and accessoriesphones for your mobile phone. like this device to increase volume on your cell phone. - ( phone ringing ) - get details on this state program call or visit well, happy friday the 13th. "options action" fans and welcome om brian sullivan in for melissa tonight. we have a big show for you here is your lineup. >> i got 2,000 blanc american express cards right now. go. >> that's not the best way to make money on american express but thanks to today's trade news, dan nathan has a safer way. then. >> i'm talking about a lot of benjamins to be made with the biotech stuff. >> yup when it comes up like this at family functions, you know it's probably time to bail. carter worth opines on taking a

break from biotech and -- >> get into mike's car honk if you want yield mike khouw turns the dreams into reality with a straightforward play to car max. it's time to risk less and make more "options action" starts now. yes, it does and welcome everybody. hope you have a good friday. lets get do it trade talks tag taking over the street as phase 1 deal pushed the major indexes to major highs. of course this is a deal without terms that anybody on the sfreet has seen but hey, whatever. dan nathan says if a full agreement does come through there is one payment play that could charge up the portfolio lets get in the money dan tell us about it. >> the narrative of the last few days has been some of the headwinds to kind of growth or the headwinds to a u.s. consumer have been lifted i have no idea what today means in terms of a phase 1 deal and i think the administration told us

we're not going to actually see anything papered until the new year but if this enthusiasm that we have seen the last couple of months or specifically in the last few weeks carries into the new year, then you want things that are pretty much levered to the u.s. consumer. just talk about american express a second here is a stock trading at a discount to the broad market a discount to many of the pierce and probably for good reason when you thunk about master card up 5 a% op the year, or visa up 40% on the year. these are much more profitable companies than say american express. different business monthly models they payment processing plays. but american express mat 15 times up 30% on the year. looks interesting. has not gotten back to the prior 52-week and all-time highs if you think the market stays here here or moves higher into the new year that's the play on the chart that you want to make a run for the 30 and then a move beyond that the company will expected to report q4 earning the week of january

expiration this is simple if you look at implied volatility, the price of options are cheap and in volume terms and dollar terms when it traded at 124 half you could buy the january 1.25 call paying $2.35 for that less than 2% of the stock price breaks even at 127.35 up just about 2.25% or so. and then you have the leverage to the upside. if you are looking for relative value and names that might enjoy a run over the next month, american express could be one of those names. >> yeah, this is one of those strategies we have talked about in a couple different spaces obviously we've had an exceptionally strong market. axp as it happened has not performed as well as the mechanic it's not trading at the all-time highs one of the things pressuring the company was that they had some missteps i would say the affiant card losses earlier. and they have recovered somewhat

from that. we are talking about a company that doubled eps the last six years. that's god but the strategy dan's talking about makes a lot of sense once again, we are dealing with stocks close to or at their all-time highs once again, talking about options prices that are relatively low this is a way that you can risk very little to tray to make a bullish bet going into the end of the year. and, again, there aren't many stocks trading at the multiples that american is right now. >> it always trades as a below market multiple. you make the point i want not visa or master card. it's not capital one kpap one has broken out but with credit risk. the truth is the setup is good if you want a catch-up this is the large liquid name having lagged the market that could catch up the breakthrough potential is there. >> good discussion and good trade. watch american express lets switch gears because we have after hours moves in the biotech. here with the detail meg tyrrell at hq. >> looking at two members

conversion horizon they are put iks and amarin for horizon it was a positive vote on the company's experimental drug for thigh radio eye decease. the stock up 10% in the after hours. the fda does not have to go with the vote from the outside panel of advisers but it often does and set to decide on that drug by march switching to amarin that stock halted all afternoon and reopened getting fda expansion of the label for what its heart drug is approved for including in the label the drug is shown to reduce the risk of events liheart attack and "star trek." and heart diaz is the leading cause of death worldwide it's up 6% as expected however it came up a couple weeks earlier. which is a trend with the fda approving drugs sooner than expected. >> the stock moving up, amarin up 3 peppers

