hey there, we're live from the nasdaq on this exploration friday cairn was so excited she decided to stick around for the big show here's what's coming up. >> the count down is onto big tech earnings and there's one thing that's about to shred it up he'll tell you how to trade it plus tesla earnings are on tap next week. don't get too giddy, elon because dan nathan says it's setting up for the short of

century. he'll explain. and -- >> his sneakers in the pool. >> maybe so. but there's one sneaker stock that's about to kick up dust she'll tell us what that is in her options debut. it's time to risk less and make more the action begins now. >> let's get right to it because next week is one of the busiest weeks for earnings and it will be all about the bank stocks and could see a 4% jolt when they report thursday together that accounts for nearly $110 billion in potential shift in market cap. and with netflix posing a huge risk this week, how should you play these names into these reports? mike, what are you looking at? >> i'm looking at facebook oftentimes on this show we talk about our desire to sell things

when they're overpriced and buy them when they're cheap. in a case like facebook going into a catalyst like earnings the near data options you're going to see elevated premiums, and longer options are not affected as much right now we can see that it's basically at the high end. so what we're going to look to do is sell those dated options and the final point we would make is facebook despite the fact obviously we've seen a strong move it's not particularly expensive we need the think about things in terms of evaluation it is relative to his growth the other thing are the concerns you might have about facebook i think are pretty well-known right now.

if for some reason we get something bad coming out of this we're not going to take a lot of down side risk buying the 205 in january, selling the ones in august we're laying out less than 5% of the current stock price and the idea here if facebook lingers around where it is right now where the nearer data options will decay the longer ones won't decay as much. if it lingers we're still going to see benefits. and worst case we're risking less than 5% if it completely fell out of bed, something i'm expecting. i'd still expect some of those longer day options to preserve their value. >> i'd be very surprised and i think something we talked about for this entire year that expectations have gotten really low as far as year to year

earnings and expectations have been ground down to a negative that's going to come back at some point in 2020 what he's really doing is playing for consolidation here if he has a stock at 205 or below basically financed 30% of those longer dated calls >> welcome to the show, by the way. great to have you with us. >> great to be here. i feel like this is my seat. >> like you belong here. >> well, it was your seat. >> all right, that would explain it >> i think it's interesting. i think it wouldn't surprise me to see facebook a little higher and that longer dated call, what do you think happens to -- >> i think that's an excellent question if the stock does rally up to 205, those 205s in august are going to be essentially

worthless. they're actually going to go up a little bit you're going to collect that premium and the question is do you sit on it and that's the end of the trade it isn't actually. what we're going to look for are opportunities to sell other calls against it we're also going to get a bit of color what's going on with the company at that time if it goes out at 205, one final point you look past the last five years we've only seen maybe three times or so where we've seen really big moves. 14% 15% or so after earnings so i'm not really expecting that. there's a relatively low probability we see something of that happening >> last month they identified some key levels for the stock. >> we're actually getting down to a low that was seen only one other time in history. how far below trend it has ever

been since its ipo here's the all data chart. this is literally the lowest point it's ever been, and i think you have a situation of it's so bad it's good, i want to make the bet that tesla actually is a time if you're short to be covering and small speculative loans. >> if you caught carter's fast money trade and it gagot back to 250 that would be the short. >> carter isn't on the desk tonight but that did mark the bottom for tesla shares. shares up ha% right now to that 250 level. how do you trade this. >> it was june third and the stock had gotten slammed over the prior months to the previous year and the sentiment was getting really, really bad i know we talk about most knights on this desk at least among our group at that point it seemed like it was a coil spring. carter made a great, great call.

