we're live at the nasdaq market site in times square. the guys getting ready behind me in the meantime, here's what's coming up on the show. >> so do you like coca-cola? >> the chart master sure does. and he says this sleepy dow stock is about to pop. when it reports earnings next week and he is the one to prove it. nvidia shares have plunged 50% from the highs. >> i declare bankruptcy! >> not so fast because mike khouw says the worst is behind it he'll break it down. ♪ go on take the money and run

>> financials just snapped a longest winning streak in years. after soaring off the december lows, dan nathan says it's time to take your money and run he'll lay out the trade. it's time to risk less and make more the action begins now. >> we start with the financials. snapping the longest weekly winning streak since 2012, and this could be the end game for the sector after coming out of the gates hot in the first few weeks of the year despite the sell-off citi and bank of america are up double din digits in 2019. jpmorgan, wells fargo, morgan stanley only up 3% is this the beginning of the end for the bank rally >> i think it is we touched on banks in the first week of december i think we agreed the underperformance for all 2018 was a really bad tell for this quup what happened in december, the bank group crashed at least the u.s. banks did. citibank in particular dropped 25% in a month, down to its

christmas eve lows i want to hit on a couple of things what are some of the reasons the last couple of days that maybe have been spooking bank investors? rumors deutsch bank is going to be in a forced merger with commerce bang. we have a 20-year chart of the euro stocks banking index. this thing is banging along the lows it's not just deutsche bank that european investors are worried about. interesting deal this week, the two regional banks, bbnt, sun trust merging in a $66 billion deal, it would be the sixth largest bank the biggest deal in ten years are i want to make a point when you're talking about forced merger or a merger that's supposedly done out of strength, a decade ago, 2008, jpmorgan was forced to buy bear stearns in march 2008 for $2 on its way to $10. the s&p was in a bit of a correction at that point it rallied 15% after that. people thought it was swept under the rug. subsequently, from may 2008 to the lows in '09, it dropped 50%.

move forward to yields the u.s. treasury yield on the 10-year is at 2.63%. people were talking about 2016 that was a generation aloe we-just made a generational double top, breaking that uptrend. here's the long-term chart of the 10-year treasury yield maybe we have been in a decades-long generational topping process where yields are never going up i don't think that's good for banks here, i don't think it's good for the global economy. then lastly, let's just get to citibank here. because this is the one i was picking on in early december look at that, karl will speak to that "v," where it's stalled out here where's the next identifiable catalyst for citibank? it's going to be q1 earnings, stress tests, stuff going on in europe whether you like it or not, i think this is a great opportunity to pick on a name like citigroup i want to look to april expiration, catch their next earnings event, catch the back

of this stock rally, 30% in the last month buy a put spread, stock trading at 62, buy the april 60, 50, paying $1.60 for that. that breaks even down at $58.40. targeting the low end, 50, that's where it bottomed out around christmas eve i like the risk/reward risking 2%, 2.5%, to possibly make 5 1/2 times my money if the stock goes back in the next two and a half months. >> i think people will be interested because of the rally in citigroup shares in the past month or so. but there are a couple of elements to the argument i want to get to the trade specifically that i think people will be hung up on they're shocking to compare sun trust and what's going on with bbnt to jpmorgan being forced to buy bear stearns -- >> we were talking about commerce bank and deutsche bank. the interesting thing there, you start talking about investment

banks that are in a death spiral, which i think deutsche bank is, bear stearns was. the problem is that you start to see a combination of things working against them then their only remedy is to try to logic at cutting their expenses you start seeing a flight of talent you start losing business. it's just really no good way out except a merger for them that's not even a good solution, but it's a solution. i will say that when you take a look at the valuations for money center banks, they're clearly telling you something is very, very wrong when we look globally, we can see what's wrong it's just in the runs. if you're going to be in financials you'd want to be more in the regionals they didn't perform particularly well after that merger news either i wouldn't want to short this right here eight times forward earnings but -- >> you like this trade >> i like the trade a lot. you're talking about a $10 wide put spread which i think makes a lot of sense take how volatile the to be can be spending $1.60 on a $10 spread. >> the circumstance is, is there

