hi there we're live on the nasdaq marketsite carter, ko and dan are getting ready for the big show here's what's coming up. ♪ ♪ disney shares have been on a magical rally oand one of the traders says its run is far from over he'll tell you how to play it. plus -- ♪ >> that sums up what happened to semis today and carter and dan say it's about to get much worse for the group. they will break it down. and later, at athleisure stocks are on fire this year, and mike

ko says there's one name that could be about to take a hit >> he'll tell you the name and how to dodge the sell-off and it's time to risk less and make more the action begins now. we start off with the semis getting trade worries. sinking 3% as the key players fall deeper into a bear market so will the semi smackdown continue let's get straight to the chart master carter worth >> it's a beg old mess in the sense that semis were so strong and drew in so much capital and it was one of the great headfakes of all time and a false breakout in fact, let's just look at it and start with that. this is a three, four-year chart of the semiconductor index and the sox and let's put the line out there. when you draw in a lot of money and it ends up being wrong that money that pushed it higher becomes an accelerant on the way out as people have to reverse

their positions. so not a good setup. now, most importantly, how do we know that it was always going to be a trap? >>. >> it's all about relative performance. the cyclical trade, even though semis broke out, their relative performance in the tech sector was never working. put the loips out here and basically there, is your breakout, but it was never con firmed and you were perform -- they're still doing worse than one could have chosen within the index and from there, let's look at this. that's the dotcom high and that's literally march of 2000, what do we know? it was a trap in this sense. it, quote, broke out just above the dotcom, and only to fall back and fail and this is a horrible setup longer term

>> so here is the etfsmh and so many ways to draw the line and one of several ways would be this and a classic trend and a break in trend another way to draw the line, of course, would be this which is a firly well-defined head and shoulders top on the minor basis with the neckline right in play and a break in this which is the presumption would give you something down into the mid to low 90s and it closed at 102 and change today, not a good sell. >> thanks, carter. today it's nathan and carter and what's your semitrade? >> he wants to sell the semis and i think the charts are interesting and they set up well mo what's most important since we had the sell-off -- the s&p about 7.5% and the semis are about 20% and they haven't made a whole hshg of a lot of it, and

you look at broad cam that night and that's the start of something that we'll see when you get to q2 earnings season and he thinks you see the retracement back to the mid to low 90s and i'll juf target 9 on the 80 was the low back in christmas or so and i think a break below 100, you find yourself in the low 90s over the next couple of months and the etf was trading at 103 this afternoon and in august, 190 put spread paying $250 for that, and buying the august puts and selling one of the august 90 puts and it cost you 25 on, and 90, you can make up to $97 and you risk the 2.50 and you are risking to possibly make extra money and it is controversial. this is also a name where if there was some magical relief to this trade war, this group is going to rocket back pretty

quickly, but i am just not praying for that and i think we'll have this thing pushed out and pushed out over the summer >> that might be the case if trade sort of gets resolved, but there are also cycle peaks in semis perspectively and it is not random that it stopped right dead cold at that dotcom era high >> talking about the nature of pricing and cyclical stocks, it's interesting, you often will see stocks look cheapest at the top and look most expensive at the bottom and that's because basically you're looking at trailing earnings and this is one of those situations, if you look at where broadcom, for example, is trading on a valuation basis and it is actually more expensive in terms of forward valuation today than it was before we saw this decline. that's how much further those expectations have dropped and there could be further downside and with respect to the struck are, we talk about put spreads aside and it's a catalyst that

raises implied volatilities and here's the situation where you have a basket of stocks and often times the volatility is less as i look at it rate now the implied volatility on smh is close to 30 and that's very high for some form of an inch debls and to mitt gate the options and that $2.5 to 10 maches a -- and when that stock broke, it broke hard and it's been cut in half ask it's 15% from the recent lows and it's kind of lights out for the group and everyone is saying, point to amd amd has a fraction of the sales of some of the biggest competitors and a third of the market cap is in nvidia and i would rather take my cues out of nvidia than one out of the park

name like amd. >> from a semi smackdown, disney is surging to new highs as they bet on the shares of disney plus when the play first started building in march. rival netflix shares have sunk into a bear market this disney dominance will continue what are you seeing? >> let's just talk about disney as a company, first of all it's a much more table and kind of a play to make than netflix netflix, we've for a long time said that it is an expanding space. >> disney, on the other hand is a proven player in the space, and they have a win are winner the valuation is not unreasonable and we've seen good stuff coming out of espn and for me from a fundamental standpoint almost everything looks good and we'll have some earnings coming up and the only thing that

