the guys here are getting ready for a big show in the meantime, here's what's coming up. the nasdaq just announced a historic winning streak and dan has a way to make money if the group goes up, down, or nowhere at all and he'll show you how do it plus. >> this is murder. >> it's not, it's ketchup. >> kraft shares are getting killed but if you think the selloff is overdone, mike has a crafty way to make some of your money back.

and. >> got your credit card? >> charge. >> it's mall madness. >> a flood of retailers are reporting earnings next week but dan and curtis say the mall madness could turn into mall maihem 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, nordstrom and footlocker all hanging on the rack to report and with the xrt retail atf underperforming the market this year, how should you play the group with these results let's get straight to the master kafrte carter break it down. >> we know retail is a mess but most is poor performance a great way to track the group is the xrt it's 95 stocks, almost $2 trillion. we've got great ones like amazon and home depot but tiffany's,

lowe's, major box players like macy's and target and you've got little things like footlocker 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. and one thing you can do is put in the line this way and what you see is a well-defined down trend. it has failed here repeatedly over and over and over and what's to say that it's going to bust through well, someone make that bet. i'm not going to make that bet i'm going to make the bet that it's going to fail yet again let's look at that same chart and talk about relative performance because this is the real -- the real problem here's the exact same chart. and 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, and this thing has beenunder performing the entire past five years not only is it underperforming, it's tracking this line, repeatedly failing, repeat lird repeatedly, repeatedly, and it hit here just again. there's nothing here it's just been bad and te it's recently underperforming it was underperforming the market today don't like it. i want to be short xrt wednesday this, walmart had a great number it's given the whole gain back after that initial pop. >> 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, it's reaction, 4% higher following those results that were perceived to be better than expected on a lot of different points and the stock was trading about 105 on monday or tuesday, can't remember what day it was, was trading within 2% of the all-time highs of the fall and it gave it all back. that's the chart for the week and it just can't get out of its own way. then you look at the xrt, like carter said, equal weight and it's right at that down trend. when you think about we're going to get lowe's, target, tj max, a lot over the next couple weeks, i think this sets up to the downside in the low 40s. i would use the xrt. when was trading about 45, i'd look out to april expiration and bite 45/41 put spread paying one dollars of that buying the april for $1.75.

selling at 35 cents. that breaks even down at 44 bucks, that's down about 3% and make up the $3 between 44 and 41 i like the range i'm looking to because i know we'll have a lot of earnings in march, but think the markets come a long ways if we are going pull back and give back some of that in the broad market think there you want to pick on the losers or the relatively weaker sectors. this is one of them. we have nearly two months for this thing to play out. >> mike. >> yeah, you kind of hit on it right away when you said the equal weighted index there's a couple etfs thattrac the retail space rth is another one that is not equal weighted the critical thing about that is what you end up seeing is they tending to predominately the winners in the space things like amazon so 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 for example. penske, we're seeing rising auto deliveries that's a problem we see a lot of fairly leveraged businesses in here that's why the applied

volatility of option thons etf has risen over time. think if you're inclined to make a bearish bet, and i understand that reason, a put spread makes a lot of sense. >> and let's maybe end where we started. the fact that walmart could put a number that was so well received, low beta stock, about a .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 just going to take off and go to the races? i don't think so. >> you can broaden the conversation out you saw autonation down today, the penske file, that's old school, we're going to get toll brothers next week, homedy pope, we're going to get lots of reads on the u.s. consumer and some of the important things that kind of work its way into the macro conversation so to me, the short side is the best way to kind of play that if you're somewhat down beat as we head into q 2. >> from a potential retail wreck to a stock that's getting

whacked. here's a kraft heinz crashing 27% for its worst day after as it slashed his reveal and it's sparking a fluor riff activity in the options market crashing more than ten times it's average daily volume making. single most active stock in the day. if you own the stock or think it could be due for a bounce, how should you play ketchup? couldn't resist. >> the options let's start with that in the is not typically i name we'd see topping the board. first of all, it's a much smaller company and these types of staple stocks are not where people are expecting to see big violent moves. those are the types of stocks that people like to play another thing about this company which is important to ren remember is that half of it is owned by two big shareholders, berkshire hathaway and holdings. and they are institutionally