staying with biotalk and look broader at the ibb maybe be, the biggest etf in the seccer. surging in the second half of the year now on pace for the longest weekly winning streak since back in 2013. wow. but, your chart master says biotech's big run probably is too far too fast carter worth, head over to the plasma and bust out the charts on the ibb. >> lets take a look. sometimes you are right to right calls or trim along or take measures if it's too hot that's the case. we know that health care having lagged almost three years has come back. within health care biotech leading. if you look at the simple table on a two-month basis which is where the real fire has been biotech is up more than financials, industrials, these are the areas purportedly doing best more than staples more than consumer discretionary by a long shot at this point i think you fade it

lets look at charts and make the case this is the before when it was dull and boring. we know there was a well defined trend line look at the next chart there is the trend line. and what happens watch the arrow. you get a major move above that level. but where does it return to? it's returning right to a prior high and more often before exceeding a high you have to contend with it look at the next chart we are stuck right at the high we've been grinding now almost a we can i think what you're going to get is a period of very low vol actually after the big move, as two things happen. you encounter supply people from here taking profits -- i mean getting out, and people from here taking profits. i want my money back i want to book my gains and you get stuck. the betting here is that this is actually just that, stuck and it's right to harvest gains if one has done well. >> good charting carter mosty back to the desk

mike give you are viewers the trade on the ibb. >> it's interesting carter hit on something right away. he said make write some calls. interestingly in enough ibb that makes sense. right now the implied volatility of the at the money call options of ibb is 22.5 or 23 for a single stock that might not seem high but for a stock trading at implied volatility at 15% which is what ibb has been doing that's quite high. the. problem with going out and selling calls is that you expose yourself to unlimited risk if for whatever reason the thesis that this is going to trade sideways proves incorrect. the way we mitigate the risk is by instead selling a call spread specifically i was looking at the january 1.23 spot 33 call. you sell that for $2.15 and buy the 1.25 calls for 1.45.

net-net collect 70 cents on a spread that at the most could be worth $19.67 we can calculate the approximately the likelihood in a normal circumstance that's going to end up in the money this is a trade that will typically have a higher than even probability of profit why? because in makes money if ibb goes sideways, if it falls and even if goes up a little bit obvious the risk being it breaks out from here but we mitigate the risk of loss by buying the upside call. >> this is an interesting options trade. if you you are looking if you are a stock guy orp or gal and saying that thing has 115 or 110 written you will a over on a pullback the next couple months you'd say option praises are relatively cheap i would look to make a 10% move to the downside and willing to risk maybe two or 3% to hatch that mike's trade is different. mike looks at the probability of success and saying to himself i have a pretty high probability of a small gain here and if carter is right if the

thing does nothing then i'm taking in lets say close to 50% the width of the call spread i'm selling. this is an options trade very much but if you said i think ib is is on its way back to 105 there are other ways to do i don't think you want the call spread. >> it's worth notes as is the case with so many etfs there is a big name that drives it. amgen is the big weight. the exbi equal weight. a sector lagged triple the market market up 6 it's up 20 the past two months process and this part hot ner certain names. and every day new news it feels peak imprisonish. >> the real thing to consider on options trade are you actually spending some money betting on something happening? or are you collecting money kind of expecting something not to happen here if it continues to contend with in high, then it's going to lange wish along here. that means little is going to happen by selling a call spread you

look to get paid for that nothing to happen. and if it declines. >> what's the risk on that selling the call spread. >> the risk is of course. >> the call spread. >> the risk you are taking is the difference between the strikes which is a dollar 67 and the 70 cents you collect basically, you know, you're not risking a great deal but the risk happens if if actually in turn breaks out. but it has to break out in within the next month because that's what it expires. >> that's a good discussion. i learned something in that. good day for everything "options action" go to our website, "options action".c nobz.com and while there check out the news letter. it's all right but in the meantime on the television here is what's ahead. >> there are some car max it's disbelieve car max racing higher this year. and if you bet on more upside ahead our mike khouw lays out a trade too good to pass up. 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. ♪ "options action" sponsored by think or swim by td ameritrade ♪ ♪

