coleman: if he can succeed, the government can collect a portion of that income, which will then go back to victim investors. i think, from a purely voyeuristic standpoint, it's going to be great theater to watch. captions by vitac -- happy friday for you it's time for options actions. we have a great show for you here's what's on deck. >> keep your receipts. carter worth isn't buying the data he's drawing up signs to guide you to the returns aisle right now. but. >> there's a lot of upside here. >> it's still a party in other areas of the markets you bring the chips. and new to options action. >> that sounds like the perfect

question for professor ko. >> you're not along. as individual investment options grow, so is the marketplace. how that could benefit everyone with more diverse products, actions. "options action" starts right now. >> let's get to it a slew of retailers ondeck to report quarterly results next week but despite today's pop in data, the recent retail wreckage isn't over yet what are you seeing in the charts, carter >> we did get data as you mentioned, retail sales today reported that the total value are now higher than covid, so that's in a way bullish. but the stocks reflect let's look at charts the first is a comparative chart. you're looking at xrt, the

retail etf, 88 stocks, $3 trillion versus the s&p one year chart trailing 12 months we know this index is double the performance of the s&p, up 36% versus the s&p up 18 so how much is priced in this is a two panel chart and it's another way to look at the circumstance in question what you have here is the xrt on top going back to its inception with its 150 day moving average. on the bottom is a calculation, showing how far above or below the xrt has gotten in relation to its 150 million average and we are now as high as we were coming off the '09 crash overbought comes to mind the third chart is a comparative chart, two panel looking at xrt on top, and the

xrt the weighted index versus the xry, the actual. and this counter trend move on the bottom panel, this relative outperformance period, every time we've gotten to the trend line, it's failed. the bet here is it's going to fail again as a relative outperformer and start to falter and finally the absolute chart of xrt itself you have the incredible move of the plunge in march to a well defined prior top in principle before exceeding a high, a stock will contend with a high, which is to say back in fill or back away. we just approached the former high, the thought would be to hedge, trim, take some measures before someone does it for you. >> thanks for that carter, mike

what is the trade out of this? >> when you talk about equal weight versus cape weighted indexes, what we have here and what carter was eluding to one is that you're heavily dependent on the winners, that's a good thing, too. whoever wins, as they go up they increase their weight to the index and the ones underperforming have a smaller and smaller impact what's interesting here, you look at something like rent a center, that's the same weight as amazon in this index. hard to imagine. something like 15 auto parts or car dealerships in this. you have to understand given the economic environment we're in, some of the big durable good exposure has to be in jeopardy looking at it from a volatility perspective, we see it's fallen

and we see volatility come in the broad markets but we often see increases in volatility after labor day. so looking ahead to that, rather than involve myself in a spread, i was looking out to the october 2nd weekly, those are trading for about $1.85 when i was looking in you may wonder why i chose that expiration usually when i'm trying to follow carter's set up i'm looking for 60 or 90 days. the idea is to carry through labor day, september we're trading just at the all-time highs right here. there is definitely some companies here that haven't been on the radar, but they obviously could be exposed if the we start to see some significant consumer weakness. >> tony, what do you think >> i like carter's chart work but i want to warn investors

it's hard to shorten this market, especially the strength in xrt if you look at the constituents of this etf you have a lot that have reported over the past couple weeks, they rallied into the earnings reports but have now slowed or reversed if you look at stocks like overstock, carvana a lot of the stocks have started to stall their momentum and move lower. i think the opportunistic play here, but i think the key is to limit your risk as small as possible that's what mike is doing using a put here for investors that may want to limit further, trade this and use a put sped but the trade i like. >> why not a put spread? >> there's two reasons for this. a lot of the names, these things are trading at head divall way s

you combine it with other general weakness that could hit it hard. i'm not opposed to spreads i love the spreads, but you want to wait until it starts to roll over and then look for your opportunity to sell the downside strike or roll this one. this gives us flexibility. is there risk? yes, but we're looking at 4% of the current xrt by putting this on it's not a significant risk and a lot less risk than shorting xrt. >> is there retailers you don't like even though you like the overall index. >> sure. walmart, target are quite good but overstock, of the 88 stocks, overstock is the biggest weighting in xrt, it's 5%, the next closest is 2. they were basically priced for