just as it overshot to the down side when it broke 250 in early may and went straight to 175 it has the potential to do that on the up side. right now it's below that prior support which was then resistance and if you think about once again the fundamentals are going to drive the story. what's really interesting in july 2nd remember we were waiting around for those q2 guidance, but they've only delivered 175,000 cars they've guided 380,000 cars for this year. they've got a lot of stuff to do when they gave that delivery guidance that didn't update the financial guidance or full year guidance the options market is employing about a $20 move in either direction. that's really how much the stock has moved over the last four quarters much higher,.5% so here's the

trade to me i think. you might want to consider some protection because if they do tweak down that full year guidance in any way, shape or form that's not going back down, probably on the way back towards 200 so to me it's a pretty simple trade you can look at august exploration and selling one of the august 210 at 2 and that breaks even down and just again you saw that chart there. that looks like a pretty useful level for protection i don't think it's going to be a sort of disaster, but i just think some minor tweaks after the run the stock has had, you're going to get this stock going back the other way pretty quickly. >> the stock moved about 460 today. that's about half the cost of trade right here if you're wondering if you could

see a move that justifies, first of all we'll point out it's a $40 one so you're getting a better than three to one pay out. that would be kind of a big ask thing on the down side move given the short interest remains as high as it does generally speaking when stocks are falling that does create support. if you really didn't think there was anything to catch it when it fell, to me when i take a look at this i think this is the trade structure you want to use. i certainly wouldn't consider shoring the stock under any circumstances. >> i agree generally with your direction. i have a question for you, though the lower strike for $2 which is 0.8% i'd think about not selling that >> it's a great point. one of the things i'd say if it's me and i'm trading this, where might buy that put, i

might get that move. maybe it goes back $5 or $6 and then i might sell that 210 look for something that's a bit meteor i use it as sort of a discipline because it makes sense oftentimes, you know, we do these trades because we're defining our risk and you don't always get them right. every option you sell is helping out your odds of success even in a minor way. >> when we think about the percentage of premium you're getting, you're looking at it in terms of the share price which is a decent way to think about it dan is really looking at trying to shave about 20% off the cost. and let's bear in mind when that catalyst takes place, it's going to go to zero. >> check on your website and while you're there sign-up for

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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 actions. sketchers racing higher on earnings this morning. that sneaker stock has been on a tear this year there's another sneaker stock about to leap into first place for a very special options actions edition of fine print. >> footlocker i've got to trade with the option overlay but let's go through why i even like footlockerer in the first place. valuations the second thing is they didn't buy back stock in the second quarter which they normally do and i think one of the reasons is possibly they're looking at doing an acquisition i think that could be a good

thing. and the last thing, though, the stock consolidating actually right around here, a little bit lower, i think this is a good level to buy it. so let's go through a take a look pe i look at and i i want to look at the balance sheet here this is about as low as it's been in a really long time so i like that that's important to me the the second thing i like about it is this consolidation i talked about, so right around here about $40, that's about as low as the stock's been even when they had a tough quarter and the market got crushed in may. still it didn't break that level. that's what fundamentally i like about it now let's look at the trade. what i want to do is a risk reversal what i'm looking at is buying the september 37 1/2 call and selling the september 37 1/2 put and the stock went outright in the middle of those two. you get a look at earnings which will happen in august and i'm

long-standing but i want to have a bigger position if the stock actually had a great quarter and i think it's go up a lot but i'm willing to go up longer if the stock gets put to me. you can put this trade on for about even earlier in the day. maybe you have to pay about a quarter later in the day but i really like this trade because i think that your down side it minimal. there's a great balance sheet here and i think there's a real chance that they put up decent numbers after a terrible quarter and that there's momentum back in the stock and we see it significantly higher than even if it's not at 47 1/2 you have some time to go. so good earnings will make this trade work even if it doesn't get to 47 1/2. >> karen, come back over to the guest. dan, i want to get your take first. >> a couple of really interesting things

i think she nailed things we get questions from our viewers about all the time she's willing to buy more of it down below that's why this structure is so perfect for just kind of her trade on the name. and as karen mentioned they invegsed $100 million in a company and this is company that owns flight club and this online sneaker marketplace. and i think that's something that we'll see that partnership expand over time, and that could be the sort of thing that gets investors to maybe revalue the opportunity in footlocker. but i like the fact she's giving herself a lot of wiggle room >> i think it's really interesting also because on the institutional side we've definitely seen you know we think about puts against stock positions usually on the retail side people thinking about buying ahead to their portfolios but oftentimes institutions are

