we are live at the nasdaq in times square this is my first time ever hosting. trade tables up. seat backs forward seat belts -- it could be a bumpy ride here is what's coming up one dip stock just had its best week in ten years but mike and guy think the smoking thing could come back to trade in the "ultimate options action tag team. it's alive it's alive

>> after lagging the market all year, health care is showing signs of life. and the chart master says 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 maga, i got maga. >> it's time to risk less and make more. the action begins in you the action begins now. the tech sector 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 so 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 that i'm familiar with. >> no. >> not that one. >> we're going to make acronyms great again. let's talk about those four names, microsoft, apple, google, amazon so that graphic showed us they gained $600 billion in market cap in the firsthalf of this year if you chart them all together, which we do here, these things are kind of well off their highs. all of them except one, the m in maga, microsoft. they're all having good years. google is underperforming. but for some very fundamental, specific sort of things. i think microsoft's a name really worth focusing on, up 32% on the year. is we head into july, we know we're going to get the earnings. there's the chart of the four of those together what i think is interesting about that, while they made a new high back in april, they did not confirm the high that we just made a couple weeks ago a lot of that has to do with relative underperformance over the last few months of apple,

google, zam. focus on microsoft this thing is seemingly making new highs every day for the last couple of weeks. it made a new high last week the thing has kind of cool observed a little bit. that chart is interesting to me because when it broke out above 120, it kept on going here i see that there's possibly an air pocket below back towards 120. which was the june 3rd low here. so what are we thinking about here this is kind of getting expensive. trading 29 timed on a trailing basis. 26 times forward earnings. these are earnings that are not growing hyperfast like you might think in some of those names here p/e to growth at 2.5 times this isser 15-year highs the way i think about this, there's a lot of the 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 that's implied volatility, the price of options i think they look relatively cheap. here's what i want to do here.

because options look cheap on a near term basis, because we have other macro issues that could create volatility, i think taking a shot on microsoft for a pull-back over the next few weeks makes a lot of sense because of those at the money options being so cheap today the stock was trading a the 134, you could look at the july 19th, 134 put, pay $2.90 for that. that breaks even down at 131.10. and that's where the stock was just trading a week and a half ago here to me i think there's a really cheap way to make a bet in a very crowded name that also has multiple catalysts the challenge with options very often when you put on long bets 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 go outright and buy puts to make directional bets, you often will find that the probability of profit is less than 50/50 but here's one thing i'd like everybody to think about as dan pointed out, these puts are exceptionally cheap, 2.5

percent of the current stock price. you have to ask, 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? it's not going to drift below the 134 strike at any point? at which point this trade would be profitable. that's the reason when options are cheap you want to buy them 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 we know it dropped 9.5% in the month of may 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 sometimes even beasts have setbacks >> guy >> i'm just thrilled to be here. i'm like, i feel like i'm a viewer. >> it's a vacation. >> don't i look handsome >> i like the jacket. >> dan nathan correctly mentioned valuation. it is expensive at 27 times

forward earnings or thereabouts, 12% eps growth rate. at a certain point, valuation matters. in "fast money" which you also hosted carter pointed out the market is poised to ar rollover. if the broader market rolls over, if we have some magic deal with president trump and xi, i think the trade he outlined is an exceptional one i do think, 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 things -- i hate the expression, but trees don't grow to the sky and at some point this rolls over, i think it doesn't into earnings. >> dan, you want to conclude by reminding us what the trade is >> here's the deal the stock at 134 the at the money strad tell, the put and the call, the 134 strike in july explanation, would cost a let's less than $6, to ur% in each direction the trade is simple. if you don't like my bearish call and you wanted did find your risk to the upside, buy the

at the money call for the same price the put is trading at. the point is you're risking 2% to make an at the money bet either higher or lower, whether you buy that put or that call. to me that looks very dollar cheap when i consider the events i think are coming out, the big one being earnings. >> carter has been misbehaving again. >> no, come on. >> he's been misbehaving again we're going to send him back to the plasma we voted, we want him to go to the plasma. >> whatfy just let him stay here >> no, you must go to the plasma the sector that has sat out the rally, health care, up just 7%, underperforming the rest of the market there is one group within health care breaking out. i want to check out the xbi biotech etf up 22% the chart master says it's heading for a hot summer rally. >> controversial space the big hmos under pressure. certain names like j&j struggling