bankruptcy before covid hit, trading at $2 now at 100, that's a 50 bagger off the low. if you look at the stocks, all technology stocks, all stocks in the russell 3000 the number one performing is overstock and it's the biggest weighting in this equal weighted etf. too hot. >> we're also getting more numbers out of the semiconductor space. tony says this chip could rip on the announcement, what are you looking at >> i'm looking at invidia, the stock is incredible, driven off two sectors, gaming and cloud computing which in video has dominated even before covid and since covid we poured fuel on the fire we expect q2 earnings to be strong because you see gaming and semiconductors to be strong

throughout covid but the important thing to look at this particular quarter is the guidance going into the second half of the year, predominantly around gaming which i expect to be very strong and this is coming down to the fact that you have an x box and ps 5 launching in the fall that generally gets gamers to upgrade their tech and invidia has a share in guidance is important here if we look at the chart, not a lot to stay other than incredible strength recently broke out above the 430 resistance level, support is now starting to move higher. that's the set up i like to look for going into an earnings event and the options are implying a 7.6% implied move versus 4.9%

over the last quarters but invidia trades at a large premium to its peers, 56 times next year's earnings as optimistic as i might be on the stock i think it's fairly valued and somewhat limited upside the trade structure i'm looking to use reflects that, going to september, selling at 450, 415 put spread, paying about $10.60 on the september 415 puts. net here collecting about a $12 credit on this $35 wide credit spread which is about a third of the width here my break even price is 438 as long as it trades sideways, moves higher or a little bit lower i can be profitable on this trade and i'm only risking 5% so in the event it moves out

lower i'm only risking 5% of the price to make the bet. >> do you like the trade, mike >> i like the trade structure. it's almost impossible to short a stock this expensive and going up the street is overwhelmingly bullish on the name but the stock has gotten well ahead of the average price target sometimes that's a sign that the investors know something that analysts don't or at least haven't gotten around to tell us yet. if you're following the technical set up, i'm not the technician on the show, this is a good way to set up the bearish bet or hedge the long. >> do you agree, kraecarter. >> it's an incredible uptrend, but you also heard from mike that the street is it bullish. 34 buys, only 2 sells, price target 12 months from now is

$415, the stock is 462 the streets had it wrong it's been a monster, incredible, now you make your bets before earnings. >> check out our website options actions cnbc.com sign up for our newsletter, here's what's coming up next. >> announcer: coming up, you have options and you're getting more of them professor ko explains why new product slices could grow the pie for everyone plus, 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 ♪ ♪ ♪

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welcome back to "options action" we've tackled the explosion in volume options for a while now. as you know you can't talk options without talking volatility, especially with the best performing index, the nasdaq 100 there's a brand new way to track the volatility, if you wonder why it should matter to your portfolio you're in like, professor ko is here mike, take it away. >> it's not out yet but it will be soon. we're talking the nasdaq 100 volatility index, they'll offer futures on this, which you trade on the cme and subsequent there'll be options trading on it if you don't trade the products they'll be fairly big products, the multiplier about 1,000 this

matters. as you pointed out the nasdaq 100 is the best performing index this year. the volumes of options have been exploding essentially. we can look at the history of volumes options traded in the united states it's gone up 50% in the last three years and also a big increase in the interest enter trading in volatility strategies opini strategies it's easy enough to see how much the market is moving around but these products tell us how much the markets anticipate it'll move around. when you involve yourself the way money is made and lost is the difference between those two. volq tracks the nasdaq 100 there's a big difference in the way these are calculated the vik, absecure to understand

because you have to look at a waited strips of options that expires 30 days from now but the way most traders look at implied volatility they look at options at the money so this will be continuously looking at options from the day you look at them but it's at the options you're looking at the first two out of the call strikes and put strickes are th way to look at this. that makes sense to people as we see the big increase in the amount of information available to investors, some competition and more underliers i think that's a win win, a win on pricing, transparency and price discovery in the marketplace and investor choice so i think it's a positive development. >> do you think this will be useful, tony >> yes

when you look at an investor's portfolio it's more to look like the nasdaq 100 rather than the s&p 500. so it's important to have an index that tracks your portfolio so this encourages the 100 to have a hedge for their tail risks here the calculations here are different from the vik because the volq is more aligned with what traders use for, when they're using implied percentile or rank, it's much more in line with those calculations that investors use and also what's interesting they'll calculate a call and put deck so you have an understanding of skew between the call and put side. so these are all advantages to the index that i think is going to be interesting to look at as they launch here on the 5th.

