york city. on deck, here's what's coming up >> as stocks see the worst week of the year, utilities just hit an all-time high and there is something in the charts that suggest there is more room for the group to shine carter will break it down, and mike will give the trade. plus, talk about socially awkward. there is one social stock

shutting out its peers this year and one of the traders says the rally isn't over yet he'll break it down. and -- >> the energy. >> yikes but if you thought that was scary, you better wait until you hear what dan nathan has to say about the energy trade it's time to risk less and make more the action againbegins now. >> that's where we start with energy getting slammed, making it the worst performing sector falling 4% for the worst week since the depths of the december selloff. check out some of the names hit the heart exist. devin, halliburton, slumber j down 10% will there be more pain ahead? big question dan has been looking at the energy space what do you think? >> let's start with crude oil. when you assess the damage overnight and risk assets, crude oil was down 3% out of the gate here there was a lot of things moving around there is growth concerns, global

growth concerns with the data in china. of the other headline that is interesting norway's cyber wealth fund is actually going to diversify away from enp energy stocks in their fund that was weighing on the sector a little bit and then the other one pushed out of a trade deal. y crude was down a lot it rebounded look where it was rejected at 58 bucks. it broke the up trend since the december loads that got me thinking if we were going to have a push out of this trade a deal, crude is going lower. the xle, energy select eft, conoco, ex on, slumber j make up 50% of that. where did the xle get rejected at 65? i think there is an opportunity to shet short xle will refined risk oil may pop. i think there is technical damage done and i am not sure the global economy is going to turn on a dime

least point. dollar traded at a high. strong dollar and crude high not so good together look out to june expiration, look at the xle, you could buy the xle june 63.56 buying one of the june 63 puts at 290 selling the 61 cost you two bucks breaks even at 61, maybe teen $5 between 6 # and 56 i look starring 56 for the downside of the xle. you are risking two bucks here this is a bit of macro trade the technicals don't line up and the fundamentals don't either. >> mike, what do you think of the trade? >> i like the trade for a couple of reasons first of all, think about oil prices we have been seeing rising amounts of crude oil in storage in kushing we have rising production in north america. already the largest producer in the united states. news today they expect the

permian in four years time to be producing eight million barrels a day. that would place it as -- the permian by itself is the fourth largest if it was a country as an oil producer after the united states, saudi arabia and russia. there is going to be plenty of supply out there the demand picture obviously isn't that great that's an economic story first and foremost it's a transition story as we move to alternative forms of energy take a look at big games niek exxon, they are not reinvesting to replace the reserves. that come band with the fact that options premiums are relatively low we have seen a sharp rebound in a lot of these stocks off of that recent bottom that we saw i think this trade that he is setting up makes a lot of sense. >> i am guessing you think oil is going leer based on your technical view of where you think the market itself is going? >> let's talk about that what we know is that crude has continued higher until just of late whereas the energy stocks did not participate over the

last five, eight, ten sessions not only can you see that in the xle and dan points that out, the beta part, if you look at xop, the e&p name, they have been smoked down 7% on the week. double that of the xle the message is that the move in crude is likely at an end and people are playing the leading edge which is energy stocks which is xlp. >> so he likes my lines. that's how we shake it out. >> energy in the broader market may have had the worst week of the year there is one group sitting at all time highs utilities. closing at a fresh record high today. the group now up 16% over the past year while the s&p is completely flat. will utilities continue to be a bright spot in the markets go over the plasma, take out the charts for us. >> sounds like i am repeating myself sometimes good things need to be reiterated i think utilities are one of the

places you want to be. i think what's going on at the rate environment, we know that swiss yields went negative three months ago japanese ten year leads. german field negative. stuck despite last week's head fake yields moving lower s&p utilities making highs, 400 utilities making new highs here to talk about how mechanical it is, this is the entire past decade it is an uptrend look how much of an uptrend it is it is literally touched this line over and over and over as though it's on some sort of autopilot. that is what technical analysis when it's working is all about do it this way check out the arrows this is literally, it has stopped, it has pivoted and, most importantly, if we were to zoom in here, what you see is we are now just now making new highs. so if i go to the next chart and we zero in on that, here is the here and now chart

it is the only sector both at the 500 level and four level that is making all time highs. that says a lot. you can draw the lines this way. i want to be long utilities. >> mike, you're trading utilities? >> yeah. this is an interesting situation that we have here because, i mean, obviously one of the things that we wide receiverry abo wore ry about, valuation it doesn't seem quite as compelling as a group we are looking at a space that's trading 20 times earnings that doesn't look particularly cheap. you have to put that into context. what we see right now, for example, this spread between high yield bonds which is another source of yield and corporates is actually very, very narrow. what that tells us is that there is really a significant chase on for yield in this environment. this is, as a basket of equities, that yields well over 3% in terms of dividends when you think about it in that context, i think actually you could see why people might actually look into it.