biotech has a bit of life to it of late. that's appealing to a general player which is what technicals are all about in the end so here's a long-term chart. i wanted to make the general principle about trend work one of the things that's as good a technique as any, just 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. when the line flattens again -- 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 the line, you can see it ever so gradually. it's starting to -- zero in even

tighter. for the first time the 150 moving average is inflected upward for the first time in about two-plus years that's an appealing setup, to my eye. i think it's a place to be long 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 but one of the most optically clear would be this. we have 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 i like this. in context, we know that biotech has lagged here over the past two years. up 8 versus 20 i think you're going to get a little convergence, whether it's this going like this, and this going like this, or both of them going up, and biotech going up more, or both going down and biotech going down less. i like xbi on the long side.

>> carter has done his two minutes. >> unbelievable. >> he can come back from the penalty box. >> it's not a penalty box. >> no. >> actually, i know usually at 5:00 you're busy having your blue plate special at denny's tie. but we're doing a show called "fast money. we do "the power pitch," dan >> yes >> you might recall a few months go we power pitched a company called surrepta. a lot of these biotech names, they have real stories behind them i agree with carter. steve mentioned this earlier you knew some of the rhetoric over the last two nights would go right after health care we mentioned that on monday. whale tell you is unh is too cheap relative to itself and relative to the broader market now that these debates are done, i think united health is a buy. >> mike? >> yeah, so i don't like spending options premium if i can avoid it the reason is 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 actually just trying to take a look at some levels where i could put on a call spread risk reversal, target basically the 93 level we saw in early april, but not have downside risk until it gets down to about 80. specifically the trade was the september 80, 88, 93 call spread risk reversal. sell the 80 puts for 210, buy the 88 calls for 430, sell the 93s against it for 220 netnet, you're laying out no premium. the first week of april, topped out at 93.80 worst case, xbi pulls back 10% and you're going to own it at 80 bucks, which is the level it's been bouncing off for several months. >> yeah, so this is a good example of where you're kind of marrying the technicals with mike's option strikes.

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

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

w?w?uhió'ñó mno kidding.rd. but moving your internet and tv? that's easy. easy?! easy? easy. because now xfinity lets you transfer your service online in just about a minute with a few simple steps. really? really. that was easy. yup. plus, with two-hour appointment windows, it's all on your schedule. awesome. now all you have to do is move...that thing. [ sigh ] introducing an easier way to move with xfinity. it's just another way we're working to make your life simple, easy, awesome. go to xfinity.com/moving to get started. 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. mike criterion seeing a huge move this week, up 16% best performance in a decade after beating earnings tuesday how should you trade the stock after such a meteoric, if rare, rise guy and mike are at the plasma with the ultimate "options action tag team. guy, take it way. >> just rocking to the music love that music. >> so everybody's giddy about mike criterion i get it the quarter was fine but you know, web bush just came out and initiated, stock closed at 39 tie, they 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. derecommend revenue, 61% of the company, down like 45% year over year nen revenue, 31% of the company,

down 25% year over year. those numbers aren't getting any better if you look at their guidance so you have declining revenue, not good that's number two. and number three, i don't know how they pronounce huawei with an "h," doesn't matter i'll tell you, they are in a loophole that mike criterion has. they can make sales but if all things go pear-shaped at the g20, which i think they will, i think president trump figures out a way to close this loophole, not good for mike criterion, means in my world the stock's going down but you know what we're doing here, tyler, a little tag team now mike's going to tell you how to trade it. >> all right let's take a look here 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. essentially what you're taking a look at, you think this move is too far, too fast action meaning it's presumably going to stop here or somewhere around here. so let's take a look at a couple of bullets here. we're looking for a trade that has a higher probability of profit this is a trade when you sell a call spread, three things can

