we're live on times square on this cloudy friday evening but in the meantime here's what else is coming up on the show. >> up from the ground comes a bubbling crude >> oil is surging this year and it's about to bubble even higher he'll break it down. plus -- >> are you ready dance. are you ready for more video game earnings? mike is and there's one name that's about to level up he'll tell us what that is

and -- >> i'm going to go to disney world. >> i'm going to disney world >> so is dan nathan, but he thinks the stock is about to wake up from its dream rally he's got the trade it's time to risk less and make more the action begins now. >> we start right there with disney the stock has been on a magical run. they're up 20% in the last month alone. as it broke records with its premier of ajengers end game the options market implying a move of 4% in either direction dan is looking at disney >> so i think it's going to be interesting. i cannot remember the last time that we've seen a mega cap stop like this the way it did but really on something that was structural to their business that everyone saw coming and it was about this over the top

announcement from that investor day that they had on april 11th. they caught a lot of people offensively guard. look at the chart on a one year basis. we see this consolidation that happened most of this year and then an outer explosion, but you back it out to five years when the s&p has been skipping up about 15% on average per year and you see this massive consolidation and just a massive breakout above that 120 level. i think it's going to take a major sellout before this company has the opportunity to roll out their goods i don't think you want to go out and buy it in front of earnings. a lot of reasons are going to take some times to materialize into q 3 and q 4 but the trade could set up as a way to sell some of your term options and buy some longer dated calls so financing it, we like to call

that a call calendar you want to sell it a short and the stock trading at $134 you could pay 4 and a quarter for that calls at a dollar buying one of the september # 40 calls for 525 that costs you 4 and a quarter. what you want is the stock to consolidate above 140 between may expiration and you end up owning that. at that point you may want to turn into a vertical but the most important point is the likelihood of this stock gapping again to me especially above those highs in the next week. >> reporter: two are not very likely >> i like several things i like the fact you chose to strike out of the money. if you take a look at the stock on a fundamental basis it's

trading a little over its basis. this is a stock that obviously i think everybody is familiar with the fact they've got a lot of exciting things going on it has performed very well over the course of the last few years but i agree with you why it would gap up right now when you still need to have a wait and see approach i think it makes a lot of sense to put trades on this >> you can never have a zero odds i would say this, the setup, the rerating is classic. a conventional buy agreed upon is well defined stocks at a common level, the very chart that dan had there 120 was in play for four years and then a classic breakout. at this point it's been rerated to where it belongs and the odds are that it backs and fills for a long time neither getting much better nor giving back any of

the ground that it achieved on the netflix news >> and because this is an options show, another trade that you could consider, if that stock got back to 120 over the course of the summer that's the level where i want to buy it, you can sell the downside put. you can sell the july or the september 120 put. you probably get 2, 3, $4 depending on what expert it is out there and you're basically setting up to own it but really below that strike, i think you want the lean on that 120 level if you're looking to do it from a put sales perspective. >> oil takesing a hit this week. a surge in u.s. oil inventory and crude is now down nearly 7% from its april highs the chart master says there's a rebound brewing. break it down for us >> this is not ability energy stocks it's a dead area of the market

i don't see there's anything but misery the commodity, i think you've got to sell off its bible. so crude oil, no drawings, we know of course a fairly well defined head and shoulders bottom and then it all took off. let's look at this takeoff and put it in the context of where 43% and 57% just shows when you lose money it takes a lot more to get back but the set upabout the rebound is what's important. watch this we've come back to a difficult level. there are a lot of dead bodies here over in supply. that's an important concept and it is stopped at that juncture, but where it's pulled back here is very orderly. this little dip is in line with what's happened along the way. if i were to put in some percentages here you can see this so this is minus 6, minus 8. it's all fairly orderly and a

natural kind of thing to have give backs on the way up i think that's what you're wanting to do here here is the line and my bet is that we're going to respond, respond, respond to that line yet again. so normal to back and fill after having back to where we're over at supply and i think you get your next rebound here, i want to be along the trade is uso this is the etf that does it and making the bet again that these minor selloffs all are going to give way and they have in the past to recover moves. so the sequence would call for a higher trade here along uso. >> all right so what's your trade >> so you mentioned the fact that we did see that inventory just shy of 10 million barrels week on week that we saw that does only take us to about the five-year average inventory and we have a very strong

