happy a friday we've got big show on deck for you. let's see what's can coming up >> is there a doctor in the house? or at least a chartest there is we check the vitals of health care by putting bristol-meyers under microscope microsoft, google, amazon. how to play the final name for the win. plus erwwe're going to keep running with the second sports theme.

mikey verses nike. tell us what you need to know to out pace the quarterly report next week. it's time risk less and make more "options action" starts now. >> well, not focussed on wall street as they grapple with the best path forward on drug prices chart master to break it all down >> we look at bristol-myers. there's a opportunity. and the orange line is relative to its peers, the s&p health care sector. you see the great over shoot, the great undershoot, over shoot and it's this divergence of late that is appealing to me and then more immediately how a stock is behavening day to day. you've got the sector up some 50% more than bristol.

now let's zero in on this and look at the spread so ovthe past three years again sector up 27 bristol-myers down 18. if a stock is starting to reverse this, then it becoming quite interesting. so lagging dramatically and yet day to day i twuptwant to show u the following and here's bristol's relative performance to the sector. failed at this line, failed at this line. and now it is pushed through we've broken through for the first time in a long time. a one-two set up now starting to come to light. now let's look at the chart

itself and at the minimum we get back to trends we simply have a continuation of the current run that would give you a 10% move, stop closure on 50, targeting 55 >> all right come on back what's the trade in your view? >> this is one of those situations where there are a lot of points that folks interested in value stocks might have been interested to make a play. of course it looked very cheap for all of the recent declines we've seen options aren't particularly expensive despite the fact that the stock is particularly lower than it's been with and we did those earlier today. those were slightly in the money. they were trading 50.5 or higher at the time. so 50 cents of extrinzic value

mp when you're targeting a move up to say 55 bucks obviously you don't want to buy those 55 calls because you're in a situation traders want strikes to run tlau their short strikes. isin this case there's only two. we elected to go the with 50s risking 25% of the stock price the stock is fairly priced if it turns out this is not a rebound, you're going to be risking a rel tvlly small amount >> this has been a stock in a down trend for a couple of years now. i think it's interesting here. and this 1 in particular is and mike just talked to the valuation and maybe towards 55 billion. i think this is a good examplel off simp lay buy alg caing a cal

that's already in the money. it's what you'd risk if you bought the stock but that's it and you don't have an idio sin kratic news so i like the risk/reward. and people will start looking at pharma stocks yielding three and a quarter percent. i think it works out and this is a way to trade this idea >> independent of this particular call. top sectorer on the day. and i just think there's going to be a shift to this area generally. the key is you want to start to work meaning it's not down and down and down it's starting to actually turn >> the final thing i would say

is very often you have long declined one of the things is they're going to get higher and higher lower prices cause higher volatility but this has been a steady decline and this is a steady stock. so this is a situation where they're not particularly elevated and that's one of the reasons we don't need to be creative >> meantime check out shares off amazon having a rough go of it, downall most 9% since the disappointing earnings report in july. dan says it could be about to get even worse how much worse >> we've been spending over the last few weeks -- i think a few weeks ago a constructive trade on apple and then google and

when i get to amazon i have a different picture. those three days i named before had fundamental drivers. amazon has a fundamental driver i think could take it lower. the fact that stock broke down the uptrend that had been in place since november tells me it's relatively weak comparaed to the mega cap. and it's really the only technical support i see for it and then i want to look out towards their next earning call which is the last week of october and i think to myself what have we seen in the last call they told us one day prime shipment they saw retail sales accelerate and they're dealing with higher fulfillment costs and higher labor cost and that chart is implied volatility in amazon's short payment options and they look pretty cheap.

i say to myself late october i can't imagine they're going to be able to turn the spiket off on the spending. this is the future of the company and they're not going to get off the trail for one quarter. so i think there's risk to the quarter when we get to late octobers that's the five-year chart it's held that long-term uptrnd pretty nicely. the trade to me is kind of simple obviously it's risky if we do have a trade deal and stocks take off, this thing will be higher but when the stock was trading $17.95 you look to november expiration and by november 60 spread and you makeup between 210 and 1500 to the down side and risking the 50 bucks that's a little less than the

stock price and makeup 12% if the stock is down 14% or so with the catalyst you say why sell that $10 put at 1500 bucks y think it's massive support. i'm just trying to get a good risk/reward. >> you know the thing i would point out is let's take a look that last four quarters that were reported. i was taking a look at this. 8.5% decline, 2.7 and nearly 16% where the one month post earnings decline for the last four quarters. think about selling that 1600 strike put eebl fn the results are negative, i think that makes sense. that's $1,000 a spread every time you do that trade and in the event that between now and the 24th of october if

you change your point of view you're not paying away quite as much in decay daily. new information come out, you're go having to an opportunity to play >> just in a word i think the chart is ominous it is like literally hanging by a thread the router strength and if there's any trouble in paradise this is one of the it great stocks in the marketplace. and obviously it's harder in the lower level. >> you see the path to 1500? >> i'm saying we got to get 1672 and on from there. but what it's likely to do is not slow >> listen if this isa fundamental drive it's going back to support levels now let's look at netflix. obviously amazon is big beer

stuff. and make no mistake it changed it's going to be down 30, 40, 50% at some point this quarter from the all-time highs and i don't know why you would think amazon couldn't do that. and apple, also a darling last year, had a sharp decline from prayer highs. >> it doesn't need to get down to 1500 and you actually wouldn't sell it you want it to go through your long strike or somewhere in between, i think you're selling the 1500 because you think that's as bad as it can get out of the upcoming earnings result. we're only talking about a month before they report >> the pain being felt on main street is amazon but amazon is still not exempt from general cycles and u ultimately the risk from the consumerer