looking for ways to enhance their returns on existing positions. and also in this instance you're also identifying a catalyst which could propel a stock sharply higher which is the reason why you're using those proceeds essentially to buy the outside call one of the things we be observed the option press are in fact quite high so i'm kind of wondering whether there iso going to be some upside resistance, people who got flipped the last time the stock really fell back a call reversal here might be another way to do this thinking there could be a lid on it with some of those higher prices with people who got hurt the last time we saw a lower price gap down >> did you consider that, karen? >> i did that makes sense i guess i was trying to put up as little money as possible, right, as we all do. i was willing to take a little more risk and i was able to own it

like it also, though coming up traders tuning out of netflix plus it's friday tweet us your burning questions to your options action so what are you waiting for? much more options action right after this (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 a couple of our open trades. dan said netflix could be in for a september to remember. >> that chart, though, and i've said this before tells you that for whatever reason since january this thing has been range bound. i suspect it's going to continue to be range bound after earnings but i do think this thing could setup for a nice long trade into the fall you could sell july next week 400 call at $4 and you could use the proceeds to help finance the purchase of the september 400 call for 12. >> netflix down 15% in just the last week. dan, the first leg of the trade expires today. >> i did not expect the thing to break out on this earnings

i really expected to trade within the range we identified on the chart and the trade's a total bust right now so the thing you have to think about now is one of the reasons for it they're going to continue i didn't do either of those things the stock down $60 this is an options trade. it did not go well i got all things wrong, but, you know, at the end of the day we want you to find the bottom at some point and it may setup decently and at that support at 330, 340 or something like that. >> so you'd be inclined to make a trade -- >> that subscriber miss was so massive it will not happen two quarters in a row. and you've seen this in facebook and then tay start getting the story back together. to me let this thing watch out >> next up back in june mike made a big bet on one of the banks into earnings. >> obviously if you have low

evaluations some of the news is priced in and options are cheap as we just talked about. now you have an opportunity to use those options and make a bet here in this case to the bullish side where you're not risking a great deal specifically i was looking out to august, you could buy the 29 call for 80 cents. you could sell the 2 calls for 20 cents against it. net you're spending 60 sents >> bank of america is up about 4.5 cents on the call. >> the thing is that upper right call is potentially worthless. i don't like being short theep options. and you might roll this further out in time as well. >> what would you, cairn >> i would buy that back and i would probably look to rollout something that's not going to break out crazety to the upside

but maybe you do another month out in 32. >> i think it's interesting these banks put up pretty decent numbers and none of them broke out of the range they've been in up next a very especially final call 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 carry flowers that signifyn why we want to end the disease. and we walk so that one day,

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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 actions. time to take a look at your tweets here. our first viewer asked when trying to protect a portfolio how far-out would someone target >> we don't typically head to our portfolios continuously. if you have a cat lgs, chances are it's going to be some time in the near term future. generally speaking i'm looking at options that are going to be 30 to 90 days out from expiration >> what do you do when you're buying protection? >> i look at a similar time

frame but i look three ish out of the money i'd rather have more bang for the buck >> our next viewer asked why has it taken so long to have karen finerman on options action >> karen, why has it taken so long >> this is tremendous. >> that's a very sweet tweet i don't know who wrote that. my son, maybe. thank you. >> time now for the final call what do you say? >> it's great having you on and it broadens the conversation i also think you ought to take a look at call calendars and facebook going into spring >> i'm not a giant options trader but i definitely use my portfolio or footlocker. >> so you're sticking with risk reversal i actually thought her trade was interesting. i know karen really well and the idea of overlaying a position

like that to adleverage i think makes a lot of sense and there's another thing about tesla the idea of buying a well-defined push makes sense. >> see you back here next friday 5:30 don't go anywhere. "mad money" starts right now 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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