the other thing is if we have weakness and equities generally, this is a save haven that would make utilities set up well compared the rest of the market the nice thing about utilities, especially if we are putting on a directional trade, the options premiums are exceptionally low the may calls, those were 15 cents in the money already if we take a look at where xlu closed today at 57.17 risking 2% of the underlying to make an upside bet you are not risking a great deal very good gearing if it continues higher we are trying to give ourselves an adequate amount of time to make that trade play out. >> what do you think >> acting this well when major constituents have been in trouble. pg&e has been smoked because of the fires. if you put those back in, we would be making substantial new highs. >> this is an interesting trade.

i see exactly what you guys are talking about, just kind of this correlation or negative correlation and why it acts so well i want to make a point december 7th on this show when the xlu was trading 56.50, i made a bearish bet playing for a move back to the low 50s let me tell you something. when the equity markets went berserk and they went down, the xlu went down with it. i thought it was a heads you win/tails you win sort of thing. maybe it's time for it to start outperforming equities in that capacity if you are going to play this trade, i think it makes sense. mike is risking 2% of the stock price for very near the money participation here i think it's like he is risking 12 a best case scenario he makes a couple bucks on the trade. i think it's an okay risk/reward. i think there is a better chance you lose money. >> it's low beta, right? so you have to have a catalyst -- it would take a real

dip or plunge in yields to get it smoking, so to speak. the way it acts, that's an important thing. has to be respected. >> mike, i will give you the last word. >> when we are looking at "options action," we are typically looking for situations where you can make more, risk less i think utilities is an area you are risking less call options is a place you are risking even less. if you are looking for someplace to play long in this current environment, this is probably one of the better ways you could do it. you are going to be risking a relatively small amount. although it doesn't take a whole lot to increase the value of that option, i mean if we see this go up to 58.5, 59, you will see a clean double on the calls and that isn't a bad return for 60 days. >> much more "options action" still ahead. >> i see dead people. >> that may be true because one left for dead social stock is surging this year.

and dan says the rally has more life to live he will tell you how to play it. plus, calling all "options action" fans reach into your pocket grab your phone and tweet us your question. 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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back on "options action. shares of snap down 3% this week snapping a six-week winning streak long exist on record social stocks ghosting other big names gaining more than 70%. facebook is only up 28% and twitter up a mere 5% is there time to bet on that stock? dan nathan at the plaza with his call to action. >> i think there is time to bet on it. the stock is up 70%. it actually off of the december lows to the recent highs was up 100% so it doubled there. there was a lot of enthusiasm about that q4 they reported. they had improvement on metrics, while still unprofitable, investors like what they heard they like the new direction out of evan spiegel. they had a lot of management turnover, he seems to be very much in charge and focused there is three reasons why i think there could be up side in the stock. maybe not today, tomorrow, or next week. i will tell you how to play it looking towards july

in the near term here are a couple of things that caught my eye. this stock him proving metrics when they reported on a lot of different levels but the stock rallied 22% last month the day after the earnings and it kept going which was really interesting the other point is this huge pivot that facebook is making towards direct messaging, going after snapchat mark zuckerberg made that announcement, i would have thought the stock would be down a lot more we know they targeted some of snapchat's best features in the past and it hurt their engagement and growth. that relative strength very important. the last point i want to make, if facebook starts to make serious inroads in direct messaging and thinking about how to offer different services to monetize direct messaging, i think that makes snapchat's property a very scarce asset for much larger platforms and i think that becomes a takeover target even with evan spiegel's

super voting rights. i think there is probably a way maybe he and jack dorsey have a meeting of the minds and say we should be doing this together. there is no shortage of other large platform companies that would like to have evan spiegel locked up with them. so those are the reasons why i think this stock could work as we get further into the year i think you want to play with a call calendar. i don't want to buy outright premium here i want to think about how i would sell some short dated calls to help finance some longer dated calls and play for this stock to kind of move around a little bit above where it's trading right now. really importantly, here is the chart here obviously, it hit a little bit of resistance last week, almost to the dime at like 20.5 here. it's trading down about 9.5 bucks. i think you want to play a call calendar let me tell you what the trade is really quickly. with the stock around 950, look at april expiration and sell one of the april 11 calls at 15

