welcome back to cnbc's continued coverage of markets in turmoil. i'm brian sullivan "options action" coming up in a few minutes. first, a special guest, someone who last april said the s&p 500 could be setting up for a 40% decline. scott minerd scott, welcome again you did not foresee this global pandemic coming. it's not just the pandemic, is it, right? the market structure, the debt loads, everything else that was already in place, the pandemic

may have just been that chip on the jenga stack, if you will. >> brian, if you want to think of it as a house of cards that was built by the policymakers in order to bail out the financial system during the crisis, you know, one day a breeze came along and knocked over one of the cards andit's bringing the whole house down. >> well, the house -- listen scott, the equity market rose 13% this week. i understand, we're still well down on the year seems like the fed has shored up the credit markets a little bit. it sounds like you're not believing that the bottom is in yet. >> no, i don't think so. i mean, brian, when we look at some of the data that we're getting with unemployment insurance claims and so on and so forth, you know, it would suggest that, you know, we're going to get to a place worse than the financial crisis

economically unemployme unemployment, perhaps, around 15%, you know, and economic contraction for the year, let's say, maybe in the neighborhood of 10% these are pretty nasty numbers and when you look at valuations on stocks, the degree of overvaluation where we were at the peak, just six weeks ago, versus the peak and valuation that occurred in '07 has been nowhere -- has been much more extreme. and the decline we got from the downturn in '07 was a 57% downturn in stocks we've been down around 44% so far. it just doesn't seem, given the economic backdrop, that the prices have adjusted to reflect economic reality. >> i'll push back a little bit, my friend. i remember in september of '08 going down to d.c. and having

meetings with congressional leaders to explain to them what a credit default swap was. months went by before we got anything done. they were slow this time in the course of a week, the fed is throwing probably $7 to $10 trillion at it with leverage and a $10 trillion relief bill aren't you encouraged at all with the speed -- i can't believe i'm saying this -- the speed at which d.c. reacted? >> brian it's a lot more encouraging than the financial crisis one thing that we identified years ago was the reaction function by the policymakers this time around, and the next recession would be much faster than the financial crisis. that gave us a lot of confidence that the downturn would be much less severe than the downturn of the financial crisis, but nevertheless even with a mild downturn, we would expect to see, you know, about $1 trillion

worth of investment grade debt load, default rates on corporate bonds get into double digits, and now there's a pretty good argument to be made that, you know, this is more severe than just a mild downturn and the tools the policymakers are using, i'll put them into the category of necessary, but not sufficient david zerv os, who you just had on, a very smart guy in my mind, made some observations about asset backed diversification those markets, there's no liquidity there. we rely upon the securitization markets. >> scott, we heard -- i'm sorry to jump in on you, buddy it's harder to jump in when we're both remote but i understand what you're saying

and some of the stuff i heard anecdotally last week and this week was downright scary but i also heard things are opening up in terms of liquidity. are you not seeing that from your perch >> we're definitely seeing it, but it's a world of haves and have-nots. the haves are in the investment grade bond market. we've got that propped up, but the bond markets of the united states are a lot bigger and broader than corporate bonds and a large swath of bond market is still not propped up and, you know, it's going to take a massively, i think a massively larger set of programs to address all of these pockets of illiquidity in order for things to stabilize.

>> i'm flying blind here but this is part of the paper. i'll put it up on the screen grown since $6 trillion since 2007 while cash on hand has grown by 1.7 trillion. a big driver of that debt growth has been buying back stock how angry or annoyed should the investing and american public be by that statistic? >> brian, you know, first off, let's turn to the policymakers the policymakers in washington ran policy to encourage this behavior from corporate america as a way to successfully drive up the market prices the disturbing part is when you start to see whole industries like airlines, who bought $45 trillion of stock back -- sorry, $45 billion of stock back over the last decade and now they

want a $50 billion bailout program. i think there's going to be a popular backlash against this. and as the programs potentially have to expand to bail out, you know, the hotels and the car rental companies and the energy companies and the whole bit, i think that main street and middle america is going to look at it and say, once again, washington is saving the fat cat and not caring about us. >> because the bottom line is, you can't blame anybody for what's happening with the pandemic, but we can go back and say we should never have built up trillions, tens of trillions in debt. >> that's right. by the way, brian, you know, i've been out there, lecturing on this for umpteen years now that this would ultimately be the crisis we would face. >> yeah. >> we used to say back in the mountains where i grew up, the

chickens are coming home to roost. >> scott minerd, guggenheim, piece is up on your website as well as cnbc.com stay healthy we'll talk soon. >> thank you, brian. >> we'll take a short break here after that, "options action" is coming up with mike, tony and the gang sit tight. "options action" up next ♪ ♪ ♪ (vo) quickbooks salutes the grit and determination

of those who work for themselves. they're the backbone of our economy. and in these challenging times, they're adapting to support their communities. but many need our help. if you're a small business in need, or want to help a local business, go to quickbooks.com/smallbusinesshelp intuit quickbooks. to hel"coronavirus" intod your xfinity voice remote say to access important information and special reports from around the world. and to keep your kids learning at home, say "education" to discover learning collections for all ages from our partners at common sense media, curiosity stream, history vault, reading corner and many others. for more information on how you can stay connected, visit xfinity.com/prepare.