anything different in citibank at all they have the common circumstance of a collapse, the common circumstance of a ricochet whether big money center banks like cbac, also met, pru, travelers, goldman sachs, morgan stanley. concerning how poorly those major brokers act, literally making new relative lows to their sector and that's the leading edge, in many ways. the whole thing -- yes, rates, we know that's the story but the whole thing is heavy, where in a technical part it doesn't act well. >> one point, i'm not saying we're on the cusp of the 2008 bank thing if you look at the valuations, exposure to risky assets in investment, it doesn't exist it doesn't exist the way it did in 2008. that's not my point. looking at citigroup, it sold off to $50 last month, for a whole host of reasons that we've been talking about for months. there's a good chance it could happen again if some of those reasons come to pass

my point about mentioning that regional bank is that, okay, these guys have the foresight that they're going to make this really killer, the sixth largest bank maybe. who knows what is going to happen when we have forced bank mergers in europe. citibank will easily be back in 2019 if a lot of bad stuff comes to pass, the sort of stuff people worried about in december. >> you've got three months till this expires, less than two months ago the stock was sub 50. yearly can make these kinds of moves and risking a small percentage of the stock price. from financials to fizz, shares of coca-cola up over 14% over the last year, one of the best-performing dow stocks shares could explode higher when the company reports earnings next week. carter >> sure, so maybe fizz higher, pop higher, explode in the sense this is a low beta stock, it is fizzy water. i like it long three simple charts. first the chart with nothing

said what is interesting is that this sell-off basically comes down and finds support. plus or minus. comes to life. another way to draw the lines would be this way. the well-defined trend line from which the stock has bounced three times. and then finally, if you leave the bot ton trend line on and put in a descending upper line, you have the setup that i think is ultimately the breakout simple chart simple breakout bet. earnings coming. i like coke long >> simple chart, simple breakout, simple trade mike >> it is a simple tried, actually, because like a lot of staples stocks, this is a name that has relatively inexpensive options. and so it does not make sense to complicate the trade at all in a situation like this. i'm just looking at the may 49 calls. spend $1.60 for those. when i was looking at this earlier today, it obviously

represents a relatively small percentage of the current stock price. they were slightly in the money when i was looking at that part of the reason that they are at that low price, it's worth noting, when you own a call option, you don't get a dividend when you own the stock, you do that dividend between now and may is going to amount to a little over 40 cents i think nevertheless, you are also dealing with a stock, and one of the reasons that you might be looking to use call options instead of going out and buying the stock is, it is at essentially very close to its all-time peak valuation. despite the fact that the top line, if we think about the fizzy sugar water business, it hasn't necessarily been a great story over the last couple of years. revenues are substantially lower. they are managing their business effectively. and they do have a very good earnings growth trajectory i think that's the reason why you'd be making a bullish bet. >> you might have the circumstance where say it's all wrong, everything we've just said, it's going to go down less than the market in the event of a general market sell-off. >> the technical setup looks great. how many charts look that constructive in this market?

especially in the stock market mike's trade is simple, but also risking 3% for in the money participation and volume is cheap. if it sticks around you're in the game a few months. i don't like the fact that it's coca-cola trading at 22 1/2 times, expected epf and sales growth, single digits -- it's a great options trade based on your technical analysis, that's the way i think about it. >> i think they just broke out and park is no more exciting than coke. >> first of all, the top line story as we already talked about, that isn't the story here it is about whether or not they can manage that story, though. the company is doing that part fairly effectively we are seeing eps growth, despite the fact that revenues are probably $10 billion lower than their peak. dealing with a situation where you're basically banking on a stable business, a relatively stable stock, maybe looking forward to what we consider some trouble spots coming up ahead.

you put all your money into them, no you're thinking the stock might go higher, you can risk a little and potentially make a lot. >> check out our website and sign up for our newsletter it's got juicier stories than "the national enquirer." what are you waiting for ♪ freak out >> nvidia's free fall from the highs has investors freaking out. mike khouw says the worst could be behind it he'll give us the trade. 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 "options," 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 (coughing) need a change of scenery? kayak searches hundreds of travel sites and filters by cabin class, wi-fi and more. so you can be confident you're getting the right flight at the best price. kayak. search one and done.

