happy friday a "options action" i'm courtney reagan in for melissa lee. another volatile session ending nowhere near today's highs. economic uncertainty at the heart. some crystallizing in the u.s. dollar and spilling over into the rest of the glob taking us on a trip around the world of worry, but then as the world turns so do the wheels on cars taking us on a drive in the opposite direction whip the recovero

with the recovery. and what if you rode the -- it's time to risk less to make more let's get right to tornado a kick things off with the dollar. seeing a bit of a rebound after dovish commentary out of the fed earlier this weekend put pressure other than the green back dollar fodown from 5% from its all-time highs and etf typically benefit seeing gains today still underperforming the broader market this year and a warning, could be more trouble brewing. carter, take it away what do you got for us >> covered all the salient points exactly right. we know emerging markets are often debt ladened and barrows dollars the dollar weakens deflating the debt a good thing weak dollar. a lot of commodity exporters,

this is good for them. peaked two months ago and while merging markets did well they still underperformed the s&p that's the problem i think. look at a few charts not a chart to put this in context we know the dollar peaked march 23rd and of course s&p bottomed, as there's fear. people's flight to safety in the dollar look at the next slide we know lehere is the 7% low this is good for emerging markets. yet etm merging markets underwormed. the next slide look at numbers. spy versus em from the march low. again, with the dollar weakness you still don't have out performance. typically in -- well, almost always when you get a real

dollar drawndown this happens, not this time. finally, the chart five-year chart of eem top is eem itself. we break trend then a ricochet back to the underside 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. ip think you've had a big move and now i think the dollar is going to perk up saw a bit of that today, which would put pressure on eem. >> so much to think about here, carter i have to admit i haven't spent a lot of time thinking about the emerging market. glad you brought is back home. mike what do you make of this and how we straight going into next week? >> you know, so there's another thing we actually saw this week

that would give you concern. not just about emerging markets or playing on a rebound in the dollar necessarily, just whether we're in a risk on or risk off or a more cautious type environment. another thing we certainly know is that if you look at something like eem a basket of emerging equity markets, you'll see equities globally generally we saw cracks in the ice yesterday for sure and today although we finished high other than the day i'm not shufr the price acti sure it would give everybody comfort. opened higher muddling our way through to a mildly better result eem and etf is an interesting instrument containing a lot of different companies. largest constituent is baba.

different than petrofoss or others thinks correlations could spike up volatility like yesterday and playing off technical and fundamental factors that carter outlined here. i think one of the things you might look at doing put on a put spread price volatility, options higher than six months ago but substantially lower than it was at the depth we saw in march i think this is the kind of structure still makes sense to essentially be net long premium. looking at the august put president. 39 what you could buy earlier costing a little over $2 $2.05. sell the 34s against it for 35 cents. net net spending $1.30 usually look at the put spreads, this isbust

-- but justified given what we've seen over the last two days. >> tony what do you make of that worth paying more for the trade? does it make sense to you? >> i thought mike got a good trade. i agree with the puts. negative 70% correlation between dollar and eem a good probability of this etf moving lower actually what i liked about mike's trade, the 34 strike he's selling correcting about 75 cents offsetting almost a third of the cost in the $39 puts buying redeesing those costs and giving only a 3-1 risk to reward ratio on this particular trade a cheap trade to make only risking 3% of underlying ets value to take it back. >> feeling bullish about the

economic rov rained loecovery a for a name to drive it forward, you have a name to put a little push in our portfolios what are you working for >> as all 52 states move to reopeni ining at least 8 states an uptick in covid-19 cases. i don't think it will derail the reopening but moving hide shares as opposed to public transportation that lift is better suited than about perp lo uber the chart for lyft, breakout aboves $35 resistance and come back to retest that as support this iswith a strength for the company moving higher. the company provided guidance a couple weeks ago provided a lot of information how they're growing. we saw from april to may they

grew ride share growth by 26%. bike rides up 118% and they lowered their ebitda loss by about 35 million for q2. look agent the cities reopened, number of ride share growth doubled to trip the national average. i expect as estates and cities reopen that's going to significantly boost that growth in terms of ride share so if you think about the elevated implied volatility over the past few days and the fact the stock moved quite a bit on this pro guiositive guidance, a limited upside on lyft but the $35 support is pretty solid. trade structure looking to use, one to sell to volatility. july 10th weekly explanation, selling 36.5, 31.1 -- 31.5 put

payings 3ds 1 for the put. net-net collecting $1.90 on the credit spread about 35% of the w width and breaken, $35.60. right below the level i expect lyft to stay above. >> hmm well, mike, tony liked your trade. what do you think? applaud what he's working with here for lyft? >> yeah. despite the fact i was buying a put spread and he's selling one die like it. there's a time and place for every trade. sometimes makes sense to buy put spreads and sometimes to sell them what tony's outlined is a good case for selling a put spread here number one, looking at selling vertical spreads and collecting somewhere close to 40% of distance between stripes at the outsets that attractive math when you look tat. even if it runs to that other stripe, the long strike on the down side it's not going to the

