welcome. we are live. we ha big show on deck here's what's coming up. ♪ it's the final countdown" >> announcer: it's the final countdown to the biggest week for earnings season. it could be make or break time for wall street as some of the biggest tech stocks report dan and mike will tell you how to trade it. and if that's not enough for you. >> i'm in a glass case of emotion. ♪ oh, freak out >> investors are awaiting a key fed meeting on wednesday and the master says there is

something happening in the bond market that could spell trouble for stocks he will break it down. it is time to risk less and make more the action begins now. >> and, yes, it does the action begins. welcome, everybody melissa is off thanks for being with us we will begin with tech earnings as the millennials might say, they get list next week. microsoft, amazon set to release their numbers. apple, microsoft, amazon could see a 5% jolt in either direction. facebook, even more dramatic 7% implied move. it represents $150 billion shift in market cap. how should you trade, play, invest let's get down to carter at the plas plasma you will begin by looking at amazon >> the key big stocks, i thought

i would look at amazon maybe it's not as good as consensus believes there it is. let's try to interpret it together moving forward, one way to look at i, it is not interpretive it is mathematical fact. this security, which has been in a perfect uptrend repeatedly over and over and over clearly broke trend. when it broke trend, it dropped about 37%. and it has ricocheted, of course i want to talk about the ricochet the ricochet is essentially a 50% retracement. we talked about $745 per share we are up $372 in fact, it is a 50% retracement. it is essentially right to the mid-point. what's important is it is stuck, it stalled at the retrace many level if i take away the lines what you can see clearly is this

tight, tight consolidation that typically happens before a big bet. one thing i would point out, not only could you draw the lines as the break-in trend, you can also perspectively draw the lines like that. now, obviously that's a bearish interpretation my hunch is this has come a long way and the stock is a better sale than a buy. >> all right carter worth, come on back to the set. thank you very much. mike khouw is out in san francisco. welcome. what is the trade on amazon? >> yeah. so this is an interesting situation. amazon is a high-priced stock. so we will try to look at how you can use a put spread but mitigate some of the costs that normal live come with trying to trade a stock that is as expensive as this one. for one thing, when you buy options going into earnings, and it would be probably a little bit too capital intensive to sell them here, you obviously have to worry about decay going

into events like earnings. we can find a put spread we are looking at one in the money with no decay. the other is buying or selling stock itself is extremely expensive at the current price it will cost you about $170,000 to trade around 100-share lot of the stock. even if you bought one share or sold one share shot, you're looking at 1,700 bucks we are looking to put on a trade for less than that the other thing, we're going into a specific catalyst earnings we will look to do a trade that is a win/lose proposition. what i'm looking at here was the february 16, 80, 1670 put spread the stock was around the 5 level. right between the two strikes. this trade was costs about $4.80. the higher strike put was trading for $68.30 she sell the other priced at $63.50 net-net, you would spend $4.80 for that it represents 1 00 shares.

less than a single share of stock. the thing is the likelihood that the stock lands between these two specific strikes is very low. either it's going to be above the higher strike of this put spread and you will lose the $4.80 or below the lower strike and you will make $520 in profit so this is a way you can risk relative live little to make a bet going into amazon earnings, which is something that typically would tie up a tre n pheme tremendous amount of capital. >> amazon from a technical assistant has lost some of that mojo buying put spreads into advance, especially names like this that are very volatile, you get a lot of things right. obviously just to break even here i like what mike is trading or what he is targeting as far as the trades this stock sold off almost 8% the day after they reported q3 earnings it sold off not because of q3 earnings but the q4 guide answer if they come in and come in

below that, the guide for q4, this stock is going much lower. >> much lower. >> it is going much lower. >> you will see a period now where the company was -- they basically had everything going for them additionally in retail but when you see them guide down 5, 6 billion down a quarter, that is u.s. retail. if that is starting to move the other way, i don't think you want to be in the stock. >> just think about the presale 30% into the christmas low that is quite a bit worse in the market this was such a bellwether and holding up what people believed to be the long-termcourse for it it doesn't act well. the market is heavy. and i think it's a symmetrical risk. >> let's turn to facebook. the f. soaring 20% off the december low as it praoeuts to put privacy issues of the fact

mark zuckerberg today in an op-ed in the wall street journal. in it he tries to defend facebook saying once again they do not sell your data. despite the recent rally, facebook stock down 30% from july 2018 high all right. how are you trading this one in earnings >> this is a really interesting one. this has been very controversial for a year now apple the same sort of thing it started with an earnings report with facebook it is different. it is affecting billions and billions of people around the world. the fear is there will be backlash from the users and advertisers leaving the platform mark zuckerberg knows he's got to get in front of it. he will better at writing op-eds last year at this time, earnings and sales for 2019 consensus estimates were expecting 20% growth for both. right now for 2019 in facebook,