concerns me here is that the stock has indeed been as strong as it has. we've had the huge move up so what do you do if you don't own the stock you want to, but you're just concerned about the fact that you've had that appreciation and you want to get long, but you're worried about that upwards gaffe i think the way you can look to play using a call spread risk reversal and we're trying to deal with the fact that options prices might be slightly elevated and also we're trying to give ourselves a way to participate to the near upside without having to participate to the near downside event and we might give some of that back the trade was the august 13 on, 145 and 155 call spread and spend $1.35 for the $1.45 calls and the 1.30 puts for $1.85 to help finance it. you will get participation above $1.46 and change essentially and those wind options will decay faster and even though you are laying

out a emproo yum i don't think it will be that bet. worst case is the stock will fall and you'll get more than that and you will basically offset the chance if there is a gap back down and you'll get long and higher than where it was before it broke out. >> so the entire subject is defined by the gap so disney is in a five-year range and it was stuck at 1.20 and it gaps up on $65 million and it's effectively a new ipo and hash price doesn't matter. it is not steep and it is not overbought i think it has more room to run and it's the kind of thing you want to be involved with one way or another. >> mike's said something about the trade structure and that's the out of the money put and that's out of the money call if he's short of them and that's by design because he gives him structure on slippage and the worst-case scenario and i'm

putting an order in and the stock to buy it at 1.30, and when i went there, if margin is not an issue and are and the trading account in's name that has identifiable catalyst. >> trading new stock is bought of the business and if you look at the valuation that was thrown on others like netflix you would say that disney looks enormously cheap by comparison and this is a way to participate without being concerned that you're getting in too late. >> netflix, on the other side of this is dormant. the thing has literally stopped trading and it's in a tight range, and equilibrium and someone will come along to break it out or break it down. it's a non-trade and a nonend. >> for everything options action check out ox action.cnbc.com and

while there sign up for the super cool newsletter. it's the best thing since sliced bread. really here's what's coming up next noop. >> activewear is hot, but mike ko says there's one name in the space making him more like an active bear. he will tell you the name and how to play it plus -- calling all options action fans. reach into your pocket, grab your phone and tweet us your question at options action if it's nice 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 action and after sprinting out of the gate, nike shares have taken a tumble and the stock fallen more than 7% underperforming rivals and underarmour and lululemon. mike says it's time to bench the stock and he's at the plasma with the call to action. >> let's take a look at nike they'll be reporting earnings on the 27th and a little less than two weeks away one of the things that concern me here and certainly the first of them is the valuation, and we have a chart that will give you some sense of where that is. obviously, we have an upcoming catalyst, is the stock going to go materially higher is it going to go materially lower and is it going to stick around here? we'll take a look at that as well and specifically one of the things that i notice side over the course of the last two years once they've reported earnings they actually haven't performed all that welcoming out of it let's take a look. step one, we'll talk a look at the trailing earnings and we'll see if we can clear the check marks just to get a sense of

this right now it is trading at 32 times trailing earnings and this peak to put things in perspective is less than 35 times. we're just off of the all-time high valuations that we've seen going back ten years so that's certainly one area of concern. what's another area of concern well, we can take a look here. over the last eight quarters looking a month from when they reported how has the stock done it's up 1.9% the worst it's done is down almost 6% and on average it's down about 1.3%, so putting all of those things together, it's hard to see highway the it can go materially her here, we can take a hook at the stock chart and i'm looking at this level that's $77.50, what is the trade structure i'm looking let's

calendar schedule and the will straights premiums that will dekay less, and here i can buy the 77 1/2 puts and that will cost me two bucks and i can it will sell the ones that expire in july. net-net i'll spend $1 to put the spread on. this chart is actually a little bit deceiving. why is that? because actually, if the stock does this, it just comes down to this level right here after earnings, this put is going to increase in value, but this one may well expire. so you can still see profits in this region after earnings as that option decays away and this one can appreciate in this region and the sweet spot will be right around 77 1/2 and $78 at the july expiration dan, what do you think >> when you go to mid-march when the stock got hit 6.5% the next day and it was coming off a high from not too far before that and

one of the main reasons was decelerating sales growth in north america and a very important region for them and they guided to low single digit sales growth, so you may say to yourself, maybe they have low enough guidance, but it also may be the case that may be with the same sort of headwind in this global supply chain. >> i like mike's fundamental view and i like the trade structure. the stock market doesn't act well people understand in sports the pitcher is not degree well, you get him out of there so this is a stock that's showing all of the things that would suggest distribution there's heavy volume and selling and it has another of heavy selling that makes incremental new low. it looks to me it's going to the low 70s. >> we often talk about beta. if you look at the market rolling lower and you want to be in lower beta names and this has

