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

off is -- there's a way to get your money back. and a plflood of retailers e reporting earnings next week but mall madness could turn into mall and the action begins now and we started with mall madness as we head to a very busy week of retail earnings all hanging on the rack to report and with the xrt retail underperforming the market, how should you play these results? carter, break it down. >> so retail is a big old mess most of, of course is core performance. a great way to track the group in the xrt is 95 stocks, almost $2 trillion. you've got great ones like

amazon and home depot and macy's and target and 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 t does and one thing you can do is it put in a line this way and you see a well-defined down trend and failed here reepeatedly over and over and over and what's to say it's going to bust through i'm going to make the bet it's going to fail yet again. let's talk about relative performance. here's exact same chart and as it's attending over the past munt, you're almost making new 52-week relative lows. so money committed here is underperforming other things one could have done with one's

money. 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. now i full back, not just two years but five, six. this is the real nightmare we've had a very bullish market. 2015, 2016, 2017 this thing has been underperforming the past five years and it's tracked this line repeatedly failing, repeatedly, repeatedly and just again. there's nothing here it's just been bad and it's recently underperformingtop i don't like it. i want to be short xrt walmart is giving the whole game

back after the initial pop dan a >> the thing that got me looking is 4% higher following the results perceived to be better than expected on a lot of different points and when the stock was trading 105 on can't remember which day was 2 o% higher than all-time highs in the fall. and then you look that xrt and you say to yourself it's right at that down trend we're going to get lows, tart, home depot, t.j. max maybe to the low 40s and i would use the xrt. so today when it was trading about 45, i'd look at the april experation and $1.35

that breaks even down at 34 bucks. down about 3% and you make about $3 between 44 and i know we're going to hit a lot of earnings in march and if we're going to pull back some of that, i think we want to pick on the losers or the relatively waeber sectors. so we ehave nearly two months for this thing to play out >> you hit on it that there's a cometfs. and another one, which is not equal weighted what you end up seeing is they're predominantly the winners of the space this also happens to capture utter interesting groups which you might not be thinking of right away, like car dealers i think that's certainly a problem. and we see a lot of fairly

leveraged businesses the price of options on this atf if you've risen over time. i understand why you're inclined to do that >> and let's maybe end where we started. the fact walmart could put up a number so well received, about a .17 in the dow and to give it all back, let's say the numbers are good from the people who report next week, are they going to take off and go to the races? i don't think so >> so you saw auto nation down, talked about the penske file, that's old school. we're going to get lots of reads on the u.s. consumer here. lots of reads on the really important things that work its way into the macro conversation. i think the xrt for the short side is the best way to play that if you're somewhat down beat as we head into qt.

>> here's a kraft hines kraft crashing for its worst day ever after they reveal an investigation. crashing more than 10 times its average daily volume making it the single most actbive stock of the day if you're thinking it may be due for a bound, how could you play ketchup? couldn't resist. >> i think that was very interesting because this is not typically a name we see topping the board in terms of actions activity secondly these types of staple stocks are not the area people are usually expecting to see big violent moves. so i've certainly thought that was interesting. another thing is that about half of it is own oed by two big share holders. the kinds of movements we're

seeing are institutionally propelled. if you compare the evaluation of kraft hines to other stocks, it looks incredibly cheap the thing is though that they've really struggled to figure out their business they've not done a very good job managing at all. if you own it, do you want to buy more, it's trading at 11 times forward earnings i wouldn't actual go out and buy additional stock for one thing they often take a few days to work out there's big instuzal holders if one decides to blow out their position, there could be further weakness if you own stock or thinking of buying to boost your gain if it degets a recovery would be to a one buy two call spread. the idea is the stock is

unlikely to recover to the price where it just fell we have a lot of news. the sec -- obviously, that's an issue. we have them restating mater yael and we have disappointing earnings i was looking that 42 by 1 call spread and sell two of the 40s against it for 50 cents. and the yd here is if you own the stock, you're essentially going to double your returns from 37 and a half up to 40 bucks. above that your profits are going to be capped that's essentially selling at 42 and a half if you own at 34 and a half, i think you would do that. i think you would surtdenly take the money and run on that >> there's nothing to interpret. effectivively a permanent reset to drop like that.

also it's not a natural circumstance when you have two players effectively controlling 50% of the growth. 600 million shares combined. they can't really get out unless they did today meaning you just don't recover from this on a weekly basis, a monthly basis. if you have it, you get out. >> my guess is you're not going to see them blow their position out in a single day. i think they're probably digesting that >> here's a little tell. warren buffett's going to be on "squawk box" monday morning. he was tight lipped about wells fargo. >> he stood by them actually >> but understanding if he's trading around the position, he's got to be careful if he comes out efusive about the situation and defensive, then you probably want to buy

t the stock monday morning you buy one of those 37 1/2 calls, you're basically going to have a levered over riet from 35 to 40. but now you have this 37 and a half/40 that you paid nothing for. so if it was at 40, you'd be selling at 42 and a half and with options prices as high as they are after such a good move, this is exactly the sort of strategy you want to uses >> implied volatility rises. often in stocks like this that don't move a lot, it's not a strategy you would normally get employ but because we've had this big move, you have this opportunity. >> and while you're there, sign up for our news letter rumor has it this week's edition

