ng future for lyles, and i'm happy just to be a part of it. all right, guys, we'll see you soon. jennifer: thanks. greg: safe travels. ♪ jennifer: [ laughs ] greg: that is so cool, son. i'm so proud of you. ♪ happy friday we have a great show lined up for you. here is what is coming up. >> big tech on deck, but watch out for the albatross. it's an earnings armada. and one you might heed the warning of and then, what is the dilley-yo with twilio. isn't that what the kids say well, tony knows it will be broken down into terms you can understand >> and trading his calculator for a combine. to explain why and how, this

could the season to sow a plan around adm it's time to risk less and make more options action starts right now. >> let's jump right in another huge slate of earnings coming up this coming week including facebook, apple, amazon and alphabet. chart masters say investors should take caution before heading into it. >> it is the biggest week in terms of earnings, but there is a circumstance that's only happened three other times the five biggest names are all reporting on the same calendar week it goes back to facebook's ipo the three other times this has happened, apple, microsoft, amazon, google, it has been a down week each time. in any event, let's look at a table or two and then a chart of the qqq.

what we know is that the market itself is so dependent on tech and/or growth. look at the first bullet point basically when tech is down, the s & p itself is down 80% of the time look at the second bullet point. when the growth index -- now we pick up amazon and google and facebook meaning bhig marquee growth names. when the s&p growth index is down, the tech sector is down 93% of the time. so much hinges on just these big names. now take a look at the chart of the qqq. what we know is, it peaked on september 2 the same time the s&p peaked it's the area that broke the hardest dropping almost 15% versus the s&p down only 10, 10 1/2 ever since then its relative

performance has been quite poor. so the question is are these names, having been so ahead of the market for so long and having stalled on a relative basis and reporting in the same week and a little bit of stats would suggest it's uninspiring, is it a time to be cautious on these large names? the thinking is yes. >> so given that, mike, what is the trade? >> this is an interesting situation as carter pointed out. the biggest stocks represent nearly half of the qqq actually, to get to half, you would have to add tesla. the street absorbed that in a hoe hum way. the stock hasn't performed particularly well since then these stocks are all trading close to ten-year highs in terms of valuation

we're talking abou 35 times earnings for microsoft, 35 times for apple, and 32 for google then you look at the options prices we are seeing they are fairly elevated earnings is one reason the election is clearly another. and then there are stories involved with these names as well we have google and antitrust concerns some of those things are going to add to the price of options i think the way to play this, if you hold a lot of these stocks -- and chances are if you own stocks, you own some of these -- you probably need to use quick spreads to deal with the higher implied volatility. i was looking at december. that is going to keep some premium because it will capture the election as well the december 275-250 put spread, you could spend about $11.75,

and net-net, you would be spending a relatively small amount of the qs this isn't a bet that we are going to roll over it is seeing some exhaustion in the market, seeing some exhaustion in these names. seeing these high valuations understanding that some of the head winds might persist after earnings it's hard to see these names breaking out despite the fact that some have a great period of the year coming up. apple has the iphone 12 break out. those are exciting things, but the valuation is in that already. >> if you look at facebook, they had huge runs which might play into your setups and going into next week, in that they might have made these gains already based on snap. what do you make of the trades >> if you look at qqq, it held a

pretty major support level at 282 if you look at the price action this week, i think it's been fairly constructive for the index to hold this level, but one catalyst i am more concerned about outside of the earnings next week is the potential of a contested election i think that's the type of catalyst that could drive technology shares down 5 to 10%. i think mike's way is a good way for investors who want to remain to stay in and take a cheap way to buy yourself some downside protection down to the 2.50 level, which is about 12.5 level, only costing you about 1.5% of the etf value. >> if you are like tony, less concerned about what is coming up and want to buy the protection, you can take advantage of the elevated

volatility by selling some upside calls a lot of these are selling close to their high levels, so you can basically finance this way >> the shares of twilio is up more than 200% tony says it could have a better chance next week tony, what do you say? >> like you said, this stuck is up over 200% this year so far. it is not a household name so not a lot of investors know what they do. they are a b2b company they have the ability to embed voice text into their mobile and web applications and it's a great company that's provided a lot of growth here, they have made some smart acquisitions over the last couple years that allow them to project another 30% year over year growth for the next four years, so a substantial amount

of growth the company is expecting over the next half a decade or so if you look at the chart, you have a recent breakout above the 290 resistance level it has come back to test that as support and is now continuing higher when you compare that to the technology sector, not only is it outperforming the technology sector, but the cloud computing index, which is up about 80% on the year itself so when you couple that with the chart, i think you have a very strong setup going into earnings the trade setup i have is taking into account the implied volatility the stock itself averages about a 13.6% move on earnings, whil implied is only figuring about 8% i am using something called

debit spread, and i'm trying t further reduce that by using it in the money call option i am going to november buying the 300-340 call spread, paying about $12.90, which puts my breakine price about $313 which is only about 2 1/2% move to the upside. i am expecting on a strong earnings play to beat that break even level by a substantial margin >> carter, how do you think the chart is set up for tony's trade? >> tony zeroed in on the big gap up that you see, that was actually october 1st, a thursday it was analyst day the company remarkably pledged revenue growth of 30% each year for the next four years.

this is a powerful kind of setup. stocks that gap up often gap again. i would want to be long, not short. >> that is tremendous visibility, mike, what to you think of the trade >> i'm in. the situation here is that this is obviously a story stock as much as anything i like the fact that if you are going to make a bullish play, you do it in a more idiosyncratic situation it is a growth story the other thing i like about this is that options premiums while slightly are are not that high relative to the kinds of moves we have seen historically. that's the time you want to look at using options, when you have these types of stocks and can buy the options at a reasonable price relevant to historic price. all right. sign up for our newsletter here is what is coming up next

hold on to your hay bales. old mcdonald has a farm, but a strategy on adm. who do you think will have a more bountiful harvest plus, calling all options fans tweet us your question a optionsaction. if it's nice we will answer it on air ♪ ♪ ♪