a beta of 0.3 and you think it's lower risk and take a look at how it performed last year peak to trough, it declined 23% and that doesn't seem low beta on the down side it has to do with high expectations and when you put those two things together that could have a lot of air in it and that concerns me >> mike went into the calendar aspect of it and you were bearish and you agree with carter and it doesn't act well and this thing could be back at 75 where it was a month ago. mike's trade structure and if you're convicted on the fundamentals and you'll miss and guide down again and you don't like the whole trade situation and you don't like the chart setup then you do want to actually target a put spread, right? where you're risking what you would possibly be making if the stock were to go down toward the short strike at 77 1/2. >> that short strike might stay the same >> you're getting more bang for your puck, but you need more

things to go your way. what does the market do generally over a 30-day bets, in this case, do i think there's more danger to the down side rather than the risk that it will pop on you. >> up next, gold hitting its lowest level of the year and there is another metal that traders should be looking at ahead of next week do you have a question for the traders? i know you do. dig deep into your pockets and send us a tweet we will try to are sw the question live on the show. we are live from the nasdaq. much more options action straight ahead (indistinguishable muttering) that was awful. 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.

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 back at the trades he predicted gold would shine

on >> we are making new relative highs rid now and it has bounced perfectly off of this rallying line over and over and over and it did it again and let me put in the top line and we are just now, you can see it here, we just moved above that high >> i'm looking out to august the 127, 133 call spread and you can buy the 127 calls which was at the money when i was looking at this earlier today. 2.55 sell the 133 call for the dollar against it. gold capped off its fourth straight week of gain. what are you doing now >> this demonstrates why we use spreads like this. the calls were 265 and they're 230 now and the ones we sold for a dollar are now 20 cents worth of decay much of the decay of the trade was mitigated instead of calls outright and i think we're well positioned and we have 63 days for expraegz >> we hit a high of 13.60 an ounce off the high and still a

bullish week and a bullish setup and then there is, of course, silver which the ratio to gold is a 26-year low it's the ultimate beta trade, if one is hoping or thinking there's more to come and the spillover effect in silver when it does happen it can be massive. back in may, dan said ford was gearing up to hit the gas. >> trump has told us that he will meet with president xi at the g20 on the weekend of june 28 are 20 in japan, and i think if we start getting some building sentiment that we have a trade deal then you can buy the june 28, 10.50 calls paying 550 sents and those are this 3% of the stock price and the break even is 3.5%, 4%. >> ford lost about 4%. >> i was plain hurt and nobody acknowledged that back then. >> that was hard on the ear. sorry about that, people the stock's down 4% and it does

not look like we'll have a trade deal tat and they pushed down tariffs on autos and if you thought they had the one-two punch with china, then this thing starts to rally and here's the thing, that 10.50, june 28th weekly call cost about 30 cents back then and now it's worth about five and you wait and see what happens next week and maybe autos rally and at this point you have a low premium bet that that would happen. >> what do you think of ford, carter >> that says it all. >> in case you missed it, he smirked and rolled his eyes. >> what does that mean verbally. >> just that, what a roll of the eyes and a smirk might imply verbally >> the valuation to me just looks so cheap that any good news, it does have upside and ers odrket doesn't like it and the'go reason for that >> 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. ♪

♪♪ ♪♪ ♪♪

we've got time for a tweet jim asks when you're selling a covered call and the stock price keeps rising when you roll the call up and out, dan >> great question. a lot of different inputs and scenarios. if you're long a stock and you want to stay long, you better make sure that you roll it up and out prior to expiration or you will get called away if the stock is above the short strike. >> time now for the final call >> carter braxton. >> buy gold, buy silver. >> very special guest trader sam kshg o sam? >> buyic. >>y shoe, not nike's stock happy father's day >> couldn't have said it better myself, but you want to make calendar spreads to make that bet. >> he's excellent on tv. >> a chip off the old block there. >> yeah. >> listen, semis and you sell them on rallies and i like carter's technical take and over the course of the sumter looks great and happy father's day to all of the '08 fans out there.

>> we'll see you back here at 5:30 p.m. eastern time don't go anywhere. "mad money" starts right now >> my mission is simple. to make you money. i'm here to level the playing field for all investors. i promise to help you find it. "mad money" starts now >> hey, i'm cramer welcome to "mad money. do you want to make friends? i'm just trying to make money. call me at 1-800, 737. i'm talking about the gigantic short fall from one of the largest semiconducto