they have come down so dramatically maybe they have come down a little too much. especially considering the fact that analysts expect 24% year-over-year revenue growth this year. i want to be cautiously optimistic in the story. there may be another shoe to drop here. i think the setup is kind of interesting. here's the chart you see that well-defined down trend since the gap last summer. i will let carter talk to it that was perceived to be support. then it broke a couple months ago. now it is a level. to me the options market is implying a $10 move in either direction. 6.5% shy of the 7%, 8% average. take advantage of the price of options. you finance the purchase of money calls at a later date. you are playing for, a call calendar, for a bit of

consolidation it will not go up $10 a week or much lower than that either. you can buy the february, april, 161 call calendar selling one of the april 160 calls at $2. buying one of the april 160 for $5 it coughs you $3 you have room to the up side february calls will expire worthless. you end up owning the april, longer dated 160 call. that is 2% of the stock price. what am i trying to do thread the needle a little bit i'm playing for consolidation. there is a chance the company disa points. maybe the stock is down enough year over year where it's in a good spot for higher highs. >> mike, what's your view on facebook >> i think it is unlikely they disappoint at least if you are just looking at the bottom line. there is basically some hint

that their ad pricing has been able to hold up. all the controversy aside, it will still look good that doesn't look at the cloud i like the way the trade sets up oftentimes people just think about the at the money strikes so in this case that would be the 150s by using those strikes, he is giving himself quite a buffer for stocks to do well out of earnings the mere dated options, february expiration are quite expensive because of the uncertainty that hangs over the stock, trading 17 times forward earnings but growing the top and bottom lines a lot significant incomes. so i think this is really the best possible way you could try to make a cautiously optimistic bet. i have a hard time believing that whatever the overhangs are that cloud gets lifted because they report good numbers, which i probably expect here i think this trade really makes a lot of sense >> we know there has been violent ricochets in so many areas of the market, both tech and otherwise.

cyclical names, industrials, finishes if one is trying to find something that has been a bit nonpar advertise pa tore, tpaeufbg comes to mind if indeed it's unhappy, it wouldn't be a big selloff. maybe with a little luck it could. >> a vote of confidence. head to our website and sign up for our newsletter phaoepb meantime, here's what's coming up >> announcer: in srftors are edge ahead of the fed meeting next week. chart master says there's something happening in the bond market that could send ripples across wall street we'll tell you how to trade it plus, calling all "options action" fans reach into your pocket, not your phone, and tweet us your question at "options action" if it's nice, we'll answer it on air. when "options action" returns.

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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time rather than working out, rates pivot, reversed, went from 330 to 255 we bounced back to around 275. but i think the important thing here on this yield chart is the following. we have a well-defined break in trend, ever so slight, and now after breaking we've thrown back to the underbelly of the trend line, which is often the point at which you then, of course, hit your head again. my bias is rates to the down side which of course means one would want to buy something like a tlt. one way to draw the lines, paying attention to this big spike is that we broke out, we probed that high and fell back is that a failed breakout? in a way, yes. what's key is if i remove that line is that when we dipped really we held trend here. in fact, if we put in another line, what you have is a lot of

tension for resolution and ultimately i think that after toying with these tops and ever so slightly breaking out and pivoting down that we are going to make our way higher i like tlt on the long side here i think this is a good bet i'm of the scamp in fact, that yields are going as low as 2.1% on the 10-year all right. thank you very much carter worth. mike, what do you think is the tlt. that is probably the most traded most liquid bond focused etf what is the tlt trade? >> i think this is one of the cases -- it's interesting. we have seen, as carter has just pointed out, a fairly sharp move in a relatively short period of time when you consider tlt has rallied basically 8.5 points since the november 2nd low that we saw and the reason this is important is that over a period of a week, a month, this thing can move sharply. day to day it doesn't move very

much that means the price of the actions are relatively low when they are low, it means we don't need to complicate the trade, or look like spreads to offset some of the decay i was looking at the april 121 calls. those were about $1.85. that is less than 2% of the current level of tlt which closed 120 and a half. so you don't need to see much of a move to the upside to be profitable think about what you're insuring against. that's really the downside risk that you are thinking b. something like eight bucks you are risking $1.85. it an efficient and low-risk way that make a play that rates could go longer and the long bond kpcould go higher. >> you can look at the rates look at the 10-year yield. that's what a lot of traders are

looking at here. it got rejected at the 2013-14 taper tantrum highs. it broke the uptrend that had been placed against the generational low when it got to 1.4 something percent. you put that together with the fund mentals you put that together with, you know, the potential for a flight to quality and u.s. treasuries and i say to myself, mike's vol that he is buying, those calls are about as cheap as you can see, least risk asset as far as pricing. i like this trade. you are playing for a 2% move between here and april to the up side that is good risk reward >> june of 2016. quite the incredible thing >> quite the incredible thing. look, other things are in play gold is messaging certain things u.s. dollar. >> hold on go back to that. what is gold -- don't just say that, throw it out walk off