maximum value of the spread in this case $5 immediately you'll have time to look how you'll trade it. other thing is, also i agree we're not expecting it to take off. a stock hasn't looked all that terrific last 12 months if you asked me upside likely mild finely, in this space you have two companies to think about uber and lyft. of the two i prefer lyft take the three things it combine them together, leave the technicals to the guys who know more about it, tony and carter the options trade, makes sense to me and definitely prefer lyft to uber. >> toss the ball back to you, carter what do you make of levels here on this lyft trade. >> almost have to do it as a put spread something more nuanced than make ag directional bet as chart a stock, only one word, disaster if your first day in life is your best day, not good. right? we know this stock ipo over 28th

of march $72, printed 87 the next day and basically went strain down thereafter hitting a low, what? 14, 15 and, yes, already rallied 180% one had a huge rally two, established down its entire career and there is no big "lift" coming week after week, month over month and nuanced approach is the way to do it >> a bummer way to think about that huh? the best day -- first day, the best day hope all of our best days are still many years to come. coming up next, did you sail too pfaff offshore and get caught in this week's waves? for everything "options action" check out the website. optionsaction.cnbc.com while there sign up for our newsletter back after this. >> announcer: "options action" responsibled by --

♪ ♪ there are times when our need to connect really matters. to keep customers and employees in the know. to keep business moving. comcast business is prepared for times like these. powered by the nation's largest gig-speed network. to help give you the speed, reliability, and security you need. tools to manage your business from any device, anywhere.

and a team of experts - here for you 24/7. we've always believed in the power of working together. that's why, when every connection counts... you can count on us. it's got all my favorite shows turn oright there.boom, i wish my trading platform worked like that. well have you tried thinkorswim? this is totally customizable, 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. ♪ welcome back to "options action." just joining us check out the huge reversal in the market this week s&p 500 finishing nearly 5% lower than it closed last friday and it wasn't just big-time traders who got burned joining us, we have more how retail investor are faring hi, kate happy friday. >> happy friday. hey! it was a wild week for a lot of retail investors bullish traders using robinhood, hit by the pandemic sought best returns overthe past two months as the market's momentum turned around top names in the app all in the red according to third party tracker robin track ford top pick down

10% yesterday. airlines meanwhile which had been a winner for rob. hood investors, those repounded, down double digits yesterday in robinhood. a lot of names up again with the broader market another name surging demand and trading volume on rob. hood today, hertz. that stock seesawing despite may brun bankruptcy filing. allowing the stock to do a secondary stock offering of a billion shares even though the value could get wiped out. barclays weighing in on the trend saying robinhood and other retail traders are not behind this year's rally. favorite stocks tend to underperform analysts say more robinhood customers moving in to a stock has core responsibilitied to lower returns. not higher returns courtney >> this is also fascinating, kate, and i know you'll continue to keep us update and the retail

investors' moves. if you happen to be one of the investors kate's talking about maybe caught off guard by this week's week of reversal or stuck in a position that hasn't worked out not all is lost. mike khouw has a with to rescue the lost profits take it away, professor khouw. >> yeah. interesting. i don't think there's option trader, bought a stock, now down can i use options to bail myself out. bad news, of course, if you've lost money nothing in the options market that's going to necessarily give that back to you, but there are ways that you might be able to make more money back than you lost if the stock simply returns to -- to the level when wednesdhence you bou. you bought the stock earlier,

perhaps monday, high the past month, obviously you've taken significant punishment since that time. so what can you do in the options market first, look at stock recovery strategies what we call these when you plot a stock badly. if you bought ford monday, we can agree you bought it badly. the other thing is, when you do this, you're probably expecting the stock to encounter some form of resistance if it returns back to the level at which you bought it makes sense. carter often will say, people who bought it badly are very happy to recover the money they've lost and looking to exit without any pain that creating a lot of upsid supply. finally, one of the things you don't want to do is simply start throwing more money at the problem by doubling down, for example. if you love the stock, at 7.5, therefore you have to love it even more at 7, 6.5 and so on. one of the things to use, a 1 by

2 stock spread buy one july 7 call, cost 39 cents and sell two of the ate strike calls against it for about 18 cents each. doing that net-net, spend 3 cents per share, $3 per contract the idea, going to dusouble the gains on your stock. recovers back to the 7.5 level, break even make money on the call if it gets up to that level in fact you'll achieve what you originally intended to do. buy the stock low and sell it high perp se higher this is one of those situations where the stock has had a pullback but not so far that you have to abandon it entirely. a situation that basically you're going to try to thread the needle a little here

give your position a little bit of extra juice if is get back to where you bought it you're profitable instead of breaking even. >> i got it, mike. carter what do you think does it help someone who bought ford badly this week >> well, it's -- it's -- gives them hope and that's the, the point. i think just conceptionally it's important to say this. there's a common circumstance. if you looked at dupont, a household name, ford motor or american airlines. incrkrecredible weakness and al doubled. there are hundreds like them it's not ed idiosyncratic to fo, most moves were way overdone. >> yeah. a lot of these interesting beaten down names this week. hertz one still makes me scratch