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who says they don't? coach mcadoo! you know, at td ameritrade, 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. semi stock nvidia down 50% since hitting a high in october, shares sinking nearly 20% in a day after reporting weak guidance in november, getting crushed in january after warning earnings could come up short despite the moves wall street expects the stock to recover at least some of those losses, the average analyst price target $179 a share, 20% higher than where the stock is trading with an expected 7% move in either direction should you bet on a rally in nvidia

>> i think if you're inclined to make a bullish bet, do it in a cautious way we're going to take a look at a structure called a call spread risk reversal. first of all, as you alluded to, after they announced they basically had that preannouncement, we saw a sharp decline in the stock price it's rebounded fairly sharply off of that. let's pay attention, i think we should, to that recent low which was right about $130 here's asituation where you're potentially looking for exposure to the upside. maybe you think the worst is over because they've given that poor basically preannouncements. if you want upside exposure sure, in a structure like this you need to be willing to get long the stock at a lower price. take a look at what the stock has been doing we can see this very poor performance. this is the level that i'm talking about right down here. basically hit a bottom, i think $131 so that's basically the level we're thinking we want to give ourselves some cushion in the event it goes back to that level. how do we put this trade on?

i was looking at the march 130, 150, 165 call spread risk reversal selling the 130 put, the 385, buying the 150 call for $6.70, and then selling the 165 calls against it net net you're spending 55 cents to put this structure on a quick point, when earnings are going to be announced, typically what you're going to see is implied volatility, the price of options is going to decline. what is likely to happen if the stock doesn't move very sharply is that this call and this put are going to decline in value more than the call that you're long 5 cent-- if the stock rallies because you own the 150 call, you're going to have exposure, that's up only about 3% from here on the other hand, if the stock gives us further disappointments and starts to settle in a little bit, you're going to actually get net long the stock at $130, a decline of about 10% from here i would point out also, this expires in march

if you take a look at how the stock has behaved after earnings, the month after earnings, typically you see a move up or town by an average of about 10%. those are pretty key levels we're looking at here. i wouldn't want to buy the stock right here given the news we've seen two consecutive quarters of fairly weak guideness, fairly weak performance if you're inclined to make a bullish bet, this would be the way to do it, a little less risk at the same time. >> to the downside, worst-case scenario, you put the stock at 130. he's created a structure where he's not paying a lot of premium and he's near the money participation to the upside. he also is not long dated. really playing this sort of event. i would make one other point apple, they did preannounce january 2nd. the stock got murdered when they got around to reporting their quarter and spending time with investors, the stock rallied and has been strong i think this sets up pretty good again, mike said if you were inclined to buy the stock, this is a good way to do it as an

alternative. >> right, and there is a symmetry to the upside in that sense. if you have preannounced you're not going to come out with something typically that's worse. you try to manage that by preannouncing. if it's going to be a surprise, even though you've preannounced, it's going to be something positive, likely having dropped from 292 to where is it, down 57%, and basically the stock is fair price. it's been related here it has no character. sometimes, again, stocks are great reflection points. big breakouts or rollovers, cups and handles, things we talk about. this is an instance where invidia belongs here both technically and it could be fundamentally. >> i think the important thing to think about is that we're a show about options this is a situation you might be looking at this saying, i can buy this at a discount i'm saying maybe it as discount, but this is the way you can get

some exposure to the upsaid, if ewe are forced to buy it, it's going to be a 10% discount to this discounted price. shares of chipotle sizzling after the company reported earnings got a burning question for one of the traders we're taking your tweets later in the show. live at the nasdaq in times square much more "options action" 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. ♪ (voice) (danny)know what impressing the heck out of me.