happen two are good, one is less bad than shorting the stock. we like the high probability of profit the other thing we're doing by selling a call spread rather than shorting a stock or selling a naked call, littling our risk. the other thing is we're trying to play off of guy's thesis that the stock is currently exhausted. so wehat's the trade? looking at august, sell the august 40 calls for $1.70. look if you did that, you would be taking unlimited risk so we're going to cover that risk by buying the 42 call for $1, net-net collect 70 cents this call spread is only $2 wide that's a little over 30% of the distance between the strikes what we're talking about before, if the stock lingers here, you keep all the money fit goes up slightly, you can still keep that money. your max risk is only going to be $1.30 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

preens were to set up to make this trade work for us. >> thank you, gentlemen. call spread on mike criterion. >> selling the call spread, high probability of success if you think about what guy just laid out, this stock could be right back down to 10% it gained in the last two trading sessions on some bad outcome from the g20 here so this stock to me was a very crowded short. short interest isn't very high edge funds were pressing it for the fundamental reasons. they got squeezed. in march when the company reported the stock got up 10% almost to $44, came back into the mid 30s the next few months. to me i like mike's trade. i think there's other ways to do it depending how convicted you for put a short on to get this back to the mid to low 30s. >> this has all the makings of a dead cat bounce, one of the worst-performing semis while the headlines were best one-day move in two years, it should have been best one-day move in two years, returning the stock to where it was a month ago, which at the time was down 60% from its high. meaning, so what

it's a busted company or a busted chart or a busted story you heard what guy had to say. why be long? >> gentlemen, back to the plasma tie it off for us. >> risk less, make more. >> and actually, in this case, i want to make a point to dan's point, he was basically saying, you could make basically lower probability pets 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. >> singles always score when you put them together. gentlemen, thank you very much. next, oil sinking ahead of the big opec meeting next week in vienna. plus a question for the traders. maybe you want to tell me i'm doing a great job hosting? maybe not so much? send us a tweet and we'll answer it later in the show lived from 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 is uso, making the bet again that these minor sell-offs are going to give way,

and they have in the past, to recovery moves so the sequence would call for a higher trade here, long uso. >> i was looking out to july 13.5 calls trading about 42 cents 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 you put on options trade in sometimes volatile spots is you limit your risk at one point this went from 13 to 10.5. since we put that trade on it fell out of bed out of trade risked about 42 cents total. these are worth about 6 cents now. i wouldn't let them go at this point bus they're a lottery ticket there obviously we've got the direction wrong on the underlying, and the reason we put the options trade on is to limit our risk and this inn this case it did, fortunately for us. >> to say it's down 3% is being generous the peak to trough, when we got in, literally it collapsed almost 20%

yes, with this recent rally in crude and uso moving up, it's down only 3% from when we started. but trajectory has been nothing short of horrible. >> nothing short of horrible >> it's interesting. sentiment towards oil seemed like bubbling up a few months ago. from 66 down to 50, in a straight line between may and june, was interesting. you had that snap-back to me 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 associated with crude oil right now i think you're going to see a spike in crude oil, i think it's going to come on the back of the dollar getting bludgeoned which i think is going to happen and the geopolitical risk that exists lot trade has been difficult and i understand why, i think there's a rally in oil. >> dollar bludgeoned because of?

>> every central bank on the planet is in a race to devalue their currency and we are the biggest currency manipulators in the history of the world. although we blame others u.s. central bank, the federal reserve, has done that and it's going to happen in spades as the summer progresses. >> all right, guy. 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. ♪

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♪♪ ♪♪ i've had a wonderful time thanks to you guys thanks for welcoming me. "final call. >> biotech on the long side. i think xbi to get there. >> get long xbi but don't get long dream, use call spread risk reversals for that trade. >> microsoft is going to be volatile, so pick a direction, you're risking about 2%. i like to it the downside. >> this is a first four-person desk with tyler

mathisen hosting this will go down 30 years from now, people will still talk about this night yeah, baby back to you, ty! >> thank you, guy. that does it for us here on "options action. you know what happens next don't go anywhere. "options action" will rejoin you next week at this time the following program is a paid commercial presentation for total gym fitness. [music] everybody work out. feel the energy. build a better body. the best you can be. another body easy as 123. oh. ahh. better body as easy as 123 with total gym.

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