♪ ♪ ♪ ♪ ♪

all right. welcome back to cnbc's continued coverage of markets in turmoil we're still doing "options action" tonight. got to throw that in all you options traders love this show. it's more important and time ly than ever because options can be a great way to mitigate risk if you think we're going to turn around pleased to welcome in the gang, mike coat, tony zhang and carter as well. still up 13% this week but cold comfort whoa know, well down on the year oil continues its slide as this global price war rages on. all right. guys, we appreciate you joining us here. carter worth, i want to begin with you technically, this market -- i can't even comprehend the kinds of charts that you might be looking at right now, given

these massive swings, but is there anything out there that suggests to you that a bottom could be close have we hit it already if not, where it might be? >> absolutely. thanks, brian. for what it's worth, it's very much, i believe, not over. let's look at stats and discuss after that what you have on your screen there is all indices, where the market has rallied on the basis that it recently has what you see there is what has happened one month later, but if you look at the top 15 or 20 times you get a two, three-day rally, it's 10, 12, in this case it's 17, 18% week later, month later, three months later it's not particularly encouraging, which is to say the ricochet stalls.

if you look at '73, '74 bear market, 48%, 2000-2003 bear market, '07-'09 there were multiple instances you had these rallies only to give it all back the issue is this. we know bear markets are characterized by sharp countertrim rallies. one day, of course, one print will be the low print. and that's very hard to, obviously, figure out. a lot of people are trying to say that now in fact, there's certain market observers not in that camp at all. i would just point out what we're seeing for the first time is a debate. the first time in six weeks. there was no debate the last five, six weeks. everyone was in agreement. you have a big problem sell now we have a proper debate. those on one side who were looking out two to three years

i can try to look through unemployment, 15, 20% earnings decline and i can buy here because i think, you know what hotels will still be in business las vegas will still open. and then there's the other group, and they're maxed off evenly, right, who are still selling or, brian, people who couldn't sell because it was down so quickly, who were about to get their stake when they see what happened. i should get out bottoms are really, in principle, something developmental, incremental, sequential, not really something that's impulsive, impetuous and rash this ricochet are those things, impetuous, rash. >> good practical advice, carter worth. mike, what did you make of the week >> yeah, i don't think today, you know, the performance we saw today or in the days leading up to it are that surprising.

one of the things we got was a relatively quick, very quick response from washington on top of the monetary policy we saw the fed institute earlier. in both cases, you're talking about really substantial action. and i think the market viewed that positively. of course, a lot of times we see this type of volatility and this type of news, they're responding to the news of the moment. that was the news we had and the news was good. of course, we have the possibility that there is additional information coming down the pike. limited cash advances available for businesses in distress aid from washington is one thing. it will take investors a little bit of time to digest how large the implications are for some industries, they're substantial and there isn't necessarily a recovery in immediate view and i think examples of that include the energy sector. one final point i would put on it is that we have some names that have not really been hit

that hard when you take basically the move of the market ov overall into consideration, and i look at things like semi conductors, basically where they were six months ago. obviously we've seen a lot of bad news since that time and i don't think all of it has been priced into some of those stocks yet. >> tony, people listen to this network, especially at a time like this. you hear people say stocks are likely to be higher in three months and others like scott minerd, who thinks stocks could go down. its own investing strategy in such a time of uncertainty. >> that's the question that we've been asked the most this week, is have we bottomed and what should we look at in terms of positioning going forward i think the road to recovery is really the unknown at this point. you know, we have a lot of knowns that i think will stem some of the sell-off we're currently seeking but the unknowns we're going to see, whether it's economic data, whether it's the earning season, that stuff is going to trickle

in i don't see any of that type of data causing the panic sell-off we'll be seeing. liquidity is a major issue from my perspective, as long as the s&p 500 is still above 235, i'm in more of a neutral view on the markets and i think there's still room in the s&p 500 to grind up to that price still looking at a recovery some time in q3 and q4 and that's where i see the downside risk to that type, where we could stumble on that way there, in the u.s. or globally i'm inclined to buy myself some protection, using put options going out to the end of q3 that's when we're looking at the recovery if we look at volatility, september quarterly options are quite reasonably priced at 35% versus the april options on the front. weeklies are trading at double that, so the trade i'm looking to do here is a calendar spread.

