>> hi there. we're live at the nasdaq in times square, carter, mike and dan are getting ready for the show behind me here's what's coming up -- ♪ ♪ >> tech stocks got taken out, but the trade tantrum is weak, and dan nathan says there's one stock reporting earnings next week that could make or break the market rally he'll give us the details. plus -- >> get in, we're going shopping. >> and so is carter worth and mike ko because they say there's one retail stock to buy that can

weather the market volatility. carter's on the charts and mike is on the trade. >> and later bond king jeffrey gunlock just made a bold call on the markets. >> i think interest rates are likely to go up. >> and he's got a way to make money using options. we'll break it all down. it's time to risk less and make more the action begins now. >> and let's get right to it because, as you know, it was a wild week for the markets and tech in particular the sector falling more than 3%, its worst week of the year as trade tensions are front and center and dan says there's one tech stock reporting earnings next week that could make or break the market rally let's get in the money what are you looking at? >> clearly in technology, they report wednesday after the close and the options market is implying a 5% move in either direction for that point and that is a 3.5% average over the

last four quarters and what's interesting to me about this earnings event next week is that when they reported in mid-february they put up a stellar quarter and gave great guidance and this was after they had been six weeks into this recovery off of the q4 disaster and a lot of investors were very surprised about their execution and the ability to give guidance to this period and so i would tell all of you, go back and watch, jim cramer had had amazing interview with it was a steady hand in what was a difficult time and now i flash forward a few months here and i think about what we learned this week and there is no quick resolution to this trade skirmish and we know that technology is in the way and huawei, one of cisco's competitors is right in the middle of this thing and i think about intel, which, you know what this stock has gotten wrecked. i want to put a one-year chart up very quickly. it had a 10% gap the last week

of april when they gave their guidance it was a disaster and then they had another 10% gap at an analyst meeting this week after they guided down again i think about cisco and it's already 10% off of its 52-week and almost 20-year highs and much like intel was and i think there's potentially another 10% gap back to that breakout level just below 50 bucks. i want to do one more chart. if you overlay intel and cisco against each other over the last 20 years and pretty interesting here they are two of the only mega-cap tech stocks that have not made new highs and we know the nasdaq has been making new highs for some time. intel had the 20% drop and maybe there's another ten coming one last point here and this is not about cisco's execution and they will continue to execute well and the there are's been strong and look at that in the last ten years and this p-e is getting right back up to the ten-year highs at 17.5 times and that is really rich for a company that's growing like this and it's kind of priced for

perfection here and the slightest bit of murky guidance, i think this stock will outperform that 5% implied move to the down side so to me, this is a simple trade here and you look at the aspiration and that's next friday when the stock was trading at 53 and a quarter and paying one dollar and selling one of the 49 puts at 20 cents and you break even at 52 and you can make up the three between 53 and 49 your max risk is less than 2% and one-week trade playing for a downside move, where if it happens, this is not an indictment about cisco this is not good guidance. >> the charts are setting up for something potentially nasty. >> i think the charts and fundamentals, as well. >> you might ask yourself why in a name that's not overwhelmingly volatile >> ask yourself this question. the options market breaks out

for a 5% move for a company of this side and are they pricing in the potential and that's why they're being looking at a put spread and the higher implied volatility and the direction that you look at to mitigate the expense and the thing you want to think about is, you were talking about valuation and it's trading closer to 20 and a half times trailing earnings and that's basically a five-year high you have to ask yourself, is this thing going to give you stellar guidance and results or are we basically trading at the upper end of its valuation range and i think it's the latter? >> the market we know, most stocks peaked on may 1st this peaked prior about six, eight sessions prior so while it's the same trajectory as the market that makes the low on christmas eve and rallies for the prior four months and the issue here is this is cyclicality within tech in a way and the move from 40 to 57 is a 42% move and this giveback of almost 10% is bigger

