. we are live at the nasdaq in times square this is my first time ever hosting the big oa hang on folks, tray tables up. seat backs forward, seat belts, it could be a bumpy ride here is what's coming up >> one chip stock just had its best week in ten years, but mike toe and guy adami think the smoking semi could come back down to earth. they'll lay out a trade in the ultimate actions tag team. >> plus. >> it's alive, it's alive!

>> after lagging the market all year, health care is showing signs of life, there's one group that's about to shoot up he'll break it down. and tech stocks just had their best first half since the late 1990s, but dan nathan says there's one name that's come too far too fast, and here's a hint. >> can i just say maga look at maga. >> you will need the maga or the faangs >> it's time to risk less and make more, the action begins now. and we do start with the tech trade that is raging this year the sector is up 26%, best first half in more than two decades. the four biggest tech stocks, microsoft, apple, google amazon adding a combined 600 billion in market cap for 2019. will these tech titans continue to rumble? let's get in the money dan, i hear you've got that

acronym, maga, it's not the one i'm familiar with. >> we're going to make acronyms great again. let's talk about those four names, microsoft, apple, google, amazon $600 billion in market cap in the first half of this year. one thing that's really interesting if you chart them all together, which we obviously do here, these things kind of well off their highs, all of them except one. the m in maga, microsoft google is underperforming but for some very fundamental specific sort of things, and i think microsoft's a name really worth focusing on here it's up 32% on theyear as we head into july, we know we're going to get their earnings there's the chart of the four of those together i think what's most interesting about that, while they made a new high back in april, they did not confirm the high we just made a couple of weeks ago a lot of that has to do with the relative underperformance in the last few months of apple, google, and amazon let's focus on microsoft here.

this thing seemingly was making new highs every day for the last couple weeks and made a new high last week. the thing has kind of cooled off a little bit here. that chart is interesting to me because, you know whren it brok out above 120 it just kept going here there's possibly an air pocket below back towards 120, which was the june 3rd low here. what are we thinking about here? this thing is kind of getting expensive, trading 29 times on a trailing basis, 26 times forward earnings these are earnings that are not growing hyper fast like you might think in faang sort of names here on a p.e. to growth at two and a half times, these are like 15-year highs for the stock. the way i think about this is there's a lot of positive sentiment that's making this a very, very crowded trade microsoft's expected to report earnings on the 18th of july that is right before july expiration i think they look relatively cheap. here's the thing what i want to do here. because options look so cheap on

a near term basis, because we do have some of these other macro issues that can create volatility, i think taking a shot on microsoft for a pullback over the next few weeks makes a lot of sense because of those at the money options being so cheap. today when the stock was trading at 134, you can look at the july 19th, 134 put and pay $2.90 for that that breaks down at 131.10 that's where the stock was trading a week and a half ago. to me i think there's a really cheap way to make a bet in a very crowded name that also has multipreside multiple catalysts. >> the challenge is that you actually need something to happen, and you need that to happen within a specific time frame, in this case july expiration that's one of the reasons why when you just go outright to make directional bets, you often will find the probability of profit is less than 50/50. here's one thing i'd like everyone to think about. these puts are exceptionally

cheap, 2 1/2 percent the current stock price. do you think even if microsoft ends higher on july 19th when these expire that it's going to go straight up, that it's not going to have any volatility at all? at which point this trade actually would be profitable that's the reason when options are as cheep as these are you want to buy them actually, in this case the probability that at some point it's below 134, below 133 is actually not so low. >> and it's not bullet proof, right? we know that it dropped 9.5% in the month of may so that it too is vulnerable to general selling or specific selling. it's one of the most favored stocks in the world. it's a beast, but sometimes even beasts have setbacks >> i'm just thrilled to be here. i could just sit and listen. i feel like i'm a viewer. >> it's an education, isn't it >> for me it is. >> don't i look handsome >> i like the jacket dan nathan correctly mentioned valuation. it is expensive with 12% eps

growth rate. at a certain point valuation matters, in the previous show "fast money," carter pointed out how the market's probably poised for a rollover if the broader market rolls over, if we don't have some magic deal with president trump and president xi, i think the trade he outlined is an exceptional one. although we have all loved microsoft, i think categorically there's a rollover in place. it's not an indictment of the stock. it's just that i hate the expression, but trees don't grow to the sky, and at some point this rolls over. i think it does this quarter. >> dan, do you want to jump back in and conclude by reminding us what the trade is. >> the stock's at 134, the put and the call, the 134 strike in july expiration would cost you a little less than $6. that's about 4% in either direction. the trade's quite simple, you don't like my bearish call, you can buy the money call for the

same price the put is trading at the point is you are risking 2% to make an at the money bet either higher or lower, whether you buy that put or boy that call to me that looks very dollar cheap when i consider the events i think are coming out and one of them the big one being earnings. >> thank you very much carter has been misbehaving again, and we're going to send him back to the -- we voted on this we all want him to go to the plasma. >> what if i say i'm staying here. >> you must go to the plasma the sector that has sat off the rally, is health care. underperforming the rest of the mark market but there is one group within health care that's breaking out we're going to check out the xpi bee o bio etf. >> a very controversial space, you've got the big hmos under pressure, certain names like j and j struggling bio tech has a bit of life to it