>> one last point on the actual trade. we know a high dollar stock like this when you're buying a $60 put, we know one contract can be a lot. i'm trying to alleviate the cost and selling the down side put. >> all right check out our website and check out our super cool news letter, what are you waiting for see that's funny, i thought you traded options. i'm not really a wall street guy. 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

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welcome back to "options action." with the stock closing out all-time highs, microsoft says it might be time to send the giant to the bench ahead of the earnings report. mike >> so we're taking a look at nike i think we're getting to a pretty tough level and basically getting right back to, close to its all-time highs and we're also seeing it's pretty cloets to its all-time peek valuations as well and so looking ahead to earnings as a potential catalyst i thought we might try to take a look at putting on a chal. . so first i think it's trading just under 34 ton forward unings that's a pretty high level and there have been a few instances

where it's been higher than this but not much one of the reasons you would see an expansion in the price to earnings raceio is if you see material sales growth. y with have seen some flow through to the bottom line it's raining fairly constant so we have to bear that in mind as well. yo we can see the stock isically right there. year going to earnings it can either break out to new highs and sit essentially here and struggle or go lower. i was taking a look at putting oan short dated calendar spread. so today septemberb 27thth weekly you can sell 27, 8 1/2 foot. the idea here is if earnings

turn out to be a nonevent, now we own that longer put at a very low level and i would point out i was trying to put this today at 45 for most of this afternoon. and i was talk tooling ken about that maybe i forgot to hit the send button essentially the benefit of owning the longer data push, i think it makes sense and the implied move is higher than the average move can which is 3.9 and that's the relationship you're looking for are options prices higher than it would be based on the movement we're seeing? that's when these kind of calendar spreads will make sense. >> the set up is interesting we know that we have that catalyst when i think of nike i think of

starbucks. consumer discretionarierer for all intense and purposes that's a stock down 10% from the pop it had on earnings this one i think there's risk to and the potential for at least a naturalistic feelings bout our product. if you're really bearish i say don't sell the weekly put because you may get the reduction at 90 if there's a guide down, the stock is down towards 80 >> that's quite a set aup. you have well defined talks at a common level july, hits 90 and then we trietd to approach the breakout level again the stock is in poor action where it should be at that level and toying with a lot of tengsz to break out if indeed earnings are going to be good. and what's coming is not good.

and i think rather than breaks out, has a fairly dramatic seller >> the last earning season people thought it was fine and n not. >> when you have stocks trading close to their peek evaluations. you have to say what are they going to now what would they have to say to get a pronounced move higher i mean no slowdown you're going to have to see at least all of of the gregt priced in we're talking 7.5% that's obviously fatser than the overall economic growth and no trouble from any other quarter butted heerbz rr the thing i would say about this calendar spread 45 cents we just die on the vine, the isis a tratd that could be worth call it two bucks something like that so that's not a bad pay off.

four or five times what you're risking. what you're risking is a very small fraction of the current stock price. if you thought this was going to fall out of bed, what happened to fedex it punched me in the nose by the way. >> coming up smooth sailing for travel stocks this year but one of our traders says there's trouble brewing in paradise for one name ♪ ♪♪ ♪♪ ♪♪

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. ♪ welcome back to "options action." time to take a look at some of our open trades. >> it's a well-defined trend and a breaking trend this is a problem and i think one wants to be very cautious on that end >> given the fact that although options prices are elevated a little bit they aren't as high as i think they ought to be considering how options are moving around. the foot spread and you can spend $2.25 for that

>> marriott said after getting hit hard on the historic spikes. how are you managing >> lost about 75 cents or so the stock behaved very poorly for me the only thing i'll point out is there's earnings on the fourth of november. if you want those, you have to roll those out but i think it's going to break before then. >> rilt in the way of beta trade i'm going to stay. >> and alphabet could be on its way to all-time high >> i think it sets up as a calendar for a call calendar and i'm going to take in the premium and help catch the earnings event that will be the catalyst for 1300 when stock was trading at 1235 today, you buy the november 1300

call calendar. >> alphabet moved around quite a bit. what's your next move? >> bounced $5 and this spread selling october and buying november is down like a buck really kind of exactly what i wanted to do at some point soon the 1300 call you're going to hover that and then you think about what is the set up in the earnings late october. and turn a 1300 call into a vertical call spread >> so last week was google, this week was amazon. so your doing >> three weeks ago amazon, three weeks we did google. >> slip that in there. >> in order. >> in order. up next your tweets and the final call

see that's funny, i thought you traded options. i'm not really a wall street guy. 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

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welcome back to l.a. time for a tweet would you buy disney december 150 calls now? >> no, no i would not. you're talking about the stock breaking up all-time highs right now the options market is implying a 15% probability the stocks could get above that level. i think the probability is probably lower wouldn't you agree >> close to zero look, we know it had that epic rating and ever since it's been flat not much catalyst to take you that quickly >> final call time >> you know bristol-myer, fingers are brewing.

>> right options are rel atively inexpensive. >> and amazon i think it's ominous. >> that does it for us in "options action. see you book here next time. - [narrator] the following program is a paid advertisement for the nuwave bravo xl sponsored by nuwave, live well for less. is all the clutter in your kitchen starting to look like an old junkyard? sick of spending hours cooking, only to serve mediocre meals lacking in flavor? wish your family would spend less time whining and more time dining? well, now they can! with the new bravo xl, the world's first digital smart oven with flavor infusion technology. it's a breakthrough in culinary creations! coming up next, you'll see how bravo's compact design cooks large family meals in record time! how, with just a touch it can bake, roast, grill,