and welcome, everybody, to another special edition of "options action. i am a slightly less weepy brian sullivan and i hope you're having as good of a friday as you can and most importantly, staying safe and at home we started off promising and ended the week down and the dow falling again today, 360 points and all in all, not that bad considering the massive unemployment number that we got yesterday and the monthly payroll numbers today, of course, the coronavirus, the pandemic and its impact on the economy and the markets on everybody watching cnbc's mind and that is why we are here and

we have a great lineup for you mike khouw and cody zhang and carter worth let's talk about something that everybody wants to hear about. some kind of treatment or vaccine for covid-19, biotech companies scrambling everywhere to come up with something and let's get the var latest on where we stand and for that, who else, but meg tirell >> hi, brian the number of the companies working on this grows by the day. we got an update from moderna's chairman yesterday that, of course, is the lead program with the candidate vaccine already in human testing. he told us yesterday if all goes well they could be aiming to start phase two trials by spring or early summer. so we're talking may or june there. j & j also gave us an update on its vaccine program aiming to start phase 1 in september and it could even have something ready potentially for deployment

in 2021 and these are record breaking timeliness. pfizer is working with biointech and sanofi and many others, as well companies are working to repurpose existing drugs to potentially treat the novel coronavirus. we will get some data this month from gilead and regeneron. gilead, of course, on its antiviral drug remdesivir and cadzara that it's been testing in the severe patients with the inflamary lung response that happens in the severe cases. roche is starting trial with its drug and incyte and novartis will be trading jacofy. and we'll tell you about regeneron, amgen and eli lilly all of these companies using antibody approaches and regeneron has put a time line of

hopefully starting trials by near summer, brian the nearest term data points will be in just a few weeks with gilead and regeneron on the trials we told you about. >> a lot of hope there we know you'll be all over it and we want the results to be well you have a great weekend stay safe, meg >> i super bowl we have wilfred frost, what have you got wifor s >> we came up with bank of america and the size of the applications for the paycheck protection program at 2:00 p.m. they received $6 billion of requests for loans. the number as of now is 22.2 billion dollars worth that is from one bank in one day from when they opened the application process at 9:00 a.m. this morning in total, 85,000 applications

totaling 22.2 billion. it is an astonishing amount of requests don't forget the size of the total package that congress has allocated is 350 billion you could chop this up any which way, but i'll do it this way, brian. bank of america has over 2 million small business clients just 85,000 of them have requested 22 billion just one banks -- clients don't need a loan, and it's just some of them haven't made requests yet. >> yept to assume anything, but if you just do the math that you raid out, it is conceivable, not impossible that bank of america's clients alone could hit that $350 billionnumber based on the percentages and one bank could hit the total fund. >> if the rest of the 2 million

clients require as much as the first 85,000 have. so we're guessing there, brian, but yes, clearly, this is an astonishing amount for a single bank to receive in a single day and given that there are 5,000 fdic-insured banks across america that 350 billion sounds like it won't be big enough, but we'll have to wait and see it doesn't mean this money has gone out of the door yet, of course, but one would assume these applications will get met in due course and just a huge number to put out there. $22 billion of requests. 85,000 individual requests in total for just one bank in one day. >> a -- truly stunning if they have to go to congress and ask for more >> speaker pelosi said they would do that as well. so both sides of the aisle willing to increase that

>> they agree on something that's amazing wilfred frost, thank you very much, appreciate it. all right. now let's go back to options action mike khouw you heard meg talk about these companies and they're working their you know whats off, to come up with a vaccine what have you got? >> yeah. so, you know, this is an interesting situation that we have here because the names that she was talking about and the names that everybody realizes are probably the ones that are sort of leading the pack, if you will, on developing a vaccine and some kind of a treatment a lot of those stocks, unsurprisingly, are some of the better performing stocks that we've seen since the covid-19 thing really hit stocks -- i'm going to use february 19, the all-time high for the s&p is the benchmark turning point for the market to represent that i was looking at moderna and this is one of those stocks currently trading at all-time highs and if you're an options trader thinking what do i do

here do i want to chase this thing? we have all-time highs and options premiums are also extremely elevated what to do one of the things you could do is take advantage of the elevated premium i was looking out to may you could sell the put sprid and that's a $2 wide, and you'll collect tween the just under $35 as of is well bele the current stock price you want to make sure it's like the current stock price. this is a situation when you would put the put to 30. bear in mind that 28 is essentially where the highs of this stock was before any of this we go back a year or so, this