than most techs. so you have an earnings event and there's more recovery move >> spending a buck on the book spread, this is less than 2% of the current stock price. even if you hold the stock and you're concerned about this particular earnings result and this is an effective way on. >> and i want to make one other point and we had this massive reversal in the market and cisco closed up on the day and i think we can get momentum followthrough into monday and when you're targeting for a wednesday close and you want to give this thing some time and you want to get your strikes correct and this is something that i would look to do early in the week possibly when the reversal has petered out a bit >> you want to throw these in your pocket? >> there we go >> i never wear a pocket square. >> it's okay if you do that. >> the dow swinging 450 points

to end the day and check out walmart and the best performer in the index and holding up in spite of the volatility. is this the ultimate hideout trade and how should you play it into earnings next week? >> carter, do you want to go to the plasma and break it down for us >> walmart, of course, is within the low beta and it's a staple even though it's a general merchandise and so well, it doesn't have the stable quality of a coke or a pepsi or soap or cereal company in many ways because it's a grocery store it is very sort of low risk what i'm thinking it's an offensive and defensive play first, look at all of the underperformance so of this entire decade, there's your '09 low that has limited growth to underperform and the underperformance is pretty pronounced. you're talking about this over the last decade versus that, 100, 300 yet over the past year, watch what happens it all flips around and over the

past 12 months it's equities have been slowing, and walmart is making progress and i think it's both orc fencive and defense and the market participates and in the event of a great sell-off, walmart in almost every other instance has held up well with this, let's look at a few charts and yet, i think the twins, and we're working into the apex and the presumption is there's a resolution it does have earnings coming up? >> where could it go as a minimum? >> if weigh put that to the prior high, i think at a minimum that would be their 4 or $5. and then with a little luck and

some backing and filling and then a rell breakout, but the trade object i have here would be $4 or $5 just to the prior high. >> okay. what do you think? >> what's interesting is this isn't a name that we typically think of being a high-volatility stock and i think that's one of the points that carter is making here one of the things that i think is interesting, though is whether the stock starts to make a move it can make a fairly sharp one. take a look, for example, the move that we saw late october, early november basically to the lows that we saw in december that was fairly sharp and the recovery that we saw thereafter. even though the intraday volatility is low, call it four week, eight weeks and something like that, you can get fairly significant moves in the stock the other thing i would say is it's not overwhelmingly cheap and it's not a huge grow are so my inchination, andist look locking at the july calls, bear

in mind that i think they trade the well, give yourself some time for this to play out and that's how you want to make a bullish bet. >> aec wooend where walmart got downgraded and i can't remember the firm, but cut to sell somewhere. >> the technicals sets up as a constructive thing and it's building a lot of steam and the fact that it acts the way it does when you have that negative sentiment downgrade and the way the stock rerecession just don't have to go and how do we pass through the tariffs? they go back to the consumers and at the end of the day this looks constructive and it trades

really bell and i think you guysor to something and i like they did fined risk of less than two months at the stock price. >> keeping in mind the defensive part when walmart dropped in '07 down 27% and what does the s&p do definitely walmart will outperform >> we have more "options action" still ahead. here's what's coming up next. >> options on tlt, the etf and on long-term treasury bonds has never been cheaper. >> the bond king out with a bold call on interest rates this week we'll tell you exactly how to make money when the billionaire investor plus, calling all options action fans, reach into your pocket grab your phone antwd eet us your question, we'll answer it on air when options action

returns. ♪♪ ♪♪ ♪♪

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 ak woet ", gundlach, the billionaire spoke, and i spoke to him on halftime report. >> the tlt and the etf and long-term treasury bonds has never been cheaper, ever, and is completely plausible that that volatility could double when people change their mind and goes back to, like its average would be double where it is today. so my idea was why don't we take advantage of that and i don't think rates can really stay here for a year at the long end