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welcome back take a look back at a couple of our open trades. last week mike thought the run in chipotle was overdone. >> this has already made a sharp bullish move going into earnings, up 30% in a relatively short period of time i would just look out to march, looking at the 500 puts, $17.50 you could spend, selling the 450s against it for 5.5, net net you're spending 12 bucks, approximately a quarter of a distance between the strikes >> that stock has been soaring how do you manage this trade >> i think you just have to admit that that direction was wrong. i felt that the stock had gone too far, too fast.

i wasn't crazy about the valuation. but the street disagrees, that much is clear. i think i'm going to walk away and nurse my wounds. >> it's a breakout, right? so there are two ways to handle that if you're long. you take half off and let the rest ride, because after a gap often you get follow-through if you're short, the way to handle it, like you handle any mistake, get out >> also last week dan said expedia was headed for a travel nightmare. >> the stock has been in a pretty well-defined down trend, a couple of times including just today where it's picked itself up above that down trend there's still a lot of concerns about global growth. a did like expedia depends on global growth for future growth. you could buy the april 120, 95 put spread, pay $5, buying one of the april 120 puts at 560, selling one of the april 95 puts at 60 cents -- >> that's getting a boost off reports. dan, are you holding on?

>> we had a bad week last week so here's the deal so this one's kind of interesting. and carter may speak to the technicals in a second there that was obviously a breakout from that down trend when i listen to the ceo on cnbc, read their guidance, we talked about it on "fast money," i didn't buy what they were selling. investors gapped this up it was trading up 10% at one point, closed almost at a low on the day. this is one where i had a $25 wide put spread out to april, it cost $5. it's worth about $2 now. normally i'd say cut your losses at a 50% premium stop. but i've got a lot of time here. monday, if this continues to the downside, you may have this thing right where you want it. i'm going to say, give it a little time. >> that's a good point trying to manage a trade where you still believe in it but you got the move wrong initially, if you have a long enough term trade, you can stay with it. another thing you can do is look to adjust your strikes for one thing, had you shorted the stock, the pain would have

been much greater. you still have an opportunity to do a little bit of a reset, give yourself some time for it to play out i do agree, it didn't trade particularly well. that was in a tape that did very well, actually we started very poorly today, we finished basically on the highs. that wasn't true for the stock, it did the opposite. >> that's the most salient point here if a stock has news and it gaps up and all day long moment couple don'ts and people are buying into the close, versus a stock that interday starts to find exhaustion no more buyers, and closed almost on the low, it's not that bullish a day at all. >> one last point about, we do these event trades, they're really, really hard to make money. you've got to get the magnitude and the timing right we do a trade on friday afternoon, the company's not reporting till thursday, use your head about entries and that sort of thing. first thing monday morning can be tough too this stock had moved 6 bucks between now and thursday you might want to adjust strikes that sort of thing timing is one of the most

important aspects of these trades. up next your tweets and the "final call. at was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, 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. [ horn honking ] [ engine revving ] what's that, girl? [ engine revving ] flo needs help?! [ engine revving ] take me to her! ♪ coming, flo! why aren't we taking roads?! flo. [ horn honking ] -oh. you made it. do you have change for a dollar? -this was the emergency? [ engine revving ] yes, i was busy! -24-hour roadside assistance. from america's number-one motorcycle insurer. -you know, i think you're my best friend.

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i'm not really a, i thought wall street guy.ns. friend. 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 time to take your tweets what are your views on the march 8th weekly 160 calls in sales force? mike >> this is a critical level, a critical time. we have earnings, 160 looks like a level from which it would break out. i'd rather do that than buy the stock. >> it is going to break out, looks like well defined top at the level, contending in a high, in a position to exceed the high. >> your thoughts on sales force? >> competitor server had great results, but first big-cap stocks to make a high. "final call. >> coca-cola long safety net. >> calls in coke, calls for risk reversals in nvidia rather than

buying the stock. >> i didn't mean to sound so confident on the bank stocks, i didn't mean to sound with certainly things are going to go the way they did but it seems like an easy one. >> it's scary in the leadup to that trade. >> it was scary. >> all sorts of scared there >> gloom and doom. >> see you back here next friday the following program is a paid commercial presentation for total gym fitness. [music] everybody work out. feel the energy. build a better body. the best you can be. another body easy as 123. oh. ahh. better body as easy as 123 with total gym. i feel fabulous and when you