of late, and that's appealing to a general momentum player which is what technicals are about in the end. here is a long-term chart. i just wanted to make the general principle about trend work one of the things that's as good a technique as any is stick with the trend. what we know is that when the line flattens, it's a pretty good idea to be involved when the line flattens again to not be involved. when the line flattens again to get back involved. and yes, that's not saying you're going to get the absolute bottom or the absolute top, but what it is saying is that when the trend changes, try to change with it. and what we have now is it's starting to inflect upward again. so the basic principle of trend work is in play here let's zero in on this and get it in more detail again, the slope of a line, you can see it ever so gradually is starting to climb. what we have again is for the firsttime, the average is now

actually inflected upwards for the first time in about two plus years. that's an appealing setup to my eye. i think it's a place to belong in an otherwise languishing area of the market. here is the actual chart with high low close data. i think the lines can be drawn many ways. one of the most optically clear would be this. we have, you know, within this period this head and shoulders bottom we have this well defined neckline and ultimately the thinking is that this big cup and handle is ultimately resolved up and out. like this. just to put it in context, we know that bio tech has lagged here over the last two years up 8. i think you're going to get a little convergence, both of them going up and bio tech going up more and both of them going down more and bio tech going down

less >> carter has done his two minutes. >> he can come back from the penalty box. >> it's not a penalty boxme. >> no. >> actually, i know usually at 5:00 you're busy having your blue plate special at denny's, ty, but we're actually doing a show called "fast money" and dewe do a segment called the power pitch, dan e a few months ago we power pitched a company called sarepta. they have real stories behind them i agree with carter. steve brussels mentioned this, you knew some of the rhetoric over the last twonights would go right after health care we mentioned that on monday. what i will tell you is unh is too cheap relative to itself and relative to the broader market, and now that these debates are done, i think united health is a buy. >> mike, talk me through your trade in bio tech. >> i don't like spending options premium if i can avoid it. the reason what we were talking about before, when you spend

premium, you need something to happen, and you need it to happen by your expiration. if we can find a way to make a directional bet without that happening, i was trying to take a look at some levels where i can put on a call spread risk reversal, lay out no premium, target the 93 level we saw in early april but not have downside risk unless it hits down to 80, which is essentially the level we've been bouncing along. specifically the trade was the september 8893 call spread risk reversal you could sell the 80 puts for 210 and sell the 93s against it for 220. net net you're laying out no premium. the idea is you're going to get exposure from 88 worst case, xpi pulls back by 10% and you're going to own it at 80 bucks which is essentially the level it's been bouncing off for several months now. >> this is a good example of where you're kind of marrying the technicals with mike's option strikes and i think that

80 was a level that got a lot of support. you think about it, the worst-case scenario in september expirations, the xpi at 80 bucks but $5 exposure up to 93 and it costs you nothing. the most likely scenario is this stock is banging around in those levels as it goes down towards 80 you're going to show losses as it goes up towards the long strike or above it because you're almost there, it's going to show gains. this is a good trade in an etf like this because you don't have the gap risk that you would in an individual stock where a nose announcement could come out. >> and that's why i'm willing to be short the 80 puts and the 93 calls. that gap risk works both ways. you could have a jump up or jump down in single stocks and indices that's far less likely unless you have some major market moving event. >> we're going to take a quick break. we've got more "options action" just ahead and here is what's coming up. ♪ yeah, "options action" fans, get

ready because there's about to be the ultimate tag team on one soaring semi stock they think has come too far and too fast. you won't want to miss it. plus, calling all options pass, reach into your pocket, grab your phone and tweet us your question @optionsaction if it's nice, we'll answer it on air when "options action" returns. ♪ ♪♪ ♪♪ ♪♪

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welcome back to "options action." micron seeing a huge move up 16%, best performance this a decade how should you trade the stock guy and mike are at the plaza with the ultimate options action tag team, guy take it away. >> just rocking to the music. >> love that music, right? everybody's all giddy about micron and i get it. the quarter was fine, but wedbush just came out and initiated with a $30 price target i can do that math in my head, but that's a lot lower in terms of percentage. number one, number two, why? because revenues keep declining. d ram revenue which is like 61% of the company down like 45% year-over-year nan revenue 31% of the company down 25% year-over-year, and

those numbers aren't getting any better if you look at their guidance you have declining revenue, not good that's number two. and number three, i don't know how they pronounce huawei with an h in front of it. what i'll tell you they are in a loophole, they can still make sales. if all things go appear shaped at the g20, which i think they will by the way, i think president trump tifigures out a way to close this loophole not good for micron. you know what we're doing is a little tag team now mike's going to tell you how to trade it. >> let's take a look here. it's kind of the theme of the show that i don't like to lay out a lot of premium i'm looking for higher probability of profit. what you're taking a look at is you think this move is too far too fast, which means it's presumably going to stop here or somewhere around here. we're looking for a trade that has a higher probability of profit this is trade when you sell a