>> carter, your thoughts >> the more the merrier, more vehicles, more ways to participate is a good thing, not a bad thing. in terms of the explosion volume, think of slv options never traded more than a million contracts and in the past ten sessions you had six days this happened this is to the point of more investor interest and opportunities both to do very well and of course also to hurt one self. >> mike, last word >> i think the other thing i would say is because of the nuance between the difference of that themselves is going to present a trading opportunity. the more specific you can about the things you want to bet or and the more taylilored you can be, that's better. and this might be an opportunity to trade against the vik >> a sysco slide

how the tech stocks fall on earnings this week we are taking your tweets send us your questions and we'll answer some of them on air we'll be back right after this ♪ ♪ ♪

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oh yeah, you going to place it? not until i'm sure. why don't you call td ameritrade for a strategy gut check? what's that? you run it by an expert, you talk about the risk 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. ♪ welcome back to "options actions" last week tony laid out a way to put sysco into

earnings. >> it's the backbone of the internet hair business and trades at a valuation like john deere. and it's made strategic acquisitions in the cloud security business i think 2020 is a turn around year for cisco. the trade i'm looking for is to use a september 47.5, 52.5 call spread paying about $1.85 for the 47.5 call collecting about 35 cents on the 52.5 call. >> as we know cisco's results disappointed but this trade helped mitigate some of the pain you could have been feeling otherwise. so what are you doing now, tony? >> so cisco's reported earnings beat revenue so what we saw is a 9% drop in the underlying stock price but this is why we use call spreads like this to limit the risk we're taking. stocks down 9% the strategy itself when we

tweeted on thursday morning only lost about 2.5% of the underlying stock price so you were able to mitigate a lot of the risk compared to buying the stock. this is a prime example of how you can utilize options to limit your risks on a trade like this. >> meantime, carter laid out a way to lay out the space. >> everyone knows what a break out is, do they always work? of course not but this is the set up we look for we know we have earnings coming up in two weeks, john deere closed at 18350. i think it's going to 200. >> the calls earlier, sell the august 194 calls for $1.10 net net i'm spending $1.65 that's 3% over the current stock price. >> deere jumped about 5% this week, so mike, what do you do? >> this is one of those

situations when you go to a store and it says act now. that's what you needed to do on monday morning because this stock did trade below 185 monday morning but it was off to the races 186.5 by 10 and mid week hit our tarkt of 195 obviously it works in our favor, some may have gotten in, others maybe missed the boat but it's worked the way we wanted to and i think we see a decline in the 185. >> you stay in the charts? >> very good action continued this week in chemical names, fertilizer names, john deere having a big week. the earnings still come next friday and presumptively it's a catalyst for further gains. >> up next we have your tweets and the final call i'm searching for info on options trading, and look, it feels like i'm just wasting time. that's why td ameritrade designed a first-of-its-kind, personalized education center.

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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, 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. ♪ welcome back to "options action" if you caught up at the top of the hour, you heard that warren buffett took a new stake in gold. we have a tweet on gold, one person asks should i sell it for a loss or hold it? carter what do you say >> i think you sell it if for a loss we know gold has pulled off nine con success tiff weeks in a row up, that's only happened three other times in history, 1980,

2003, and 2006, and looking forward, those other times gold was down consistently one month, three months, six months gold got a little hard, too far to make it to 215. take the loss and move on. our next viewer asks spy mar 290 puts what do you think? >> i like spr. that's a little far out and down, 30 deltas, 30 days that might be my answer. >> time for final call the last word. carter, what do you say? >> xrt it's a way to bet against consumer retail based names. we like it on the short side >> tony? >> i'm looking for a continuation into the surge in gaming, selling of put vertical spread here in invidia. >> i didn't know about volq, i think that's an interesting product. >> it looks exciting

i'm looking forward to it. x 50 strike puts. >> we will be back here next friday at 5:30 p.m. eastern time meantime, don't go anywhere. "summer school" is back in session. - [man] the following program is a paid presentation for the oxypure air purifier brought to you by nuwave, llc. asthma and allergies are at an all time high, and it seems to get worse every year. it's not your imagination. allergy season continues to get longer and more intense as temperatures rise, and airborne viruses are becoming an epidemic problem worldwide, with the changing environment, and unseen dangerous air pollution surrounding all of us. you need clean air more than ever. if you suffer from mold, dust, pet dander, smoke, odors, or sleeping problems. discover the nuwave oxypure air purifier.