hey there, we're back. did you miss us? we missed you. the guys are getting ready for the big she. while they're doing that here's what's comin ♪ ♪ ♪ it's the final countdown >> the countdown is on to apple earnings and with the stock still down more than 10% off its highs, dan nathan has a way for you to play it into the results. plus -- soup and cereal stocks are on fire, but has the group gotten too hot >> i don't know. >> i don't know. >> i don't know. >> well, we do and the chart master is going to break it all down for you, and

later, yeti shares have been indestructible to the bears. mike ko says the stock could be about to cool off. he'll lay out the trade. it's time to risk less and make more the action begins now. >> let's get right to it because we just wrapped up the busiest week for earnings and half of dan nathan's $4 billion maga trade reported and that's alphabet and amazon for those who haven't been following along. microsoft up 4% to a new all-time high crossing $1 billion in market cap and it jumped off its report and we're awaiting alphabet earnings on monday and it's implying a roughly 4% move in either action for those stocks and dan has a way to play one of them into the results. you're looking at apple. >> it's important for those names and it's 4 trillion in

market cap and microsoft was able to kind of put up the numbers that they did react the way they did amazon given the guidance acting the way they did, pretty decent, too. next week if you think about apple it's a pretty special situation and we started with the negative preannouncement from apple and we've not seen an announcement like that in less than ten years and a 35-degree angle and it's up 30% on the year and some of the stuff that we heard out of texas instruments and intel and xilinx and this week and their guidance should give you pause as far as apple's rally year to date and why it could consolidate there's a scenario that if it's just good enough the stock doesn't rally and the stock could go down materially so to me, the way i think about this is it's up 30% year to date and there's obviously a lot of questions about new products as we head into the summer and into the fall, i think it makes sense

to color your stock if they're down and the extreme movement to the down side worries you more than the extreme movement to the down side so the collar is the position to the long stock and you would sell an out of the money call and an out of the money put and you're creating a scenario that you can participate and you have losses to the down side with the put strike and you're protected below that i would look out to my expiration when the stock was trading at 204 today versus 100 shares of apple and you can sell 212.50 call and use the proceeds to buy the may 192.50 put paying $2.15. you have gains up to $212.50 which is in line with next week after earnings and the risk to the down side down to 192.5 and you're protected below that and this is a trade that makes

sense, you are more worried about the downside than the extreme upside i think the important thing to remember about the trade like this is not that it's bearish. what it is is it's only modestly bullish and cognizant of a potential downside move. you have a stock that's moved sharply off of the lows around 140 or so. and the valuation that you say to yourself it's not the 16 times earnings and for apple that is pretty high and this is not a company that we're expecting to see explosive growth and quite the opposite. this is a trade that makes a great deal of sense and another thing is if you have no trade in apple. this is trading an in the money call spread trying to make sure that you don't get the elevated decay that you get in options and still taking a modestly bullish bet and this makes sense. >> it depends on how it reacts to the numbers and you've had two upside moves and two muted forms. so was netflix apple is the one in many ways,

obviously that's the most interesting and it's the lowest beta and 12.5 off its high and exactly as dan said, it is an uninterrupted almost unnatural in that sense and there's more downside risk than there is upside potential >> apple doesn't have the kind of fundamental propellant embedded like microsoft did. microsoft surprised us with better acquisitions in the cloud space than we might have expected and that's still a growth business for them it's a growth business for amazon and other people in the sector, but does apple really occupy a growth space? i don't think they do and for that reason i don't think there is a risk and if there is one, there is a big surprise to the upside over the last six year or so the company's business has become fairly predictable the stock has had three 30-plus peak to trough declines and one was in 2012 to '16 and it took about almost a year to get to

the trough, but it took two years to make new highs. when you look at that chart right there and you look at how sharply that stock fell and how quickly it's reversed and i think the likelihood of new highs is a long ways off and i think there is a chance this backs and fills over the next few months >> do you agree with that? the chance that the stock are making all-time highs? that's remote. >> okay. >> from cell phones to cereal, hitting a fresh 52-week high and now up more than 12% and the party in the pantry with names like cody, tyson and consolation brands and general mills, but the chart master says there's danger lurking in the safety trade. carter, head over to the plasma and break it down for us danger in the sense that there's nothing wrong and a little hot and too good for fairly low beta and the defensive area of the market there are three stocks that make up the chunk of it you've got basketball, coke and

pepsi, and there are a lot of bigger stocks in here and think about walmart, in fact, walmart would be the biggest by far and the family's control of the float it doesn't come up as the top three. in any event, what we know is that the chart is a fairly well-defined double top whether you draw it as a line like this or whether you actually draw the double top like this the issue is are we going to break out. more often than not before you can exceed a high you contend with a high and there are two ways you contend with it and you contend with it by backing and filling or by backing away and the third prospect is typically busting through quickly very unlikely in any event, now this is really the issue and here is your double top and all of this