cents. you look to july expiration and you buy one of the july 11th calls, 69 cents. that cost you 14 cents what you want to happen with the trade, you want it to move towards the $11 strike between now and april expiration it's a little more than a month right here then what you want do is cover the short april 11 call or have it expire worthless and then you own a much longer dated july 11 call for 54 cents, 5% of the current stock price. this trade is setting up to be bullish on the name near term, but really giving me some leverage in the back, you know, in the middle of the summer with that long july 11 call here. i am not outright buying calls, not buying the stock in a big spike. i am trying to finance longer dated calls. >> interesting stuff mike, what do you think of it? >> i don't have a really strong opinion fundamentally about snap, although we obviously see growing top line if they can figure out how to

translate that into income, that would be a positive. carter is the expert on the technicals i will speak to the options trade, which i love, i have to tell you there are a couple of reasons why. one of those reasons is that we often talk about implied volatility, the price of options. what we don't talk about quite as often is how volatility is seasonal with earnings we see names like snap get vol ais tile around earnings and trade in a narrower range in between the earning cycles guess what dan is selling that april call which expires before earnings which means from a seasonal perspective this is when we expect the stock to basically be more range bound it's still a volatile stock. then he owns the july call option he actual will i owns the volatility when you needn't want it if you think about putting on a trade in this stock, and i'll let them speak to the fundamentals and technicals. from an options trading perspective, i like the setup.

>> it is key that it's done with options because, as an investment experience, this has been special we know it came out exactly two years ago in march 2nd, i think, in 2017. priced at 17 first prints 24, 40% hit 29 and never looked back if your third day in life is your best day and you go down two years and hit a low five, something is wrong can we get a trade sure this is nothing but -- it's one of the worst performing ipos on record. >> this is a definer's trade we are expecting a lot of other high-profile tech ipos in the coming month they are not making money. that is a big issue right now. relative some of the ipos over the next six months, people may look at this name and say, okay, it has performed pretty well but it has a stud of a ceo and founder and maybe they get things right here and this looks

cheap. citigroup sinking 4% this group. one of the treaders says there is more pain coming. he'll break it down. have a question for one of the traders? stick around because we are taking your tweets later on in the show live from the nasdaq tonight in times square. more "options action" is 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. 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. ♪

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.

♪ welcome back to "options action." time to take a look at a couple of our open trades back in february dan said citi was about to break down. >> i want to look out to april expiration, catch their next earnings event, catch the fact that this stock rallied 30% in the last month it's pretty simple you buy a put spread when it was trading at 62 today, buy the april 60.50 paying $1.60 for that that breaks down at 58.40. >> citi is down around 4% this week everybody wants to know what will dan do now? >> yeah, that's old school here is the deal the stock was 62 when i did the trade. now it's 62 still. that put spread that cost $1.60,

$10 wide is worth $1.30. that 60 level is down to 61 today. i like this trade. like the idea of breaking down i know we have earnings that will be caught in mid-april. what i would do right here is i would cover the 50 put that you are short for 13 cents right now and i'd sell the 55 put and make it the 60/55 put spread. that further reduces the cost of this trade you have a 60/55 put spread on it. >> one of the most important tells, last week when rates moved up almost to 275 the banks weren't fooled the rates have come down and they have been smoked. looks like more downside to come. back in january they said bonds could boom. >> we have a well defined break in trend, ever so slight now after breaking, we've thrown back to the underbelly of the

threaten trend line which is often the point you hit your head again. my bias is rates to the downside that means one would want to buy something like a tlt. >> i was looking specifically at the april 1, 2021 calls. those were $1.05 earlier today. >> tlt up 2% today what do you think of the technicals >> well, i am thinking there is plenty more to go. that rate renvironment is poor and likely to get worse, and therefore tlt is a good place to be. >> mike, what do you do with the trade now? >> i think we can stay with it if one was so inclined, you could roll it out. i think we are in a good position here. >> the tlt got rejected on several occasions. the price of options is the cheapest on the board. if you think that the ten-year treasury, and obviously this is the 20-year treasury, but if it

breaks 260, the tlt is going up. i really like this trade i would be looking out to may or june to call spreads that are targeting 130 to the up side. up next, we will do your tweets and make 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. ♪ wear back. time to take your tweets edward skgs after a ten week winning streak for the market, what are your thoughts about putting a put spread on sby? >> here is the deal. carter in the last show showed you 2,600 and the spx looks like a target the may 275/260 put spread you can buy for 3 bucks. i like that risk/reward. >> mike, final call, what do you got? >> calls on xlu are a low risk way to make a bullish bet there. >> carter? >> xlu, tlt, any one you want to do. >> danny >> take your pick.

buy bonds, buy u, sell xle and buy put spreads. we have you covered on the bearish options. >> all right good stuff thank you very much. that does it for us on "options action." catch us back friday 5:30 p.m. don't go anywhere. "mad money" with jim cramer begins 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.

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