has the oscar winner >> dan's maga trade has made the nasdaq great agon. but he's got a way to protect yourself plus calling all option action pass, reach into your pocket and grab your phone. if it's nice, we'll answer it on air when options a 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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welcome back to "options action the text heavy index rallying. at more than 13%, trading around 7% off its high. how should you play it right now? over with a very special call to action dan. >> the nasdaq to me is at crucial point and a large part of that has to do with the fact it's microsoft, apple, google and amazon but most importantly thenasdaq 100. about 37% of the weight are those four stocks and i think what's interesting is the nds. the nasdaq 100 is up 11% on the year that's in line with the s&p 500. it's really -- because those

four stocks are a much smaller weight in there, they have less of an impact usually it's been out performing one of the reasons why is because the stocks haven't really gone anywhere this is a one-year chart of the qqq verses the qqqe, which is an equal weighted nasdaq 100. you see that, that the qqq is up about 11% on the year. the qqqe, the equal weight is up about 15%. so we're seeing something pretty positive, a lot of stock act really well, just not the biggest ones right there so that could obviously a bit of a curse if things with twur change but one of the main reasons is that we've seen three of these names stall a little bit. apple, alphabet and amazon are still considerably down. microsoft is acting pretty well. only down about 5% from those highs. but they're having anned averse

effect on the cap weighted kwrbs qq here. look at this chart this was december 3rd. we've been consolidating over the past week. it looks like a pretty interesting resistance level here and then i just want to go to the price of options in the qqq. 30 day at the money. about 15 and a half percent. so this consolidation and lack affmovement is causing action prices to get pretty cheap and the markets have been melting up broader. so the question is what do you do with this thing option prices are pretty cheap the biggest components are participating. maybe there's an opportunity where if those maga did participate and did break out the qqq, maybe you move up

if they were to stall, worst time for the nasdaq, then maybe we can see them lead us much lower. sometimes it makes sense to buy a strata this is basically we priced out an implied move with short data actions. the same strike and same experation we would add up the premium of those two and we'd get a price and divide by etf or stock price. that is what the straddle is you think it's going to move a lot during a period of time but don't know which way, this is one way to do it and it you might do it at time when stock is at a important technical level. let's just say you thought between now and april experation this thing is going to move a lot one way eor another and loo

at the march 1, 1973, call price. they're each offered at $2.50. the straddle costs you $5. that's about 3% of the stock price. i think it's a pretty good bet the qqq between now and march 15th is going to move 3% in eeth direction. you would need a move up to 178 or a move below 168 to make money. that would be buying the implied move buying the straddle here if you want to play the volatility and know there's a lot of macro headlines and know the biggest components have stalled, maybe you think they're going to roll over, this is one way to play it >> i hear what you're saying and options a option are definitely cheap.

you take a look at similar period of time and we've seen them move less than 3% in a similar time frame ending today. big constituents of this index are broadly held stocks. so if you already own those stocks, would you advocate simply buying that because basically you're in that straddle anyway? >> we talk about this all the time the implied move. we just told you how to figure it out if you said i think that straddle looks cheap but i'm bullish, then buy the call the call is 1 and a half percent of the stock price that's plety cheap to make a bet on the qqq this is for educational percher purposes 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 the put's locked out

the call's appreciated and one way to lock in that trade is turning the call one into a call spread >> the circumstance is going on in another index and the oldest, moe most important index there is. goes back to 1896. that has only hand 15 other times in the history of the dow and a rate of 0.25%. what happens thereafter fairly reliably is there is a give back of some kind in term ozf these super cap names, they're all underperforming week after week after week relative performance of top five stocks is almost at a new six-month low compared to the s&p. microsoft and the others all nds performed. the whole thing hinges on these and a few other names.

the market will have to have them participate to press on >> coming up invidia up they will break it done. you're live in times square. much more options action 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. ♪

(danny) after a long day of hard work... ...you have to do more work? (vo) automatically sort your expenses and save over 40 hours a month. (danny) every day you're nearly fried to a crisp, professionally! (vo) you earned it, we're here to make sure you get it. quickbooks. backing you. let's take a look back at a couple of our open trades. >> this is the level that i'm talking about right down here. basically hit -- i think it's 131 bicks that's basically the level we're thinking we want to give ourself some cushion. i was looking at the march 130, 150, 165 call spread risk reversals. >> the stock is up around 8% since then so what are you doing? >> we spent 55 cents on this

after we saw the initial pop, we haven't seen much since. >> it's popped i think take time to move on a uninspired >> the most important part would be to kvr that short put to the down side, not that there's too many gaps between now and when that happens between 135 and 160. i like the idea of waiting it out and trying to play for a gap. so i would maybe roll that view out because the gap is up near 200 or so and if there's any good news, grirtit's going to bc towards there. 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 ♪ it is such a good time to dance ♪ ♪ it is such a good time to [ laughing ] ♪ scoobidoo doobidoo ♪ scoobidoo doobidoo [ goose honking ] ♪ [ laughing ] a bad day on the road still beats a good one off it. ♪ progressive helps keep you out there.

♪ 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. ♪ if i am for the final call carter >> they'll continue to struggle and short srt. >> if you're kraft, one by two call spreads

>> we went all over the trade. if you're really bull gsz, buy the after money call, if you're bears, buy the after money put >> catch us next friday. meanwhile, "mad money" with jim cramer starts right now. 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 feelou