propelled. if you compare the valuation of kraft heinz to other stocks like una lieber for example, which was down a bit today but not as much as some of the u.s. staple stocks, it looks cheap the thing is they've 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 and you're thinking do i want to get in here? if you tone do you want to buy more it's trading at 11 times forward earnings my answer so that would be i wouldn't go out and buy additional stock yet for one thing, these types of declines 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. i think one thing you could take a look at, if you own the stock or thinking about buying a little bit of it here, to boost your gains if it gets a recovery would be to be 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 we have a lot of news out here the sec, that's an issue we have them represent stating materially, and, you know, we have disappointing earnings. i was looking specifically at the april 37 1/2 41 by 2 call spread at the time you could by the 37 calls for $1 and tell two fortunate 40s against for 6 cents. netanyahu you're spending nothing. and the idea here is if you own the stock, you're going to double your returns from 37 1/2 to 40 bucks. above that your proftsd will be kept but that's essentially going to be selling your long stock out at 42 1/2. if you own it at 34.5, i think you'd be happy to do that if the 'you had a chance to get out of your position at 42.5 bucks with trading 32.5 now within next days, i think you'd take the money and run on that. >> how to you interpret this >> there's nothing to interpret. you have a permanent reset to drop like that it's not a natural circumstance

when you have two players effectively controlling 50% of the float. 600 million shares combined. they can't really get out, right? unless they did a lot of it today at 134 million shares. so when i say permanent, meaning you just don't recover from this in a weekly basis, a monthly basis, it's just if you have it you get out and move on to something else. >> my guess is they're not going to knee jerk it and you're not going to see berkshire blow their positions out in a single day. whatever they're going to do i think they're probably digesting that there are other things dho do. >> here's a little tell. warren buffett's going to be on squawk box monday morning. >> three hours for three hours. >> if he doesn't say anything about kraft, which he was very tight lipped about wells fargo when they had a lot of their issues. >> he stood by them, actually. >> but wasn't saying a whole heck of a lot about the situation because understanding if he's trading around the position, he's got to be careful about what he's saying it's going to be a tell monday morning. if he comes out really efusesive about the situation and defensive, then buy the stock

monday morning the trade idea, i like it. if you have 100 shares and buy one of those 37.5 calls and sell two, you have a lever override like mike said, you're capping your gains at 40, from 35 to 40. but now you have this extra call spread, this 37.5-40 that you paid nothing for so if it was alt 40, you'ding selling it for 42.5. i like the idea here and with option prices as high as they are after a good move, this is the sort of strategy you want to use. >> this is the type of strategy that youwant to employ often stocks that don't move a lot, it's hard to get that thing off or even so it's not a strategy you would get to employ but because we've had this big move, you get the opportunity. >> check out "options action" nbc.com. and rumor has it this week's edition for oscar winner best picture. what are you waiting for

here's what's coming up next 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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welcome back to "options action." investors have reason to celebrate as the nasdaq makes history the 'the tech-heavy index rallying for nine straight weeks, seeing its longest winning streak to start a year ever it's now up more than 13% this year, trading around 7% off its high how should you play it right now? dan is over at the plaza with a special call to action dan. >> so, you know, the nasdaq to me is at a crucial point here. large part of that has to do with the fact it's maga. it's microsoft, apple, google, and amazon they make such a huge percentage of the nasdaq. pu u but most importantly the nasdaq, the qqq that tracks the nasdaq 100 is about 30% of the weight are those four stocks what's really interesting here is that, you know, the nasdaq 100 is 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 because

those four stocks air 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 want you to look at this chart here it's a one-year chart of the qqq versus the qqqe, which is the equal weighted nasdaq 100. look at this gap you see that the qqq is up about

11% on the year. the qqqe, the kwael weight, support about 15%. so we're seeing some 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 the 52 week and all-time high microsoft is only down about 5% from the highs, but they're having an adverse effect on the market cap weighted qqq here think it's important to look at this chart look at the high, this was december 3rd, right after that g 20 meeting look where we are. we've been cop sol dating over the last week, tis tqq it looks lik intting resistance lel h of t options in the it's about 15f% 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 and at a market that's kind of been melting up broader speaking in the s&p 500. so the question here is what do you to with this thing we're at a big resistance level, option prices cheap, the biggest components aren't participating and one of the things i like to think about is maybe there's an opportunity where if those magazimaga did start participating maybe

