happy friday i'm courtney reagan in for mel his lmelissa lee. economic uncertainty at the heart of that volatility some of it crystallizing in the u.s. dollar and spilling over into the rest of the globe carter worth is going to take us on a trip around the world of worry. then as the world turns, so do the wheels on lyft cars. tony zang is going to take us on a drive with a recovery play on

that name. finally, what if you're caught in the middle? you rode the recent rally but got in trouble with this week's weakness it's time to risk less to make more let's kick things off with the dollar seeing a bit of a rebound today after more commentary out of the fed this week put pressure on the greenback. the dollar still down 5% from all-time highs and just narrowly positive on the year the emerging market's etf which typically benefits from a weaker dollar also seeing gains today but still underperforming the broader market this year carter worth warns there could be more trouble brewing. take it away what have you got for us >> you covered all the salient points that's exactly right we know that emerging markets are often debt laden than boring in dollars when the dollar weakens that deflates the debts

that's a good thing. or a lot of commodity exporting countries, a weak dollar is good for them while emerging markets did do well, they've still yurnld perfo underperformed the s&p let's look at a few charts we know that the dollar peaked on march 23rd and we know of course the s&p bottomed as there's fear people fly to safety in the dollar we know here that 7% decline from the march 23rd low, that weakness in principal is good for emerging markets emerging markets have underperformed the s&p with that tail wind of the weak dollar i think that's part of the problem. next slide take a look at simply the numbers. this is spy versus eem from the march low. with the dollar weakness, you still don't have outperformance. almost always when you get a

real dollar drawdown you do get emerging market relative performance. not this time. finally the chart. take a look here at a five-year chart of eem the top panel is eem itself. you can see how we break trend and we've had this big ricochet back to the under side of the trend line we hit our head right there. most importantly is the relative performance, the bottom panel. all of the strength and yet no relative performance to the s&p, basically wallowing at five-year lows it's not good. i think you've had a big move. now i think the dollar is going to perk up, which would then put pressure on eem. >> there's been so much to think about here, carter i haven't spent a lot of time thinking about the emerging markets. mike, what do you make of all of this and then how we trade it going into next week

>> there's another thing that we actually saw this week that would give you concern not just about emerging markets or not necessarily playing on a rebound in the dollar necessarily but just whether we're in a risk on or risk off or just a more cautious environment another thing that we certainly know is that if you take a look at something like eem, which is a basket of emerging market equities, you're going to expect to see some correlation with equities globally generally. we obviously saw some cracks in the ice yesterday for sure and today although we did finish a little bit higher on the day, i'm not sure that the kind of price action that we saw is one that should give everybody a great deal of comfort. it would have been a lot different had we opened this morning lower and finished higher rather than opening higher and muddling our way through to a mildly better result eem contains a lot of different kinds of companies the largest constituent of that

indiana dex is baba i think if you're thinking correlation could spike up again, that we could see an increase in volatility like yesterday and also playing off the technical and fundamental factors that carter outlined, i think you might think of putting on a put spread. the price of options is a little bit higher now than it was going back six months ago but it is substantially lower than it was at the depths that we saw in march. so i think this is the kind of structure that still makes sense to essentially be net long premium. i was looking at the august 39 put spread the 49 puts are the first out of the money puts you could buy those were costing just a little over $2. you would sell the 34s against it for 75 cents. net-net you're spending $1.30. we usually look at these put spreads to pay 20-25%.

this is marginally higher than that but it's well justified given what we've seen over the last two days. >> tony, is that worth paying a little bit more for this trade does this make sense to you? >> i actually thought mike got a really good price on this particular trade first of all, i couldn't agree more with carter's charts. i really think the dollar is going to move a little bit higher you have a negative 70% correlation between dollar and eem so you have a good probability of this etf moving h lower. he's really reducing the cost of those puts that he's buying and gives him about a 3-1 risk to reward ratio on this particular trade. i actually think it's a pretty cheap trade to make because he's only risking about 3% of the underlying etf value to take

this bearish bet. >> if you're feeling bullish about the economic recovery and looking for a name that could drive the opening trade forward, i understand you have a way to put a little extra lift into our portfolios >> yeah. as all 50 states head into reopening, we know that there are at least eight states that have seen a significant uptick in terms of covid-19 cases while i don't think this is necessarily going to derail the reopening, i do think this is going to push consumers potentially to use ride share as opposed to public transportation i specifically think lyft is better suited to this uptick than uber. i think the chart for lyft is fairly constructive. you have a breakout above $35 resistance it's come back to retest that as support. i think this is coupled with the relative strength constructive for the stock to continue moving higher now, the company did provide guidance a couple of weeks ago which provides us with a lot of information as far as how they're growing. what we saw is from april to may