i'm buying the september quarterly options, 255 puts for about $26.10 255 puts, collecting $9.60, net/net 60 cents to buy myself protection all the way out to q3 and i'm selling april at the money puts because i'm expecting this market will grind a little higher i'm looking for those puts to expire worthless i'm collecting a third of the premium of these september puts. i'm really being -- i'm able to collect a decent amount of premium and what i'm looking to do is as the markets grind higher, i'm going to continue selling puts and hopefully buy myself some protection out to september without paying a whole lot of premium here. >> okay. so, mike, two things comment on tony's trade but i want to date myself a littleby i was broadcasting, doing this in 2001 i was doing it in 2007, 2008

tell me if you agree with this when so many people keep asking, was that or is this the bottom that generally means it wasn't would you agree with that? and then comment on tony's trade. >> that's a great comment. that's exactly right, actually, because think about what that question means every single time somebody is asking you, is this the bottom is this my buying opportunity? that means people are still thinking they should be looking for opportunities to buy stocks. and when you have that situation, you haven't had what we frequently refer to as capitulation i haven't seen capitulation. intra-day basis when you see those outside reversal type moves, big flush and then the last of the sellers is washed out and there's nothing left but buyers, maybe only a handful when people are asking, should i buy now, should i buy now,

usually the answer to that question is probably not with respect to the trade i do like calendar spreads a lot and that it's selling volatility, which very high. the kags i would put for people, when you have these type of trades it isn't a meaningful hedge. we see a big downside flush. it's a way to own longer term protection and sell the overpriced against it. sometimes i like diagonals better you get a bigger move in your chosen direction with a calendar spread sometimes if it goes too far, too fast, you don't end up making money or could lose some. sometimes if it moves too far, too fast, you end up being a loser. that's a tough place to be when you get the direction right but the trade is wrong. >> certainly is. thank you. we're not done in "options

action." after the break, if you own apple, like so many of you probably do, and you've been frustrated with the move down, it's caught up in the selling, can you use options to protect your apple investment and a profit you had long term we'll tell you how to do just that next on "options action." stick around ♪ ♪ ♪ ♪ ♪ ♪ but when i started seeing things, i didn't know what was happening... so i kept it in. he started believing things that weren't true. i knew something was wrong... but i didn't say a word.

during the course of their disease around 50% of people with parkinson's may experience hallucinations or delusions. but now, doctors are prescribing nuplazid. the only fda approved medicine... proven to significantly reduce hallucinations and delusions related to parkinson's. don't take nuplazid if you are allergic to its ingredients. nuplazid can increase the risk of death in elderly people with dementia-related psychosis and is not for treating symptoms unrelated to parkinson's disease. nuplazid can cause changes in heart rhythm and should not be taken if you have certain abnormal heart rhythms or take other drugs that are known to cause changes in heart rhythm. tell your doctor about any changes in medicines you're taking. the most common side effects are swelling of the arms and legs and confusion. we spoke up and it made all the difference. ask your parkinson's specialist about nuplazid.

♪ ♪ ♪ ♪ ♪

all right. welcome back to "options action." apple, pretty much the world's most widely own stock has got caught up in the market selling. it is down big in the year 2020. for all of you out there that own it or are thinking about owning it, let's talk about it mike, is there some options strategy for people to protect what has been a money making concept? >> for many people it is going to be. apple, obviously, has fallen pretty sharply since its peak in february, in the market's all-time high, close to 3300 today they're somewhere between 250 and 60 option premiums have certainly increased. two things i would ask people to keep in mind the first is, because apple has an exceptionally strong balance sheet, when we think about

businesses that are at risk, this is not one of them. i also think, though, that it's reasonable to believe that their businesses will be impaired like this, just like everybody's. the purchase of iphone, their biggest product, will be hurt by this, and purchases of other things, at the very least, are likely to be deferred. what people can do is try to take advantage that have by selling calls against their stock position some people will know i was actually shorted i'm not anymore. you can sell perhaps the may 275 call when i was looking at that earlier today those were about $11.50 what you're doing here is looking to collect some of that elevated options premium you're holding on to your long stock position and the idea here is that the stock is unlikely to get through that 275 strike price between now and may expiration and certainly not above 286.5 or so, which is where you would be worse off for doing this than simply owning the stock. keep doing that. it's an investment strategy, not

a trading strategy people are long-term holders of apple did so as an investment and they can maintain it as an investment. >> good stuff. carter, very quickly, how does apple look technically >> one believes in growth and reasonable price, dropping 35%, exactly the same as the market yet much better long-term prospect of the market, this san opportunity. apple is delivering as it sold off, it's basically doing better than most stocks, jp morgan down 70, boeing down 80 i'm a buyer, actually. i think one is well served certainly to buy risk. >> carter worth, a buyer of apple. i kind of like it, carter. thank you. up next, your final calls. 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. ♪

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 super fast final call time carter >> all roads lead to gold.

gold and silver. >> tony? >> i think markets are going to keep grinding higher, buy longer term protection to q3. put calendars on sqy. >> mike? >> apple's business is not permanently impaired you can sell some calls against your loan position there is. >> thank you for watching. "mad money" starts now - [announcer] the following program is a paid advertisement for the nuwave brio digital air fryer, sponsored by nuwave. live well for less. we all love fried foods, (crunching) but yuck! (sizzling) that means scoops of grease, blobs of butter, or gallons of oil, just to fry. this adds up to a lot of unhealthy fat in your diet, year after year. stop! (slamming) now, you can cut out all the added fat, and still keep all the flavor with the new brio digital air fryer by nuwave, the world's first digital air fryer with flavor infusion technology. coming up next, you'll see how brio's compact design makes mountains of crispy wings