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well have you tried thinkorswim? this is totally customizable, so you focus only on what you want. okay, it's got screeners and watchlists. and you can even see how your predictions might affect the value of the stocks you're interested in. now this is what i'm talking about. yeah, it'll free up more time for your... uh, true crime shows? british baking competitions. hm. didn't peg you for a crumpet guy. focus on what matters to you with thinkorswim. ♪ all right. welcome bang, everybody, to "options action. today's retail numbers missed the mark a little bit. next week we get another chance to kick the tires on american consumer because that's when car max reports earnings you may -- car max yee. car max it's helped investors bank serious coin this year up nearly 60% but last earnings the stock dropped immediately following the release that despite a beat by car max on top and bottom lines investors sold

how to navigate car max going forward? mike khouw has the answer over at the plasma with the call to action, mike. >> yeah, we're going to talk about selling a covered call actually for those who own stocks, this is probably the way that most get into the options market the first time. you sell calls against stocks that you own when you look to do this, what are some of the reasons? what are we looking for? car max's case, one of the things we definitely identified is that we see above average options prices when you sell options, the price of it matters a lot. the higher they are the more they collect right now seeing a move of 8% on earnings well above the 6% the stop typically averages. the other thing i would point out as brian mentioned, the stock has had a heck of a run here and right now it's basically trading right at the average analyst price target of $99. approximately where it kploesed. the idea here is we're trying to zwrernt yield on a stock you

would be willing to sell at a higher level this is a yield play, kind of like trying to get yourself of an extra dividend. lets look at the stock and we can see what brian was talking about. obviously the stock had a tremendous run here. here is an interesting thing with the market making new highs this one seems right about now to kind of level off here. we'll wait to hear carter's view of this from a technical perspective. but one thing i happened to observe is that this is a stock that generally speaking when it starts getting close to those upper levels of its valuation as right now -- and we can see the orange line is the average analyst price target through time and this is the spread. what we can see is when these converge, very often what happens a month or so after, the stock trades sideways or falls off a little here is the trade. if you own the stock what you can look to do is sell the january 105 calls. at the time i was looking at these earlier you could sell

them for $2. here is the thing you would base le look at a situation where you collect the $2 on the stock you own. near 2% yield on the current stock prays. if the stock rallies through 105 you could have your stock called away from you. but if it does that you collect the $2 plus the $6 that the stock gains between the current $99 and the strike worst waist, if the suffolk rallies threw that you'll end up making $7 or $8. that's pretty good better than 8% in one month. and if it sits here you make 2% yield. that's the idea looking for covered calls. look for a price where you'd sell the stock look to enhance the yield. and then hopeful you can find situations where the options are overpriced i think right now they are. >> pretty amazing for you to talk about the tech stocks now talking about car max good stuff, mike come on back dan what do you make of mike's trade. >> i think ma mikehead it out perfect already to a stock up 50

some% on the year consolidated a bit. there is an even you can target. the implied move this is where mike is looking to sell the call, the best case scenario is the stock at 10 a and taken in $2 after the stock appreciated if you have that between now and january expiration that would be a pretty good outcome for the stock. i like the idea of overriding a long like this. >> right and it's also threatening to break a trend line there is a well defined line you can see on the chart from the december low and we're at risk frankly after the 5 a% advance to new sharp all-time highs, 52-week highs it's exhausted i think you have to take measures however one does it this is as good as any. >> one of the things also it's interesting because we come into the end of the year. and it's not uncommon people have huge gains we have seen wig gains in american express begins the ink of the year big gains in car max a lot of stocks like this but there are reasons people don't want to go out and sell stocks that are gainers before the end of theier. there could be tax consequences.

a lot of reasons you wouldn't do that but this is a way you can look for a little bit of additional yield. worpts case in january up 8% in it continuing to rally through the strike. >> good stuff there, mike and car max. up next, another hot stock, starbucks really steaming this year we tell you how a trade are is betting on the coffee giant in the greer. plus it's friday you know what that means send us the burning questions. if you are lucky our traders answer it on air and time to pick favorites go to twirpt at "options action" to tell us which of our trades tonight strikes your fancy live as always from the sdnaaq market site in times square. and we're back right after this. ♪ >> announcer: "options action" is sponsored by think or swim by td ameritrade. ♪

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♪ ♪ ♪ ♪ ♪ and welcome back to "options action." all right time now to take a look back at one of our open trades last week dan over here said starbucks was due for a boost.