they grew ride share growth by about 26%. bike rides were up 118% and they lowered their ebitda loss by about 35 million the number of ride share growth is double to triple the national average. as cities reopen, that's going to significantly boost that growth in terms of ride shares if you think about the elevated implied volatility here over the past few days and the fact that the stock has moved quite a bit on this positive guidance, i think there's somewhat limited upside here on lyft, but i do think that $35 support is pretty solid. the trade structure i'm looking to use here is one to sell volatility i'm going out to the july 10th weekly options expiration and i'm selling the 36.5, 31.5 put vertical

i'm paying about 1.3$1.30. i'm collecting about 1.90 on this credit spread the break even price on this spread is about $34.60 which is right below the $35 support level that i expect lyft to stay above. >> mike, tony liked your trade are you going to applaud what he's working with here for lyft? >> despite the fact that i was buying a put spread and he's selling one, i do like it. sometimes it makes sense to buy put spreads and sometimes it makes sense to sell them he's outlined a very good case for selling a put spread here. number one, whenever you're looking at selling vertical spreads, that's pretty attractive math when you take a look at it even if it runs to the long

strike on the downside it's not going to go to the maximum value of the spread, in this case $5 immediately. the other thing about it is that i also agree that we're not expecting to see this thing take off here this is a stock that over the last 12 months hasn't looked all that terrific. finally in this space you really have only two companies, uber and lyft of the two, i definitely prefer lyft when you take those three things and combine them, i'll leave the technicals to the guys who know for about it but when i look at the options trade this one makes sense to me and i definitely prefer lyft to uber. >> the key is that you almost have to do it as a put spread, meaning you have to have more n.

we know this stock ipo'd on the 28th of march and basically went straight down already we've rallied 180% you've had a huge rally. there is no big lyft coming day to day week over week so that more nuanced approach is the way to do it coming up next, did you sail too far offshore and get caught in this week's market mastorm? turn on my tv and boom,

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maybe a couple throw pillows would help. get a strategy gut check from our trade desk. ♪ welcome back to "options action." check out the huge reversal in the market this week the s&p 500 finishing nearly 5% lower than where it closed last friday it wasn't just big time traders who got burned kate rooney joins us with more on how retail investors are faring hi, kate happy friday. >> it was a wild week for a lot of retail investors. bullish traders using robinhood had been picking stocked hit by the pandemic which saw the best returns over the past two months but yesterday these top names on the app were all in the red. according to third party tracker

robin track, ford was a top pick that was down about 10% yesterday. the airlines meanwhile which had been a winner for robinhood investors as those rebounded were down double digits yesterday. a lot of those names were back up again today with the broader market but another name seeing surging demand and trading volume on robinhood today hertz. that stock seesawing this week despite its may bankruptcy filing barclay's weighing in on this trend this morning saying that robinhood and other retail traders are not behind this year's rally their favorite stocks tend to underperform analysts say more robinhood customers moving into a stock has corresponded to lower returns, not higher returns. >> this is all so fascinating, kate i know you're going to continue

to keep us updated on all these retail investors' moves. if you happen to be one of the investors who maybe got caught off guard by this week's wicked reversal, not all is lost. professor mike is here with the call to action take it away professor >> it's interesting. i don't think there's an options trader on the planet who hasn't heard the following request. i bought a stock, now it's down. can i use options to bail myself out? well, the bad news is that if you're lost money, there's nothing in the options market that's going to necessarily give that back to you, but there are ways you might be able to make more money back than you lost if the stock returns to the level whence you bought it here's the situation in ford if you bought the stock earlier this week, perhaps on monday

which was its high for the past month, obviously you've taken some significant punishment since that time. so what can you do in the options market first of all, you want to look at stock recovery strategies that's what we call these when you've bought a stock badly. if you bought ford on monday, i think we can all agree you bought it badly. when you do this, you're probably expecting the stock to enku encounter some form of resistance if it returns back to the level you bought it. people who bought it badly are happy to recover the money they lost and they're looking to exit without any pain that creates a lot of upside supply finally, you don't want to simply start throwing more money at the problem by doubling down for example. if you love the stock at 7.50 therefore you have to love it at 6.5 and so on. one of the things you can use is a one by two call spread

overlaid against your long stock position you could buy one july 7 call, that would cost about 39 cents then you could sell two of the eight strike calls against it for about 18 cents each. net net you're going to spend about 3 cents per share to put this trade on. essentially the idea is that above that $7 strike that you're long, you're essentially going to double the gains that you have on your stock if it recovers back to that 7.5 level, you'll break even on your stock, but you're going to make 50 cents on the one by two call spread if it does get up to that level, you'll achieve what you originally intended to do which was to buy the stock low and sell it higher if you're selling it at 8 that would be higher since it never reached that level this week the stock has had a pullback but not so far you have to abandon