you get a move up. by the same token if they were to stall and pretend worse times for the nasdaq, then maybe we could see them lead us much lower. but 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 implied move with short dated options. we would take the at the money straddle, that's the put and call of the same strike and the same expiration, we with would add up that premium of those two and we'd get a price and then we would divide by the etf or the stock price that will give you the implied movement over a period of time that's what the straddle is. if you want to buy the implied movement in an underlying because you think it's going to move a lot during a period of time but you don't know which way there is one way do it and you might do that at a time when option prices are cheap and the stock is at an important technical level. let's look at the qqq. let's 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 you'd -- excuse me, this is march expiration and you'd look

at the march 173 straddle. that's the march 173 call price, plus the march 173 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 in buying the implied move in the qqq creditor that would be buying the at the money straddle here. if your one of those people who want to play the volatility, we know there's a lot of macro headlines going on, we know the biggest components have stalled. maybe you think they'll breakout, maybe they'll rollover, this is one way to play it. >> mike. >> i hear what you're saying and options are cheap. personally i don't usually advocate buying straddles because you do need the market

to move a decent amount for it to be profitable you look at the similar period of time we've seen the kwctions move less than 3% over a similar time frame ending today. so my question to you is big constituents of this index are broadly held stocks. so if you already own those stocks, would you advocate to simply buying that put instead because then synthetically you're basically in that strald anyway >> it's a great point. we talk about this all the time, the implied move and we get questions from viewers all the time how to figure it out. we just told you how to figure it out if you said i think that straddle looks cheap but i'm bullish, then just by the call call is $2.50. it's half the price. or the flip side is doing it in the put. really this is for educational purposes to explain how you do it i would say this let's say you bought the strad will and you had a quick move up to 177 or something like that, you could sell a higher strike call against the call that you own. you still own the put. the put's lost value,the call'

appreciated, but one way to no that trade would be trading that call one into a spread. >> the circumstance that's going on in the nasdaq of course is going on in another index and it's the oldest and most important there is nine weeks newspaper a row for the dow jones industrial average is which is history as opposed to 1970 was back to 1986 and that's only happened 15 other times in the history of dow and interest rate at 0.25% what happens thereafter, fairly reliably, is that there a giveback of some kind. now, in terms of these super cap names that drive so much of the performance, they're all underperforming week over week over week. in fact, relative performance of 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 60% in month one trader says it has more room to run we'll break it down. 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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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. ♪ (client's voice) remember that degree you got in taxation? (danny) of course you don't because you didn't! your job isn't understanding tax code... it's understanding why that... will get him a body like that... move!

...that. your job isn't doing hard work... here. ...it's making her do hard work... ...and getting paid for it. (vo) snap and sort your expenses to save over $4,600 at tax time. (danny) jody... ...it's time to get yours! (vo) quickbooks. backing you. welcome back to "options action." time to take a look back at a couple of our 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 it was about 131 bucks so thaet's basically the level we're thinking we want a cushion in the event it goes back to that leif. how do we put this trade on? i was looking at the march 130, 150, 165 call spread risk reversals. >> the stock support around 8% since then so, mike, what are you doing? >> we spent 55 cents on this

structure. you could probably sell it for a little over 8 bucks that's what we recommended on twitter because after we saw that initial sppop we haven't seen mh since. >> carter. >> probably move on. down on the week, uninspired. >> the most important trade management would be the cover of that put, the short put to the downside not there's too many gaps between now and when when that expiration happens but this thing consolidating down, to me, i like the idea of waiting it out and try to play for a gap. i would maybe roll that view out a few months because the gap is up near what 200 or so and if there's any good news this this thing it will 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 like the short xrt. >> mike. >> if you're long kraft, 1 bau by two call spreads.

>> don. >> on the qqq we went all over if you're bullish, buy the money call, if you're bearish, by the money put. >> catch us back here next week at 5:30 a.m. eastern standard pmi time - [announcer] the following is a paid program for automatic home standby generators. brought to you by generac power systems. - [narrator] there's no place like home and today, you rely on power more than ever for all the comforts you love. but when your power goes out, you feel helpless, out of control, you're in the dark without air conditioning or heat. food begins to spoil. many people lose clean, running water. the home network and internet are down. your home security system is useless and the basement sump pump is not working.