greatness is, in fact, this an outfit killer. meaning picks made here have cost you in the sense that one could have found other things to buy. that poor, relative strength is the issue, and i don't see anything fixing that any time soon in fact, if you were to go back to '09 you would expect these things to underperform and what we have here in the stables is that this is a declining series of highs and i think that divergence with the market ultimately a problem after having heard from hershey, good number, kimberly, good number and proctor went down on its number because so much is priced in >> all right mike, what are you looking at? >> the point here also is that we're looking at a space that's trading at pretty high and lofty valuations right now the average analyst price target for all of the constituent stocks is 4% higher than it's currently trading. that's not a whole lot of upside

and that's just a street view. here's another thing to think about. over a third of those stocks and the average price target for those analysts is lower from where the stocks are currently trading and this isn't a high growth sector and if you take a look, you can look at enterprise value and look at enterprise sales and that's an interesting one because right now as a group it's trading at a ten-year high in terms of valuation, but while the price in terms of valuation is high being the price of options is relatively low and that's just a rolling number that basically is a reflection of how expensive options prices are and they're not at their all-time lows, and they're not far off of them. so i kind of think in this situation where there's probably limited upside and there are a lot of things that could cause it to roll over and keep the trade simple and the 56 strike put and just 75 cents for that i would have actually gone out slightly longer, maybe july or august and i was looking for something in the 60 or

90-daytime frame this is a trade that you can be nimble with and it runs through that strike and look down and out and that's a simple way to make an inexpensive way. >> sometimes simple is the right way and a lot of times we try to outsmart ourselves and we come up with a complicated trade. when i look at this trade mine basically has a little more than a month and a half he's risking 1.5% of the stock price that lines up with the level where if it does get rejected and when you think about how the underlying names and are how sensitive they are in the dollar that apparently is breaking out right now i can see a lot of scenarios where investors would dump staples in the next five on six weeks and this would be a good way to play it so many have popped on their number and all of that expenditure of energy simply return it to its former high and what is it that would compel it from here when we've heard from proctor, coke and pepsi and so forth? >> is there any validity if you believe that the markets are

going to have some sort of a downturn or that growth is in jeopardy somehow around the world that maybe these companies are better off because they have pricing power which we saw in the earnings report. they were able to raise the price and for them that gives them a cushion or margin that other companies and other sectors may not have >> that's a legitimate idea and that's why they're trading where they are and we're trying to could why are they trading at ten-year high and you just provided the answer >> here's the thing. low beta stocks, and if the market rolls over, and that doesn't make it immune to a decline and we're looking at a possibly milder decline and that will be priced into the option as well and that's one of the reasons why that's a big issue and the consideration here >> for everything options action.cnbc.com. while you're there sign up for the newsletter and it's a hotter ticket than the avengers movie here's what's coming up next

♪ ♪ the ipo party is raging, but mike ko says it's one hot name that's about to be a bit of a buzz kill when it reports earnings he'll break down the trade plus calling all options action fans, reach into your pocket, grab your phone and tweet us iur question at options action. ift's nice, we'll answer it on air when "options action" returns. ♪ ♪♪ ♪♪ ♪♪

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i'm not really a, i thought wall street guy.ns. 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 welcome back to "options action," the unicorn stampede is running rampant.

44 to $50 a share giving the valuation as high as $90 billion. slack, the office messaging app offered to go public during a direct listing on the nyse with a valuation of $17 billion all of the recent ipos are taking flight. how should you play this hot space. mike is over at the plasma looking at one stock that's more than doubled since the debut last fall and that would be yeti mike, take it away >> i think any austinite will be a big fan of yeti and their products i mean, this is a phenomenal product that they're making. the thing is this is a stock that has really taken off as you can see here and some ipos have been disappointing and going into earnings, right now the options market is implying a move of about 15% in either direction. given how far it's moved and the fact that it's been progressing

at a 45-degree angle here, i think there's some chance that the earnings here might result in a somewhat modest move, certainly to the upside there might be some limitations, so we'll look at trading a call calendar here and because we've had this big rally into earnings and because we've had this volatile move right here both the stock and the options are expected and let's take a look at the trade and the may 3rd weekly and these are what expired in one week. selling those for $2.40 and then buying the august 35 calls against it for $5.20 net-net you're going to spend $2.80. this graph basically does demonstrate that if you held this entire position, let these first once expeer and hung on to the august 35 call and they need to be above 37.80 to be profitable however, in the many time, if they announced earnings and the stock lingers within a rage of