economy. we could see some increase demand so kind of as the charts are indicating i feel like this is kind of a pick 'em. it could go either way which is the reason i would be inclined to not sell any kind of downputs uso represents wti and wti is a little bit different than brent is we take a look at the term structure. right now there's almost a little bit -- the very front prices are a little bit lower. so i think what we want to do here a way to take a bullish bet without risks too much, out to july, those are trading about 42 cents. the idea here is you're not risking a great deal as a percentage it mait might seemz like a lot but consider how much this thing can move, where we have come from when we take a look at the

highs and the lows if it ends up working in our favor you have the opportunity to roll this up and out or spread and do things like that >> mike said he's looking to risk a little, make a lot. it's actually 2 and a half percent of the stock, it could go either way. it did break that uptrend that it had the dollar just pulled back a little, that sort of thing i think the most important thing is he's risking the stock and the etf was trading two weeks ago. you could have this thing right back at that level and what has been a very volatile sort of risk asset and a low roll volatility market as of late

>>. >> based on the chart of oil though and uso can you extrapolate that that's going to be the move in energy stocks >> highly correlated and a time they have nothing to do with each other they have not kept up with commodity. they have lagged the market and it's not so much, it's just not of interest of the investment community. few you ear running a growth portfolio, energy is 1 and 2% of your portfolio bench it's lost its import in the construct of many portfolios >> is that why you chose oil >> i have some exposure to some of the energy stocks my logic is there's been a lot of activity in the north american companies but that hasn't really played out in the equity. there's some real concerns right there. i think if you're trying to make a directional bet in oil, you focus on something like uso.

>> sign up for our newsletter, mike reads it to its kids every night before bed so what are you waiting for? here's what's coming up next >> it's been game over for the video game stocks but there's one name that could get a one up he'll break down the trade plus, calling all options action fans reach into your pocket, grab your phones and tweet us your question at options action if it's nice we'll answer it on air. when options action returns. ♪ ♪♪ ♪♪

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listen to your mom, knuckleheads. hand em over. hand what over? video games, whatever you got. let's go. you can watch videos of people playing video games in the morning. is that everything? i can see who's online. i'm gonna sweep the sofa fort. well, look what i found. take control of your wifi with xfinity xfi. let's roll! now that's simple, easy, awesome. xfinity xfi gives you the speed, coverage and control you need. manage your wifi network from anywhere when you download the xfi app today. 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 gaming stocks getting wrecked with the biggest names still below their week electronic arts not far behind but one name in the group is about to get a power up. he's over at the plaza with his call to action >> so i'm taking a look at electronic arts. i want to point out straight away that this is a contrary bet. it's essentially been disaster and one of then ares for that is competition here, which is

fortnite which is obviously a run away success, their competition in the space really aren't keeping up with that first person types of games a at all but i will point out that as i've seen the stock come in, most of that is actually just a result of an improving valuation because actually the revenues and the earnings has continued to grow and what we've seen is a significant valuation going on so the other thing i would point out too is that whether or not we think they can compete with fortnite, they do have some pretty interesting products with the madden football and my own kids have a lot of interest in those things here we can actually take a look at the chart and we'll let carter speak to it but this doesn't look too compelling but we have noticed that some of this weakness may have ended up with this sideways action.

not risk a great deal of money by looking at a calendar spread. this is implying about an 8.5% move on earning. i want to take advantage of that i'm looking here to sell the ma may 1, '00 calls and i'm spending a relatively small amount to make a modestly bullish bet in the short term. notice where the stock was trading today, i have some upside if it should, you know, have a positive response coming out of earnings i be i own that slightly longer response in case there's a follow through so i think this is a situation where the fact that a lot of the price decline is a result of that bet despite the fact that we saw some weakness in their

competitors this week and the fact they've had not a great track record >> so this is high octane stuff. you're talking about a stock on the lows at christmas was down 51% and it rebounded with the marktd and then had a quarterly report that was so bad consensus came in at 86 cents, the stock plunges and yet two days later they put out news about this apex legend thing and the stock recoups all the losses that's half the flow in the six-day period and that kind of action often happens when you reach a capitulation low so three bat quarters in a row what they say next even if it's bad is somewhat or totally priced in the stock. >> those bad quarters it's not as if it's contracting eps we're seeing slower risk of growth essentially they'll align themselves, i think we may be at

