hey there, the guys are getting ready for a big show in the meantime, here's what's coming up. ♪ >> the nasdaq just notched an historic winning streak and dan nathan has a way to make money if the group goes up, down, or nowhere at all and he'll show you how to do it. plus -- >> it's murder. >> it's not. it's ketchup. >> kraft shares are getting killed but if you think the sell-off is overdone, mike has a crafty way

to make some of your money back. and -- >> got your credit card? >> it's mall madness. >> a flood of retailers are reporting earnings next week but dan and carter say the mall madness could turn into mall mayhem they'll break it down. it's time to risk less and make more the action begins now. and we start with mall madness as we head into a very busy week of retail earnings names like home depot, macy's, lowe's er lowe's, nordstrom and foot locker all hanging on the rack to report. with the etf underperforming the market, how should you play the group heading into these results? let's get straight to the chart master at the plasma carter, break it down. >> retail is a big ole mess, we know that in so many different ways, but most of course is just the poor performance a great way to sort of track the group is the xrt it's 95 stocks, almost $2 trillion so you've got great ones like

amazon and home depot but also have tiffany's and lowe's. you've got major box players like macy's and target and you've got little things like foot locker and so forth and so on here is the chart. well, it doesn't say much but if you put in some lines, it does one thing you can do is put in the line this way and what you see is a well defined downtrend. and it has failed here repeatedly over and over and over and what's to say that it's going to bust through. well, some would make that bet i'm not going to make the bet. i'm going to make the bet that it's going to fail yet again let's look at this same chart and talk about relative performance because this is the real problem here's the exact same chart. as it's ascending over the past month and backing and filling, you're almost making new 52-week relative lows. so money committed here is underperforming other things that one could have done with

one's money. the definition of no alpha now, if i pull this back even further, same circumstance, right. and the issue is are we going to undercut that low. and i think that's what's coming on a relative basis, regardless of what happens here on top. now, if i pull it back not just two years, but five, six, this is the real nightmare. we've had a very bullish market. 2015, '16, '17, '18. what's happened? this thing has been underperforming the entire past five years and not only has it been underperforming, it has tracked this line repeatedly failing, repeatedly, repeatedly, repeatedly, and it hit here just again. i mean there's nothing here. it's just been bad and it's recently underperforming. it was underperforming the market today don't like it. i want to be short xrt and end with this. walmart had a great number it's given the whole game back

after that initial pop. >> all right we're going to do something different tonight. dan and carter are doing a rare tag team so, dan, what's the trade? >> so i think the last thing that he just said is the thing that got me looking at the space earlier in the week. walmart's gap, its reaction, 4% higher following those results that were perceived to be better than expected on a lot of different points the stock when it was trading about 105 on monday or tuesday, i can't remember what day it was, was trading within 2% of the all-time highs from the fall then it just gave it all back. look at that, that's the chart for the week and it can't get out of its own way then you look at the xrt like carter said, equal weighted. it's right at that downtrend so to me when you think about we're going to get lowe's, target, home depot, t.j. maxx, a lot over the next couple of weeks, i think this sets up as a really didn't trade to the downside and i would use the xrt. today when it was trading about 45, i'd look out to april expiration and buy the 45-41 put spread buying for $135 and

selling one of the april up from puts at 35 cents that breaks even down at $44 that's down about 3% you can make up to $3 between 44 and 41 i like the range i'm looking to april because i know we'll get a lot of earnings in march, but i think the market has come a long ways if we're going to pull back and give back some of that in the broad market, i think you want to pick on the losers or relatively weaker sectors and this is one of them. so we have nearly two months for this thing to play out. >> mike. >> you kind of hit on it right away when you say the equal weighted index there's a couple of etfs that track the retail space what you end up seeing is that they tend to be predominantly the winners in the space, things like amazon. this also happens to capture some other interesting groups, which i think could see some pressure which you might not be thinking of right away like car dealers. penske, we're seeing rising auto delinquencies. i think that's certainly a problem. we also see a lot of fairly

leveraged businesses here and that's one of the reasons implied volatility, the price of options on this etf have risen over time. so i think if you're inclined to make a bearish bet and i understand the reason why you're inclined to do that, a put spread makes a lot of sense. >> and again, let's maybe end where we started the fact that walmart could put up a number that was so well received, a low beta stock, about a 0.7 in the dow, and to give it all back ultimately, let's say the numbers are good from the people who report next week are they really going to take off and go to the races? >> i think you can broaden the conversation out a little bit. you saw automation down today, you talked about the penske file that's old school. we're going to get toll brothers next week, home depot, we're going to get lots of reads on the u.s. consumer. we're going to get lots of reads on some of the really important things that kind of fend or work its way into the macro conversation so to me i think the xrt to the short side is the best way to play that you've you're somewhat downbeat as we head into q2.