>> so what exactly does the bet mean professor ko at the plasma with a little options 101, mikey. >> when we hear jeff gundlach talk about rates it would be rise of us to listen we can take a lark at the tlt and that was the etf that he was referencing the 20-year bond etf. so you can look at this as a proxy and you will see this rise and it will also be true let's take a look specifically at what he was talking about which is the price of options and this is the five-year history at the money help implied volatility and we can describe this as an option we are basically for all-time lows and this is about as low as you're going to if the

par of it is that vitts hasn't been moving around that much, but again, we're eight a situation here where it can't get much lower than this, so it either stays here which would already be asking quite a lot because we've had a low volatility environment for quite a period or it could rise. he then was talking about putting on a straddle. in tlt in this case, i was looking out to august with the 125 strike which was essentially at the money at the time you can spend $2.30 to buy the put and their 2.30 to buy the call and put those together and approximately 4% and slightly less, maybe than the current level of tlt how can a trade like this potentially make money >> well, obviously, if it goes much higher it has to rise by about 4% and you will make money at expiration or lower by a comparable amount. at expiration you can make money

as bell. even though tlt starts baupsing around more the priss of options, even though decay, and you will get some offset there and that's one thing you can certainly do another possibility is that he's hedging his trades and that makes a great deal of sense and it is trading at the lowest price you've ever seen and there is a function for how low they can go it does make sense if you think about buying it there because you may lose or risk very little to potentially make a lots. >> we've been doing this show for 10 years and i can probably count how many times mike and i have said we think you should buy a straddle in something. what reefry gjeffrey gundlach,

have a peripheral view of where the implied volatility is at these multi-year lows and the tlt when the ten-year treasury bond was at 1.25% and right now it's at 1.26 and when we had rates at a multi-year high and the ten-year at 3 1/had it was at 112 the trade makes so much sense, but if rowe have a directional inclination you are going to buy that put or that call and it's half halved value of that strep >> there's a look at stocks and as they steadily climb higher, here's the thing with bonds what do you see when rates are low? convexity increases.

convexity describes the relationship between the price of rates and the price of the bond so we're in a situation right now where i think theoretically as well as just taking a look at historical numbers this looks al awfully, awfully cheap. >> consensus is that rates will go higher and every year for the past, count them up, rates don't go higher and in the beginning of the year they go 3.2% and the consensus has now been ratcheted down to 2.65 and you want to be long data treasurys. >> i think we'll go down to two. you would only want to own essentially the call side of this trade so depending on that at home, i do not i'll leave that to smarter people than i, but i will say that the options are very cheap so your directional bets are cheap and options are definitely the way to play them. >> coming up, small caps down

nearly 10% from their highs and we'll tell you what's next for that group plus if you have a question for us, send us a tweet at "options action." if it's a good one we'll try to answer it later in the show. we're live in times square we're live in times square more why are you so good at 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. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

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♪♪ ♪♪ ♪♪ should i take profits? michael. >> you know what, you can sort of split the baby on this one. why don't you consider rolling those and taking some of the

money off the table? the 288.5 calls are about $2.50 and the ones you own are $5. >> next? >> don't split babies, people. >> our next fan said with volatility, what's the best way to play an amd put spread? >> here's the thing, it depends if you're bearish or bullish if you're bearish, you want to sell the put spread. that's a way to take advantage if you're bearish, you can sell a call spread. this stock has showed tremendous relative strength versus intel, which we just talked about in the earlier show that's been down 20% >> final call? >> carter, kick us off >> walmart on the long side. wmt. >> mikey >> happy birthday to my mom today. >> nice. >> and buy some straddle tnt >> happy mother's day, too, in advance to all the moms out there. >> happy mother's day to my mom and my wife. cisco systems, again, i think

that bad guy that you're going to have this down maybe 5%, 10%. >> an interesting week next week between that and trade, who knows what's going to happen interesting to see uber next week a big week that does it for us. have a great weekend catch us back here friday, 5:30. don't go anywhere because "mad money" with my man cramer starts right now. >> 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 you to help you find it "mad money" starts now >> hey, i'm cramer welcome to "mad money. welcome to cramerica other people want to make fans i'm just trying to make you money. my job is to educate, to teach, to put it in context call me, or tweet me @jimcramer. this is the way hell weekends. not with a bang. but with a whimper if younl