it entirely. you're going to try to give your position a little bit of extra juice so that it if it gets back to where you bought it, you'll end up being profitable instead of just breaking even. >> does this help someone who bought ford badly this week? >> it gives them some hope and that's the point i think just conceptually there's a common circumstance. if you were to look at dupont or ford motor or american airlines, they all have the common circumstance of a credible weakness and they all doubled. american airlines went from 10 to 20. dupont went to 30 to 60. and ford went from 4 to essentially 8. there are hundreds like them it's not idiosyncratic to ford it's that a lot of money has gone into beaten down names and most of the moves were way overdone. >> a lot of these interesting beaten down names this week, the

hertz one still makes me scratch my head. tony, what do you make of this trade? i know you gave us your trade on lyft earlier autothou >> so first of all, this particular type of strategy, a repair strategy is one that on the surface might be fairly complicated for someone who's never traded options before. the better way to think about a one by two call spread is think about selling a cover call on the stock that you own and using that proceeds to buy a call debit spread that's exactly what a call bun one by two spread actually is. there are a few nuances about this strategy. it is a fairly creative way to utilize options to get yourself to break even sooner there are two caveats. number one, it doesn't provide any additional downside protection if you think ford is going to continue moving lower, this strategy will not provide you any protection you're probably better off selling the stock. conversely, if ford rallies

quickly this is going to show a paper loss at first and you're going to have to hold onto this through the july expiration to utilize this type of strategy. it's a very creative way to utilize options to allow you to get yourself back to break even without additional risk. as mike said, if this is a trade that's gone against you, sometimes the best lesson to learn as an investor is to cut your losses, take a small loss, move onto the next trade as opposed to trying to find ways to get yourself back to break even which typically means you're taking on even more risk and that becomes a slippery slope. that's how i think most investors should be thinking about this type of strategy. >> a lot of lessons there. up next, crude getting crushed this week, falling more than 8%. we'll tell you what the energy meltdown means for one of our

traders. plus, we are taking your tweets. send us your qstnueio questions @optionsaction ♪ ♪ ♪ ♪ ♪ ♪ ♪

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♪ ♪ ♪ ♪ ♪ welcome back to "options action." it's time to take a look back at some of our open trades. >> this has come a long way,

crude also i think it's going to be ripe to harvest gains if you're long and those looking for new short sales, xop, that's our idea. >> i was looking to july this 6055 put spread bearing in mind that options are still pretty expensive in the space. you could spend about 1.35 for that put spread paying about 2.60 >> the xop plunged about 10% since that trade mike, what are you doing now >> yeah. so i often ask people to follow us on twitter. i pay attention to what you guys tweet to us as well. i know a lot of you have already taken your profits on this trade yesterday when it got very close to the short strike. that's what you should do, take your profits and run you should take the money on this one >> meanwhile, tony zang said it might be time to get long on the consumer

>> i managed to break out above that 185 level and came back to retest that as support this week and is starting to be fairly constructive on a move higher. couple that with the fact it's bounced off the 20-day moving average and you have a really good risk/reward for a long trade on dollar general. i'm paying about $5.80 for that july 185 and i'm collecting about $1.10 on that july 200 call option. >> dollar general hung in surprisingly well this week, down only 2% since that trade. tony, what are you doing now >> so i love the fact that dollar general has held up it's trading just at 1.84 this is the support level that i reference in the trade the fact that the trade is still flat, i'm going to hold onto this trade since i have all the way through july i think dollar general will

continue to move higher as consumers come back. >> okay. you're holding on. just as mike said, we're rdieang your tweets. up next, we're going to answer them so what are you working on? >>i'm searching for info on options trading, and look, it feels like i'm just wasting time. wasted time is wasted opportunity. >>exactly. that's why td ameritrade designed a first-of-its-kind, personalized education center. see, you just >>oh, this is easy. yeah, and that's >>oh, just what i need. courses on options trading, webcasts, tutorials. yeah. their award-winning content is tailored to fit your investing goals and interests. and it learns with you, so as you become smarter, so do its recommendations. >>so it's like my streaming service. well exactly. well except now, you're binge learning. >>oh, i like that. thank you, i just came up with that. >>you're funny. learn fast with the td ameritrade education center. call 866-296-7451 or visit tdameritrade.com/learn. get started today, and for a limited time,

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- we did it!c) (crowd cheering) - [narrator] wherever you start, snhu is where you can finish. (crowd clapping) (crowd cheering) - here we go. - [narrator] and it's it. - [group] yay! - [narrator] you did it, high five! - southern new hampshire university. - [man] that gets a hug. (laughing) - look at that! master's degree, i did it! - i did this for my children. i am very proud of myself. - [narrator] finish your degree at snhu.edu. welcome back to "options action." a quick fwetweet. how would you play a microsoft $200 july call position?

carter >> i think it's going to be real close. you'll probably end up at 200 but you'll have a lot of decay i think i'd sell at 210 and bring my break even price lower. >> that does it for us here on "options action. we'll be back next you 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. i promise to help you find it. "mad money" starts now >> welcome my job is not just to entertain but educate and teach so call me or tweet me. this market is inc