from a potential retail wreck to a stock that is getting whacked. shares of kraft heinz crashing 27% for its worst day ever as the company slashed its defensive send, revealed an s.e.c. investigation the move sparking a flurry of activity in the options market crossing more than 10 times its average daily volume so if you own the stock or think it could be due for a bounce, how should you play catch up i couldn't resist. >> the options activity, let's start with that. this is not typically what we see topping the board. first of all, it's a much smaller company and secondly these types of stables are not the -- stables - i think it's important to remember, when you look at two of them, it's going to be very interesting the kinds of

movements we're seeing are institutionally propelled. if you compare the valuation of craft heinz to other stocks like unilever which was down a bit but not as much as some of the u.s. staple stocks were, it looks incredibly cheap they have really struggled to figure out their business. i mean they really haven't done a very good job of managing it at all so you're looking at the stock an thinking do i want to get in here if you own it do you want to buy more it's trading at 11 times forward earnings my answer to that would be i wouldn't actually go out and buy additional stock here. for one thing, these types of clients often take a few days to work out there's big institutional holders. if one of them decides to blow out their position, there could be significant further weakness. so i think one thing you could take a look at, though, if you own the stock or are thinking about buying a little bit of it here, to boost your gains, if it gets a recovery, would be to do a one by two call spread over a long equity position the idea here is that the stock

is unlikely to recover to the price where it just fell look, we have a lot of news out here the s.e.c., obviously, that's an issue. we have them restating materially, and we have disappointing earnings i was looking specifically at the april 37.50, 40 1 by 2 call spread you could buy one for $1 and the idea is if you own the stock you're essentially going to double your returns from 37.50 up to 40 bucks above that your profits will be capped but if you think about it, that's essentially going to be selling your long stock out at 42.50. if you own it right now at 34.50,

my guess is you're not going to see berkshire blow their position out in a single day i think they're probably digesting that >> here's a little tell. warren buffett will be on squawk box monday morning. >> three hours for three hours he's going to be on. >> if he doesn't say anything about kraft, which he was tight-lipped about wells fargo when they had their issues. >> he had buy them actually. >> understanding if he's trading around the position he's going to be very careful about what he's saying. you know, it's going to be a

tell monday morning. if he comes out really effusive about the situation and defensive, then you probably wanting to buy the stock monday morning. i just want to say one thing about the trade idea you've got to think about the mechanics here you're long 100 shares and buy one of those $37.50 calls and selling two of the $40 calls, you basically have a levered overright for all spents ainten purposes you're capping your gain but you have this extra call spread this 37.50-40 if the stock was at 40 you'd be selling at $42.50. i like the idea here and you're going to probably with option prices as high as they are after such a good move, this is exactly the sort of strategy you want to be using. >> this is the type of strategy you want to employ when you see these types of moves because implied volatility rises often in stocks like this that don't move a lot it's very hard to get that thing off or even so it's not a strategy you get to employ pause we have this big move, you have this opportunity. >> for everything options action, check out our website, optionsaction.cnbc.com sign up for our news letter.

rumor has it this week's edition has the oscar winner for best picture. so what are you waiting for? here's what's coming up next calling all options action pads esont us your questio quti @optionsaction. if it's nice, we'll answer it on air when "options action" returns. 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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for nine straight weeks, seeing its longest weekly winning streak to start a year ever. it is now up more than 13% this year, trading about 7% off its high how should you play it right now? dan is over at the plasma with a very special call to action. dan. >> the nasdaq to me is at a really crucial point here. a large part of that has to do with the fact that it's maga it's microsoft, apple, google and amazon they make such a huge percentage of the nasdaq, but most importantly the nasdaq 100, the qqq that tracks the nasdaq 100 is about 37% of the weight are those four stocks. i think what's really interesting here is that, you know, the ndx, the nasdaq100 i up about 11% on the year that's in line with the s&p 500. we haven't seen that a whole heck of a lot. the s&p 500 has really -- those four stocks are a much smaller weight in there, they have less of an impact usually the nasdaq has been outperforming. one of the reasons why is because of that weight here and because those stocks haven't really gone anywhere i just wantifst want you to loo

chart. this is a one-year chart of the qqq versus the qqqe which is the equal weighted nasdaq 100. look at this gap right here. you see that the qqq is up about 11% on the year. the qqqe, the equal weight, is up about 15% so we're seeing something that's pretty positive. we're seeing a lot of stocks in the qqq act really well, just not the biggest ones right there. so that could be obviously a bit of a curse if things were to change one bit but one of the main reasons here is that we've seen three of these names stall a little bit, okay apple, alphabet and amazon they're still considerably down from their 52-week and all-time highs. microsoft is acting pretty well here it's only down about 5% from those highs, but they're having an adverse affect on the market cap weighted qqq here. i think it's really important to look at this chart look at this high, this was december 3rd, right after that g-20 meeting look where we are right here we've been consolidating over the last week.