call spread, three things are good we like the high probability of profit, the other thing we're doing rather than shorting a stock or selling a naked call is limiting our risk, and the other thing here is of course we're trying to play off of guy's thesis that the stock is exhausted. what's the trade here? we're looking out to august. when i was looking earlier you could sell the august calls for $1.70. if you did that you would be taking unlimited risk. we're going to cover that risk by buying the 42 calls for a dollar, net net, we're going to select $0.70 this call spread is only $2 wide that's a little over 30% of the distance between the strikes and what we were talking about before is if the stock lingers here you keep the money. if it goes up slightly, you can still keep that money. your max risk here is only going to be $1.30, and of course if it goes down you're going to make that money the idea here is this is kind of an investment strategy, you look to sell premium again and again. this is a situation where basically the technicals and the premium's sort of set up to make

this trade work for us. >> thank you, gentlemen. call spread on micron. >> he's selling the call spread, high probability of success. if you really think about what guy just laid out, this stock could be right back down, the 10% it just gained in, you know, the last two trading sessions on, you know, some bad outcome from the g20 here. this stock to me was a very crowded, short interest isn't very high, hedge funds were pressing it for the fundamental reasons. they got squeezed in march when the company reported the stock cap up 10%, almost to $44, and it came all the way back into the mid-30s for the next few months i like mike's trade. i think there's other ways to do it depending on how convicted you are. >> all the makings of a dead cat bounce it's one of the worth performing semis and while the headlines were best one day must'in two y a month ago at the time was down 60%, meaning so what, right? it's a busted company or a

busted chart or a busted story and you heard what guy had to say, why be long. >> gentlemen, back to the plaza. tie it off for us. >> risk less make more and actually in this case i want to make a quick point, to dan's point, he was basically saying you could make basically lower probability bets and try to hit one over the fence this is the kind of situation where you're making a bearish bet. we're basically trying to hit a single here. >> single's always score when you put them together. gentlemen, thank you very much. up next, oil sinking today ahead of the big opec meeting next week in vienna. we will tell you how to play that one i've got a question for the traders. maybe you want to tell me i'm doing a great job hosting or maybe not so much. send us a tweet, and we'll answer it later in the show. live from the nasdaq in new york city more options action coming right at you (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. ♪ it's time to look back on some of our open trades. last month mike and carter bet on an oil surge. >> the trade uso making the bet again that these minor selloffs

are going to give away and they have in the past to recovery moves. the sequence would call for a higher trade here, long uso. >> i was looking to july, 13 and a half calls, trading about $0.42 when i was looking at this earlier. >> that was may 3rd, the uso down around 4% since the time of that trade mike, how do you manage this ahead of the opec? >> one of the reasons that you put options trade is that you limit your risk. we were talking about that before at one point this went from 13 to i think 10 1/2 since we put that trade on. they obviously fell right out of bed. our trade risked about $0.42 total. these things are worth about $0.06 now. i wouldn't let them go at this point because they're basically a little lottery ticket there. obviously we got the direction wrong on the underlying and the reasons we put the options trade on is to limit our risk and in this case it did fortunately for us. >> and actually, to say it's down 3% is being generous. the peak to trough from when we got in collapsed down almost 20%. yes with this recent rally and

uso moving up, it's down only 3% from when we started but the trajectory has been nothing short of horrible. >> nothing short of horrible, critique. >> interesting, the sentiment toward oil seemed like bubbling up a few months ago and to have it go from 66 down to 50 in a straight line from may to june was pretty interesting when i think about it, if we don't have a trade deal, i'm seeing lower oil i'm seeing a retest of 50. really second half growth is going to be called into question at that point. >> that's the thing, does growth outweigh the torching of the u.s. dollar by our federal reserve and the geopolitical risks that associated with crude oil right now. right now it does. i think you're going to see a spike in crude oil at some point. i think it's going to come objeon the back of the dollar getting bludgeoned which i think is going to happen. although the trade has been difficult, and i understand why, i do think there's going to be a rally this oil.

>> dollar bludgeoned >> every central bank on the planet is in a race to devalue currency u.s. central bank, the federal reserve has done that, and it's going to happen in spades as the summer progresses. >> guy, up next, your tweets and the final call we'll be right back.s 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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♪♪ ♪♪ >> i have had a wonderful time thanks to kru guys this is fantastic. time for the final call, corey you go first. >> bio tech on the long side, xpi to get there. >> get long xpi but don't get long premiums, dan. >> so microsoft, i think this one's going to be volatile pick a direction, you're risking about 2%, but i like it to the downside. >> this is a first, a four person desk with tyler mathisen, this will go down 30 years from now, people will still talk

about this night. >> broadcasting hall of fame. >> back to you ty. >> thank you, guy, that does it for us here on "options action." don't go anywhere. you know what happens next, "mad money" starts right now. "options action" will rejoin you next week at this time see you. - [announcer] the following is a paid program for automatic home standby generators. brought to you by generac power systems. - [narrator] there's no place like home and today, you rely on power more than ever for all the comforts you love. but when your power goes out, you feel helpless, out of control, you're in the dark without air conditioning or heat. food begins to spoil. many people lose clean, running water. the home network and internet are down. your home security system is useless and the basement sump pump is not working.