that stage now >> we talked about one in disney and one in a company like ea that has an event that's controversial at this point. i especially like selling short dated options because you're getting basically the odds are working in your favor. that move after a gap down 13% in earnings it rallied 30% they have $5 billion in cash and it's a washed out story so to me i'm not certain you want to be doing calendars if you want to be so contrary and depending on your conviction, because of the way this thing has a potential to move. >> it is a fair point and the options market is implying a big move this is why the other thing i think for everybody who's watching this at home we did a similar trade in cmg to the downside before.

you have to be nimble. you may not be able to wait until the next options action. we will provide some kind of an update on twitter, but if that second one ends up in the money, consider adjusting your trades considerably this is a stock that can move very quickly >> you've haefrd washed out. you've heard capitulation low, no one wants to talk about it. often that's the opportunity and i think there's more potential that it surprises the upside than collapses again >> coming up, lyft shares cruising higher today but still down 13% we'll tell you how to play the name into earnings next week and a question for the traders of course you do send us over a tweet you may be lucky enough to get it answered on air we are live, more options action right afrz this. (indistinguishable muttering) that was awful. why are you so good at this?

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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 look back at a kucoupleo our option os into earnings. >> we start thd year off with this negative preannouncement from apple

we have not seen an announcement like that in more than ten years the stock has gone up 45% and nearly a 45 degree angle on that you could use the the proceeds to buy the may 1.92.50 put >> that stock up around 4% since the time of the call so what do you do >> so that was a call or trade selling a call and buying a put. it was a hedge trade into a potentially volatile event it actually moved right up to that point so if you sold the may 212.5 call, a week later it's basically up like 20 cents or something like that that put that you bought with the proceeds of the call has lost most of its value here so the stock is up 7. you have to make a decision with

your long strzok position whether you want to keep that position intact. your long stock would be called away so at this point it is a market call. you're going to have to cover that call at some point and make a decision to avoid your stock being called away. >> apple popped on its earning and remember it plunged going into the earnings. here it is at 210. so to go up a dollar with that kind of news is not impressive >> and one month ago mike predicted that lyft could be headed for a breakdown >> right now the options market is implying the forward price for lyft, which was about $75 which i was looking at this today is actually closer to about 68.5 down in october so you look at this range, that's a little bit of upside. it's a lot of downside the october 77.5 calls for

trading for about 7 bucks. the 60 puts in october were also trading for about 7 bucks so if you sell those for 7 and buy those for 7, netanyahu you're not laying out any premium >> lyft is now down 13% and the company said to announce premiums >> so this was a better way to take a long position in the stock. there was a really high short interest in it if you put this trade on and you were short that put you ended up buying the stock 68 closed now it's implying a very big move into earnings i think one of the things you want to continue to do is continue to keep your cost basis low. you already own it at 60, now you're down around the 56, your idea is to keep lowering your cost basis >> so the stock closed at 66 and

a half today the implied move is $7 in either direction. i'll just make the short, high interest is still there. uber is coming next week this is a very important week for this stock for uber and for lyft and lyft rallies out of it. >> up next, your tweets and the final call 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. ♪

♪♪ ♪♪ ♪♪ time to take your tweets ryan asks, when would be the best time to use a butterfly strategy >> this is something you want to do going into a catalyst when options premiums are elevated. you want it to run to that short strike so you want to keep those things short dated and you're looking for situations where options would be a little rich >> time now for the call >> uso playing long.

>> i think you keep it simple in uso. it's a pick 'em trade here i would just buy calls >> i think the lyft sets up really interesting and i also think that disney probably consolidates but you want to play for a breakout later in the year >> mad money starts right now. the following is a paid advertisement for time life's music collection. ♪ chances are 'cause i wear a silly grin ♪ there are artists we'll always remember... ♪ mona lisa, mona lisa ♪ men have named you there are beautiful songs, words and memories that will always touch our hearts... ♪ it's impossible ♪ to tell the sun to leave the sky ♪