do >> yeah, it's interesting. goldman sachs blew this trade up for us this week i like what dan is saying. when you have these trades and they go against you a little bit, you do need to figure out how to stop yourself out right now if we sold it, we paid 45 cents for it, it's worth about 12 i'm not going to sell a $2 put spread for 12 cents in this market, thank you very much. so i'm going tostick with this we still have a little time to play out if this rally comes undone, this may pay off. >> carter. >> this is what the word drubbing or walloping or beating or battering or murdered straight up, the bet was short at this point you hangna ind see if you get some relief. up next, your tweets and the final call looked at chart patterns. i've even built my own historic trading model.

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let's goat kayla tausche for more. >> a tweet from the president just a few moments ago saying he will be making a major announcement concerning the humanitarian crisis on our southern bordered and the shutdown that announcement will be coming from the white house tomorrow at 3:00 p.m it's unclear what this announcement will be we're efforting more details on that he stopped short of declaring a national emergency over funding for the border wall saying that would be the easy way out. we'll see what he decides to do next tomorrow at 3:00 p.m. >> kayla, thank you. kayla tausche from washington. let's squeeze in one tweet it's from our line producer brie who says happy 10-year anniversary. yes, it is our 10-year anniversary. so she asks what was your first options trade. mike, do you remember? >> i do. i bought some puts on an insurance company while i was in college many thanks to a tip from my roommate and that's what got me started in this business.

>> wow, what a start dan? >> i was probably like you guys at home. i was an equity trader and trying to get leverage i used options a lot and did it very poorly until i figured out the rules to the game here. >> you know, mine was i was at a tractor company and massey ferguson bought calls. the market is one of the few places first you get the exam and then you get the lesson. you learn after the mistakes you make. >> but it is amazing to think that ten years ago we started the show about options trading who thought that it would be in existence today and as popular as ever. >> i did not think so. >> max myers did. >> that's right. time for the final call here let's go around the horn mike, what do you say? >> april 65 call starbucks >> carter? >> starbucks, have some gold too, gld >> dan nathan. >> we've got to give shoutouts to max myers and amanda diaz they have been amazing producers. to me, u.p.s., i think this sets

up as a thread the needle trade >> that does it for us here at "options action. we'll see you next friday at 5:30 with plenty more trades don't go anywhere. "mad money" with jim 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 other people want to make friends. i'm just trying to make you some money. my job isn't just to entertain but to teach you call me at 1-800-743-cnbc. or tweet me @jim cramer. 12 weeks a year, you have to be on top of the game playing above your head and deeply focused i'm talking about the three week