stock ipo 'd in late 2018. so essentially you would be protecting yourself in case it breaks below that level. the idea here is take advantage of the elevated premium, try not to chase stocks where there's a lot of good news baked in already and this is one of them is try to take advantage of what the market's giving you and want get caught basically being stuck with the things you don't like about where prices are currently. okay mike, good stuff there we a we are going to get to you in just a second and we have more breaking news and berkshire hathaway and who will bring us that news, but our friend becky quick. >> good to see you there's just some news out that berkshire hathaway is selling some of its stock in some of the airlines this is something that people have been wondering what will berkshire hathaway do? because it owned a 10% stake in the airlines, united, delta,

southwest and american the news out is just from an sec filing it says right now that they did sell both delta and southwest shares it was enough to take them from above 10% to just below 10% and there's not a lot of questions that are answered in this, it probably raises more questions than it answers on these things and all we know it is it sold below the 10% tlash hold and the reason you're seeing an sec filing and every time you own 10% of the company, you have to go ahead and say we are selling this or we are buying this at this point if you own, and you are not be on ljmed after the 45-day after the quarter closes and we don't know what will happen after this. whae will say is now that i've gotten this, woo did put a call

into the office and it has no comment on anything coming out on this, but they don't have to report again for another 45 days until the close of the quarter and we probably won't be seeing more sec filings and warren buffett will not speak until the meeting in thebeginning of may and it's the first saturday in may. i think the date is may 2nd. i'm not sure we will not know what he's doing between now and then because he will not be speaking publicly. it raises more questions than it answers at this point, but that's what i can tell you right now. >> big news moving the stocks. becky, i've got a lot of questions for you and not a lot of time. first off, is the annual meeting stoil in person or has that been moved to virtual secondly, a lot of warren's businesses are consumer facing have you had the total impact on berkshire hathaway's business? >> first up, let me just tell you, the meeting is going to be

a virtual meeting at this point. they had been hoping to keep it open for shareholders, but the writing was on the wall and it became clearer and clearer as the events came out. they will still be holding the meeting and at this point warren buffett and charlie munger will be there and i don't know how many of the board of directors will be there, and maybe none of them and the meeting may be carried live at this point some of the reporters there would still be asking question, at least that's what we've heard at this point, but there's not a clear format about how any of that will work its way out, but we will be hearing from the oracle of omaha, and my expectations is there will be live questions asked from shareholders that day and hopefully we'll get more answers from him all around that time in terms of the consumer-facing businesses, you're right you start thinking through, the jets, they can't go on any of these things. >> yeah. >> you think of the shopping and the retail outlets and those

have closed down across the board and berk shirl be facing the shutdown to the burlington northern santa fe railrood they're not carrying the same amount of stuff and -- >> brian, are you at home right now? >> this is the awesome thing abouthaving cameras on all of time i'm doing this in my pajamas >> you know, that's okay i have to be honest. i'm using that shower right there and there's going to be a day when i forget to turn off the camera and i want to be very clear and by the way, in about three weeks i'll have a full-on mullet and i don't care. i'm going wear jean shirts --? no, literally. >> and it's going to be -- it's going to be great. >> i literallysaw this news about a minute and a half ago, and i had my pajamas on already because that's what you do at this time of day, right? >> you don't have -- i'm not standing up. i'm just going to leave it at

that becky quick. thank you very much. >> best to you and everybody all right. we'll take a short break on options action and talk about nike and managing the volatility there. stick around ♪ ♪ ♪

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♪ ♪ ♪ ♪ welcome back to "options action." i'm phil lebeau on united airlines we're not going to go through all of it, but there is one bullet point of news in here that gives you a sense of just how bad things are for the airline, united airline says that its projection at this point is revenue in the fourth quarter, fourth quarter of this year will be down 30%. brian, i'll send it back to you

and a glimpse of what the future holds for the airline as they see it right now >> yeah. a double dose of news in the airlines phil and becky before the break. the news just continues and it's unbelievable >> phil lebeau, thank you very much >> we've had a lot of breaking news over the last five minutes or so and big news here. let's talk about nike because sales are down and retailers everywhere that might sell nike shoes and they have been forced to close their doors and mall traffic is all, but nonexistent and let's talk about nike and the best way to play this stock. tony zhang, you have an options trade on nike that might help owners of it, i guess, manage through the volatility what is it, my friend? >> so i'm looking at fading some of the strong names in the sector if we look at nike, it's retraced 50% of the initial sell-off and bounced off the level and it's continued to fade

alongside consumer discretionary so i expect nike to trade lower to the $06 to $70 range. if you take a look at the consumer data, we've seen the largest two-week decline of the consumer sentiment in history which is in line with the economic data we're looking at and if we look at bank of america, credit card data, clothing spending is down 65% year to year so this is going to provide strong downside protection on stocks like nike over the next few weeks so the trade that i'm looking to do here is not typical in a strong volatility or a high-volatility environment, but because nike is trading at a volatility, i'm going out to may i'm looking out to may and buying the $80 puts and spending $6.50 and selling the may 62.50 puts and collecting about $1.50 against that paying $5 for that debit and the break even price on this particular stock is only $75. so the stock only has to move $3