down 15% or up 15% you will probably break even and if it stays here you will actually see some profits and the near-dated and very elevated calls right here are going to expire close to worthless and you'll still own the august 35 call and the stock is expensive and i wouldn't buy it down here although i really like the products and this is one way you can take advantage of the fact that those option are very expensive and it is grd to go into theups, just by buying outrights the way we did in the consumer staple, for example >> we're talking about simple before and then threading the needle there aren't too many stocks we talk about that have 90% implied volatility and he's got some opportunity to sell very near-dated options to help finance the purchase of longer dated ones and i think that makes a lot of sense and the risks are defined here and it is

a very unique situation they think we'll need more and more of these as we talk about pins and lyft and all of these things and it will be interesting options trading around the ipos. >> at what point, carter, can you use the shirts >> if pattern interpretation are juxtaposed with past price about whether you're about to clear, form or supply and we're about to recover from a substantial downtrend and there's not much to come to a judge about, that being said this did sell off in the december low and an ipo just before december and it's with the market and it's 12 to 36 and it feels a bit stretched and complacent one day,'s perfect thing, and you trim and take some other measures. >> we compared different ipos and sometimes you get concerned and will these companies ever face profitability >> i think we all know it's a

pretty simple business model and an expensive product and one that people want to buy and the question is if they'll say something during earnings. i think that's less like than seeing it trade sidewaysor a little lower. >> 3m getting crushed and we'll tell you how to make money back. >> have a question for the traders or tell us how much you love us. we're live at the nasdaq at times square more options action right after 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.

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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. ♪ welcome back to "options action." time to take a look at our open trades 3m could be primed for a breakout >> what you have in many ways say double bottom of sort, but you also have this well-defined inflexion.

turns and now turning again and so the bet is that this is on its way to meaningfully higher prices. >> you can buy the june 210 call, spend $6.50. so a little over 3% of the current stock price to make a bullish bet that will, of course, capture earnings and a decent amount and beyond >> well, 3m shares tanked off its earnings this week after warning a slowdown in china. how do you manage a trade like this >> this is an important one and we probably should have sent out a tweet so do follow us on twitter although we didn't in this particular case it did almost exactly what carter suggested and those were up 100% and those were going into earnings and they had become in the money calls and they came more quickly and they behaved like stock than they did like an option and this is a situation where they're going into a catalyst and you want to think about rolling those calls and it's too late in that instance and this is basically guidance going forward here's something else. for those of you who look at

delta and something do, it's probably time to adjust it that means it's in the money and that would be a good time to think about rolling out or simply taking profits. >> that's right. it was good and then it wasn't and when it wasn't it was really bad and you might have seen this this was the single worst day for 3m since black monday, 1987. that day it dropped 26% and the drop this past week was 13 and still, this is a world-class beating. >> the most important thing though, is these guys put the trade on march 29th and the earnings were this week. so weeks ahead of time and now you have a 70 delta option and you have to re-evaluate the whole trade. it looks like very different than it did on march 29th and you had these gains and that's why you always have to revise your view into an event like this and roll up and out like mike suggested >> next up, dan predicted that energy could be primed for a pullback >> we may get a trade deal and

stimulus stuff and oil may pop and i think there may be technical trade drop last week, dollar almost traded at a new 52-week high and the strong dollar in crude oil not so good together and i think you look out to june expiration and you look at the xle and june, 53 put spread >> it fell 4% taking energy stocks along with it dan, what do you do? i was pretty fired up there. i was dead wrong and nailed the low in early march and it was at 63.75, and over the last four or five weeks at this point that thesis that i just laid out might be playing out now and that trade that cost $2 is now worth about 80 this is a situation where in the wrong trade and you want to take that premium and you may get followthrough on monday and you may get better prices to take this on and i see this going lower into the summer.

>> the tale here is crude went higher and higher and higher and yes, they're exxon which actually did poorly on its number, but the key names like schlumberger and halliburton where there was risk embracing nature and never coming to life and then with crude coming off now 66 to almost 63 or below what's the thesis for being on >> as a halliburton shareholder, don't i know it? i'm with these guys. it hasn't seen anything good. >> up next, your tweets and the final call 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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♪♪ ♪♪ ♪♪ time now for the final call. carter >> the staples have come a long way and the greatest, they put up great numbers and did not go higher. >> mike, ko, looking at the staples, they're pretty expensive and the options are inexpensive and i don't see a lot of upside and june 56 puts for 75 cents

dan nathan apple reports tuesday night. we said the implied moves about four and a half. interestingly enough, that doesn't include 10% on this negative preannouncement. >> that does it for us, see you back here next friday at 5:30 easter >> 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 if you want to make friends, i'm trying to make you some money. my job is to teach and put in context. so call me or tweet me if you thought this week was overflowing with earnings, you ain't steen nothing yet.

it's not all earnings all the time toda