>> it just bounced off a couple of times from that uptrend from the december lows. it's now approaching what i think was an important technical level on the downside a few months ago which is now resistance you know right below 90 or so. that looks like a constructive chart to me you could by the january 87.5 call for $1.50 breaking even at so 89 up 3% >> all right and starbucks up 2.5% since the trade good work, dan what if anything are you doing on this trade now. >> yeah, this happened week over week, the stock up 2.5% or so and now in the money the stock was 86.30. i bought the 87.call thirt now the call is worth $29.50 you want to roll that up a bit i'd be incline to look at january the 30 call. look to use that to finance the purchase of the january 90 calls that's how i trade it.

>> we are joined by options play chief strategist tony zang for more insight into starbucks. welcome for the options set tony thank you >> thank you. >> what is your play, trade on starbucks. >> dan i like the trade. i thought you caught the inverted head and shoulders at the right time broke out about and it run up to 92 when you volumes are cheap. trade up about 6% like you said. and normally with options mri i think thorl we start thinking about trying to parse gains here but i think -- i found an interesting play here where you can roll it out to february $90 calls trade that for an even trade. which means that you can actually roll this out to february, capture earnings which is a week after your expiration date and be alk to buy yourself another month without spending any more money. >> you know brian i've been doing this show ten years. i got schooled by the kid

this is called rolling it up and out. he identified a catalyst looking to play moment ultimate and technical setup and looking at january. what he is saying now because we have the profit lets look at that catalyst which february expiration will do and i did can do that net even money. >> there is another reason that's a good idea one of the things you'll typically see on options on the long side of a catalyst is that the implied volatility will rise as that catalyst approaches, right? if you are trading it through the that -- you can almost get lowered rate of decay because the option is not going going to decay as quick as think. of course you can reevaluate before erpgss but i think that makes a lot of zbleens i think the stock can continue up to 92. >> you don't think barak to prior highs below 100 you get and the momentum and the earnings event cattlize -- is that how you think about 92 or more to go. >> i'm thinking you risked 2% and i can trade earnings risks 2% that's a great trade. >> before you get to 100 you got

to get to 92. >> a small point. >> good point. >> there is a lot of congestion at the 89 to 92 entire month of trading as tony noted. in the way that's the immediate target where maybe measuring. >> do you think it will get there. >> i think it will push into over supply but not through it and that's what that. >> if we get to 92 break through, beings railroadsens. >> that's weeks and weeks of time this is more immediate you go quickly into the 92, 92 where it ends. >> all right. >> how optimistic about the levels. >> i like starbucks into earnings, i like the growth steak strategy they have currently in china it's a great play. >> i'll make one last point on this if you overlaid mcdonald's and starbucks the last six months or so they had similar charts, new all-time highs in the summer, both had peak to trough declines of 15% this one bottomed and starpted to turn. mcdonald's can't get out of its way here i like playing this for the momentum into the 90s. >> all right

tony real pleasure to have you on set. >> thank you. >> theidscol ks hoing the nathan up next, the final call. this piece is talking to me. yeah? so what do you see? i see an unbelievable opportunity. i see best-in-class platforms and education. i see award-winning service, and a trade desk full of experts, available to answer your toughest questions. and i see it with zero commissions on online trades. i like what you're seeing. it's beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪

with a trade deal on the tanl are you ready for next week i give ut game plan. then what should you make of managed care into 2020 i have the ceo and up 90 peppers i'm talking to ana plan he is top brass "mad money" next. >> announcer: a decade of

records in the books how much longer had the cally last a week long look at best performing sectors and the issues that could derail gains for next year and beyond worldwide exchange, 5:00 a.m. eastern monday 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 well that's all we have time for ton. thanks, guys see you back here next friday. don't go anywhere because "mad money" with jim begins next. my mission is simple, to make you money i'm here to level the playing field for all investors. there is always a bull market somewhere. and i promise to help you find it "mad money" starts now hey imcramer welcome to "mad money. welcome to cray america. other people want to make friends i'm trying to make you money process my job not just entertain but educate and teach you cale me a at 1-800-743-cnbc or tweet meet @jim cramer. if this market is still not crazy enough for you let me see you ain't seen nothing