lower over the next month and a half in order for the strategy to be profitable >> tony, thank you very much carter worth we'll finally bring you in here, buddy. what do you think of tony's trade and what do you think of nike, fundamentally or technically? >> if you look at the entire consumer discretionary space, if you look at nike, it is handling outperform with puma and adidas and ultimately it will catch up with those two on the down side. so i'm with tony all of the way here, and he's targeting a level where there is an unfilled gap from just a week or so ago to the down side, that's the play >> mike? >> yeah. the thing tony was referencing was the implied volatility onic. >>y exorbitant and he's using the spread to help mitigate that

and that makes sense to not only mitigate the cost of the spread and although the stock is stronger than it should have been, all points he's making were good ones on that the fact is the stock is still well off of its all-time highs and some of the damage has already been done. here is the magnitude of the further damage they think can happen between now and the expiration so using a spread, i think, makes sense for both of those reasons. >> okay. looking at nike. now let's talk about a pure play retailer -- one that might be a good -- that might be a good play and a good defensive play even in this market environment. the stock has been doing well. mike khouw, let's stick with you. let's talk about dollar general. generally viewed as a recession play and what do you think the play here might be >> okay. >> so this is an interesting situation, dollar general because this is one of the stocks, i think, that carter had

been discussing and had mentioned that he thought it was probably a defensive type of a play in this situation, and you know, i'm sort sort of inclined to agree with that i think the trade that we should use here is a call spread reversal was the june 185, call for risk reversal. so it's in the 165, 185 call spread and selling the 185 puts to help finance that in this instance, it was trading for very close to even so you would collect 50 cents at the closing price that i was look at you will get participation from 165 to 185 and if the stock should trade lower and i was looking at very close to the lows when the market rolled over and we saw the worst in march of 145. that's basically where the stock was bottoming out and i think it hit about 140. that's essentially where you would get long the stock the idea is you get upside

participation and you get a buffer to the downside and that's basically one of the things you want to take a look at where stocks you like might see further downdrafts if you get further weakness in the markets. >> carter worth, this is one of your ideas, as well. d.g. >> it's all about defense, and this stock just to be as blunt as possible is outperforming walmart which is one of the most defensive securities in the marketplace and what we also know is beta, it's much better in terms of being low relative to staples and etfs and you see that on the screen any also its performance year to date and there are two stocks in the entire consumer discretionary sector if you look at the chart going up that are up and the only other one is amazon now this is -- this is an important defensive play and what i will also point out and you'll look at the next chart coming forward is that this has been in a solid uptrend for the

better part of four years and has not cracked on a relative strength basis and we're making new all-time highs as we speak so this is a setup that i think ultimately offers both upside as well as downside protections and something that is basically not really on the radar screen when one thinks of consumer discretion and to be as defensive as walmart without the grocery exposure is an important circumstance so dollar general, and ultimately for a breakout. >> tony zhang, your take on the dollar general trade that mike and carry the talked about >> i really like the options trade because mike has found an inexpensive way to play for the upside about 10% lower, but the stock itself i really like this because dollar general is able to capture the stocking up that consumers did right before the lockdown historically, the stock is strong going into recession and

it's one of the few discount retailers that are currently investing in the digital strategy and all around a clear winner in this particular space and as unemployment rises over the next few months consumer will be positioned for all of that >> good stuff, guys. look at the dollar general >> coming up after the break, we'll keep assemblance of normalcy you have questions and our traders have answers that's coming o"oioupn ptns action." you're watching cnbc, the worldwide leader in business we're back after this. ♪ ♪ ♪ ♪ ♪ ♪

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♪ >> all right welcome back time now to take some of your questions. we have time for one question. mike khouw it's a basic one with most money managers saying stocks will be higher, do you recommend long dated options out to january 2022? >> yeah. so you know, it's interesting. the implied volatility has risen as much as the shorter ones and not by quite as much and the fact is there will be elevated volatility for some time and if you're looking for a way to manage your risk and take a longer term bullish view and purchasing longer term options is the way to go and i would consider selling near-data ones to help offset some decay. >> good short answer there and

let's take another quick, short break and we'll be back to wrap it up on "options action." it was a wild week the dow down and ending about 3% 3% we are back right after thisty. 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. ♪

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we'll see you in two week, good friday, the market is closed next friday and most importantly, if you missed it earlier. a happy 50th wedding anniversary to the two people i care about the most in winchester, virginia i wish i could be with you tomorrow, but anniversary tomorrow but i can't be well. mad request jim starts now. my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica i'm just trying to keep you from losing too much money. it's my job, not just entertain, educate, teach you call me 800-737-cnbc o