my head. tony what do you make of the trade? you gave your trade on lyft earlier. automaker, different play, different reasons. how does it look to you here >> yeah. first of all this particular strategy, as mike called it, repair strategy, on the surface might be complicated for someone who's never traded options before think of a one by two call spread think about selling a cover call on the stock you own and using that proceeds to buy a call debit spread. what a call one by two spread actually is. a few nuances trading this type of strategy. it's a creative way to utilize options to get you back to break even sooner. two caveats. it doesn't provide additional downside protection. think ford's going to continue moving lower, this strategy will not provide you protection probably better off selling the stock. conversely if ford rallies quickly, this is actually going to show a paper loss at first

and you have to hold on to it through the july expiration to utilize this type strategy a creative way to utilize options to allow you to get yourself back to break even without putting on additional risk that's not very common to be able to do as mike said, if this is a trade gone against you sometimes the best lesson to learn as an investors is cut your losses, take a small loss and move on to the next trade as opposed to trying to find ways to get yourself back to break even which typically means taking on more risk and it's a slippery slope. turn ag small loser into a winner oftentimes blows up your account. that's how i think most investors should think about this type strategy. >> a lot of lessons. through the paper losses see them initially, making this play out to explanation thank you, gentlemen. up next, crude getting crushed this week. more than 8% tell you what the energy meltdown means for one of our traders. plus, taking tweets. make sure to send us your

questions @optionsaction we'll answer some on-air we'll be back right after this. >> announcer: "options action" sponsored by -- isk and potential profit and loss. could've used that before i hired my interior decorator. voila! maybe a couple throw pillows would help. get a strategy gut check from our trade desk. ♪ 100% online car buying. carvana's had a lot of firsts. car vending machines. and now, putting you in control of your financing. at carvana, get personalized terms, browse for cars that fit your budget, then customize your down payment and monthly payment. and these aren't made-up numbers. it's what you'll really pay, right down to the penny. whether you're shopping or just looking. it only takes a few seconds, and it won't affect your credit score.

finally! a totally different way to finance your ride. only from carvana. the new way to buy a car. this crisis is going to be over know exactly when and we don't know exactly when the stock market will reach its bottom, we've got to be prepared for this to last a long time. if you assume that you're out of work for nine months but you end up only being out of work for three, well that's great. but if you think you're going to be furloughed for three months and it lasts for nine, well that'll be emotionally devastating. so, we've got to prepare ourselves. tangibly and practically, as well as psychologically and emotionally.

♪ ♪ ♪ ♪ ♪ ♪ action." looking back at our open trades. last week khouw and carter said might be running out of gas. the s&p. >> come a long way crude also, and i think it's going to be ripe to harvest

gains if long and those looking for new short sales xop, that's our idea. >> looking to july 60-55 put spread bearing in mind options are expensive in the space. deservedly so. spend about $1.35 for the put spread paying $2.70 for 60 puts, selling 65 against $1.35. >> the xop plunged 10% since that trade just about. mike kwhash mike, what are you doing now >> i often ask people to follow on twitter i pay attention what you tweet to us as well. taking profits on this trade yesterday, got close to the short strike, buy versicles, run the short strike and take profits and run. take the money on this one. >> okay. meanwhile, tony saying it might be time to get long on the consumer. >> managed to break out above the 185 level arnold came back

to retest that as supports this week and starting to be fairly constructive on a move higher. you couple that with the fact it's bounced off the 20-day moving average multiple times and you have a good risk to reward for a long trade on dollar general going out to july, looking at the 185, 200 vertical spread here paying about $5.80 for that july 185 and collecting about $1.10 on that july 200 call option. >> dollar general, hung in surprisingly well down only 2% since that trade tony what are you doing now? >> yeah. love the fact dollar general held up. trading just at 184 the support referenced in the trade. the fact the trade is still flat, holding on to it since i have through july. i think dollar general will continue to go higher as consumers come back. >> holding on.

just as mike said. reading tweets. up next we'll answer those tweets back in two. >> announcer: "options action" sponsored by -- ions trading, a, ions trading, a, 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, get up to $800 when you open and fund an account. that's 866-296-7451,

or tdameritrade.com/learn. ♪

welcome back to p"options actio action". time for a quick tweet carter >> you know, i think it's going to be close. probably end up at 200 but have a lot of decay

i think i'd sell a 210 and bring my break-even price lower. >> thank you, mike, carter and tony that does it for us here on "options action. back next friday don't go anywhere. "mad money" with jim cramer starts now. - [woman] the following is a paid advertisement for the hoover smartwash pet automatic carpet cleaner. (upbeat music) real life is crazy messy especially on your carpets. whether it's kids, pets, or just plain heavy use your carpets get dirty, but cleaning them can be such a hassle, even painful. down on your hands and knees to spray and scrub or struggling with one of those bulky rental machines, up the stairs and all around your house. and did you ever wonder if the last person to use it even cleaned it up afterwards? what did they clean off their floors