this is the qqq. it looks like a pretty interesting resistance level here then i just want to go to the price of options in the qqq. this is implied volatility, 30-day at the money. it's about 15.5% that's well below the one-year average, just over 20% so this consolidation of late and just the lack of movement in general from some of the bigger components is causing option prices to get pretty cheap in a market that's been going up broader in the s&p 500 what do you do with this thing we're at a big resistance level. options prices are pretty cheap. the biggest components aren't really participating right now one of the things that i like to think about is maybe there's an opportunity where if those maga did start participating and did break out the qqq, maybe you get a big move up. by the same token, if they were to stall and portend worse times for the nasdaq, then maybe we could see them lead us much lower. with option prices as cheap as they are, sometimes it makes sense to buy a straddle.

let's talk about this. this is how we price out an employed move with short-dated options. we would take the at the money straddle, that's the put and the call of the same strike and the same expiration. we would add up that premium of those two and we get a price and then we would divide by the etf or the stock price that will give you the implied move over a period of time that is what the straddle is if you want to buy the implied move because you think it's going to move a lot during a period of time but you don't know which way, this is one way to do it and you might do it at a time when option prices are cheap and the stock is at an important technical level. so let's look at the qqq let's just say you thought between now and april expiration this thing will move a lot one way or another you would basically look out to april expiration and -- excuse me, this is march expiration you look at the march 173 straddle that's the call price plus the put price. they're each offered at$2.50 the straddle costs you $5. that's the implied movement between now and march.

that's about 3% of the stock price. i think it's a pretty good bet that that thing, the qqq between now and march 15th is going to move 3% in either direction. so if you bought that, you would need a move up to 178 or a move below 168 to make money between now and march 15th that would be buying the implied move in the qqq. that would be buying the at the money straddle here. to me, if you've one of those people that wants to play the volatility we know there's a lot of macro headlines goingon. we know the biggest components have stalled maybe you think they're going to break out. maybe you think they're going to roll over. this is one way to play it. >> mike. >> yeah, i hear what you're saying and options are definitely cheap personally i don't usually advocate buying straddles because you do need the market to move a decent amount for it to become profitable take a look at a similar period of time. we've seen the qs move a little less than 3% in a similar time ending today

so big skpiconstituents of thi x index are broadly held names if you own those stocks, would you buy that put because you're basically in that straddle anyway. >> that's a great point. we talk about this all the time. we just told you how to figure it out if you said to me i think that straddle looks kind of cheap but i'm bullish, then just buy the call because the call is 2.50. it's 1.5% of the stock price that's pretty cheap to make a three-week bet on the qqq or the flip side is doing it on the put. really this is for educational purposes to explain how you do it let's say you bought the straddle and had a quick move up to 177 you could sell a higher strike call against the call that you own. you still own the put. the put has lost value, the call has appreciated. one way you could lock in that trade would be turning that call one into a call spread. >> i mean so the circumstance that's going on in the nasdaq of course is going on in another index, right, and it's the

oldest and most important index there is nine weeks up in a row for the dow jones industrial average, which has history as opposed to the nasdaq, 1970 goes back to 1896 and that has only happened 15 other times in the history of the dow, an incident rate of 0.25% and what happens thereafter fairly reliably is there is a give-back of some kind now, in terms of these super cap names that drive so much performance, they're all underperforming week over week over week. relative performance of the top five stocks which would be these four plus facebook is almost at a new six-month low compared to the s&p. google was down this week, facebook was down this week, and microsoft and the others all underperforming. the whole thing hinges on these and a few other names. the market really will have to have them participate in order to press on much higher. >> all right coming up, nvidia up nearly 16% just this month. one of the traders says it has

more room to run much more "options action" still ahead. 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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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 "options action." time to take a look back at a couple of open trades. two weeks ago mike said nvidia could rip on earnings. >> this is the level that i'm talking about right down here, basically hit a bottom i think about $131 that's basically the level we're thinking we want to give ourself some cushion in the event that 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 reversals. >> the stock is up around 8% since then, so, mike, what are you doing? >> we spent 55 cents on this

structure. you could probably sell it today for a little over $8 that's actually what we recommended on twitter because after we saw that initial pop, we haven't seen much since. >> carter. >> i think you probably take the money and move on. down on the week, you know, uninspired. >> the most important part of the trade management in my opinion would be to cover that put, the short put to the downside not that there's too many gaps between now and when the expiration happens but this thing consolidating down between 135 and 160, to me i like the idea of waiting it out and try to play for a gap. so i would mayberoll that view out a few months because the gap is up near what, 200 or so if there's any good news in this thing, it's going to be back towards there. up next, your tweets and the final call 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

what do you look for 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. ♪ time for the final call. carter. >> i think retailers will continue to struggle i'd like to be short xrt. >> mike. >> if you're long kraft, one by

two call spreads. >> dan. >> on the qqq, we really went all over the trade there listen, if you're bullish, buy the after the money call if you've bearish, buy the after money put. >> catch us back here next friday at 5:30 in the meantime "mad money 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 my job is not just to entertain but to teach and educate you so call me at 1-800-743-cnbc or tweet me tonight i want to share my accumulated wisdom believe me, i've bee