>> all is well as the ricochet in equities would imply. the positioning got extreme. people were punished for that. consensus remains higher rates, everything sort of okay don't worry about what happened in december in equities. we'll see. all right. still ahead. starbucks brewing up big gains this week. what might be neck for starbucks stock. plus, do you have a burning question for the traders we'll take your tweets later in the show hit us up at options action. and you might get your answer live 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.

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all right. welcome back it is time to look back at some of our open trades last week you remember carter worth and mike said shares of starbucks were about to be -- or heat up on earnings. >> we toyed with breaking out once we got a little 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 stock clears all of

these hurdles. i'm a buyer. >> i'm looking out to april. 65 calls were trading $2.50. close to at the money calls when i was looking at that. >> all right shares of the coffee giant jumping on the results up 4% today. okay, mike, what do you do now with the trade >> yeah, sure. so the shares were up 4% the calls were up about 50% as of the close today the thing is now we are along a call that's in the money one of the advantages options give you is the convexity meaning you don't risk to the down side and you gain to the upside once the call ends up n money, you have two things working for you. one is it is starting to decay we have seen the the move we were playing for the other is because it's in the money, it will respond much more like the stock than an option. my inclination is we take the 50% gain we made week on week, use some of the profits to buy another coffee

carter >> that's exactly right. so it's knowing who you are in the market if you have played a moment, we did in earnings, and you got paid and paid in spades because of optionality, take the money and run. does it mean starbucks is not going higher no it still hasn't cleared the all-time high. you stay along and enjoy it. for this specific purpose, the trade that was put on, exactly what mike said, take the money for starbucks. >> we're not done calling out prior trades earlier this month dan bet intel was heading higher >> take a couple shots of intel on the long side the last year and a half or so to me it's kind of been stuck. they have had a few macro issues, a few company-specific issues, losing their ceo, having a delay on a important tip so market share losses we might get resolution to all of those things. 50-60 call spread could be bought for $2.40

buying one of the july 50 calls for 3 bucks, selling one of the july 60 calls at 60 cents opinion. >> yeah. so here's the deal i said that we might get resolution soon to some of those things we didn't get resolution we got news that wasn't fantastic for the stock. it was down 5.5% today since i laid this out a few weeks ago, stock is down 50 cents. this trade could have been bought for $2.40, the first week of january is now worth 180, 185. i chose july expiration because i wanted to give myself time for this to play out the 50 call strike is an important level. it was almost there the other day. it almost got through. it didn't. if the noose level were to change the next few months, this is the sort of call you would want to own mid-year. >> the remarkable thing is the juxtaposition of positions incredible week. breaking out to big all-time highs. at the strong end. at the weak end, you have recovery moves

dozens of mchp and samsung coming off their lulls the outlier is unhappy in the sense that it is something specific to the company. it is probably just a pair of twos here. no trade not bearish, not bullish up next your tweets and the final call 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, i've done my job. call for a strategy gut check with td ameritrade. ♪

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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. ♪ all right. welcome back now time to take your tweets our first fan asks what about that apple call that you guys discussed a while ago, should we hold or sell ahead of earnings, mike khouw in san francisco? >> options premiums are elevated this has to run by 170 stick with the trade >> kick it off with our final call since we've got you >> april 21 calls. mtlt april 21 calls carter. >> amazon is up 30% on its low take money off the table and put

it tlt. >> sell amazon by bonds. whoa >> facebook, be cautiously optimistic about buying calls. i like the idea of buying call calendars. >> all right that does it for us on "options action". catch us 5:30 eastern time don't go anywhere. jim and "mad money" start right now. have a great weekend - [announcer] the following is a paid presentation for the three week yoga retreat sponsored by beachbody. - are you a woman of a certain age? if you are, pull up a chair and sit with me because this is for you. i'm leeza gibbons, and it was a big year for me. i turned 60, and i'm all about aging gracefully with empowerment and all of that. but, let's be real. there are some parts about getting older that are just hard. - all of those symptoms from menopause, from a to z, i have it. - my body is changing. - i'm not as flexible as i used to be. - i'm anxious, i don't sleep.