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welcome back if you caught the show, you will remember that the professor found a way to get bearish on bonds. >> one of the things we see is that the options premiums are quite elevated relative to their historic level in fact, if we take a look at the spread between the price for options going up three months or so and how volatile it has been the spread is quite wide we can interpret this one of two ways i think the options market is telling us there is some danger ahead for people who hold long-term u.s. treasuries. i was looking up to january. the 155 puts, you could spend $2.50 for that that's risking a relatively small amount the tlt doesn't move a great

deal, but when it starts to move, it can be aggressive >> that turned out to be a good trade. rates have skyrocketed since then hitting their highest levels in four months. mike is back with a way to try for bigger gains mike >> if you follow us on twitter, and you should, you will know we did an update on this trade. we offered two ways to spread it one was to sell the january 150 puts you could have collected the amount, now you are essentially in the trade for free. and the other was to sell the december 4th weekly. and you would be in for no money. if you are putting it on the calendar spread, you are looking for a total of 20 basis points that carter was talking about. there are two ways you can spread it. >> believe it or not, that's not all mike has to offer. the professor has another thing to offer for this rate rebound

mike, back over to you >> yeah, i mean, obviously, if you noticed, we have a bearish trade on tech and long-term bonds. you might think i'm bearish on everything, but not completely agricultural stock adn has a strong balance sheet and stable business a lot of bad stuff has been priced in, like ethanol has been hurt by falling fuel prices. and things like that we do have a slightly attractive volatility level despite the fact that they're higher than average. this is a name i think we can take advantage of to the upside. the stock is breaking out to new highs for the year i think the way to play this is with a call spread i was looking to january the 57.5 call spread this is slightly in the money because the stock was under 52 when i looked at it.

you could buy it for $3.60 and sell and i'm offsetting more than a third of it by selling those 57.5 at 65 cents this is a way we can make a hedge bet to the upside, mitigate the decay and take advantage of one of the few stocks trading at a high multiple >> carter? what do the charts look like on adm, carter? >> sure, so, when whee discussed this earlier, there were a couple things that sat up well first, look what the grains and softs are doing, sugar, corn wheat, cotton all up between 15 and 30% over the past three months second slide and look what the market has done, nowhere near as interesting. look at copper and oil the grains, the softs, all up

15, 20, 25%. doubling, tripling other asset classes. two or three charts. the first is a comparative chart. and what's so interesting here is the performance of cater pillar versus archer daniels they're in lock step they are correlated. we know that a lot of cat's business comes from land-moving business and to some extent ag i have added john deere. it has already broken out. we think it leads the way for both cat and archer daniels. so two archer daniels slides so archer daniels the up and out good up trend. what is not to like? two more now where are we back to we are exactly back to the 2018 high circle that high, and you see the arrow implying breaking out. the more authority a level has,

the more authoritative the resolution final chart. this level has been in play all of the way back to 2013 and 2014 so a breakout here, and we think that's what is going to happen, deere has already done it. archer daniels is a powerful thing. we think grains are telling us that is what will happen >> tony, what do you think >> if you look at archer daniels on paper, it looks foreign it doesn't have a lot of revenue growth, operates on thin margins, but if you lock at the fact, it has a strong track record of boating earnings and having dividends for the last 45 years. so when you couple that with the fact it is outperforming its sector, i think it trades at a reasonable multiple of 15 times next year's earnings, i do think

you have some upside it will be a slow grind, but that's what i like that's the type of money you would use on a slow grind. going all the way out to december, his break-even price is only $53. the stock doesn't have to move much for the strategy to break even i like the stock and the strategy >> do you think caterpillar is due for some breakout? >> and it has earnings next week as well. i do >> all right got an answer. coming up, snap, crackle and pop. great news for one of our traders. we will be back after this it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position.

you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪

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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 time for a look back o a trade that tony hit out of the park >> we have gotten a recent breakout above this 26.50. you couple that with the strong strength we have seen in snap chat in comparison to the sector, i think that puts it well into targeting 29.50 which is an all time high.

buying the 28.32 call debit going out to november, collecting about 95 cents, about half the value of that $28 call option, paying net-net here about $1.25. >> that turned it into solid gold the stock soared to an all time high tony, how do you manage this one? >> this is one that even beat my expectations, but when you use a debit spread like this and i blows through, it's best to take profits. pretty much the full value of the vertical spread. that would be a little over 200% on this trade. if you missed out on snap, i think pinterest is another one that could be on the upside. >> what does it look like to you, snap, carter?

>> what's remarkable of course >> when you gap up, you get cheaper. something that's counter intuitive, but it means such big news has been released, fda approval, an indictment, that often you are not priced accurately there is a follow through. in this instance it has been a massive follow through and u at this point, i think it's a case where you want to harvest gains and find the next one. perhaps twilio or some other stock, but move on to a stock that has the potential to do what snap has just done. >> up next, tweets and 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. oh. 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.

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♪ ♪ ♪ ♪ ♪ ♪ welcome back time to take some of your tweets our first viewer asks -- i want to play a possible bounce in solar, with a biden win

the november 6, calls of 80 cents. tony >> i like the thesis on this particular trade biden has put together an infrastructure spending plan that includes solar and has a climate change plan that is good for this thesis. i would give yourself more time than four days past the election for this type of play. final call carter >> well, we want to continue to be short bonds, playing fo higher rates and archer daniels or caterpillar on the long side. >> tony? >> i like the cloud computing name twilio. looking to buy a november called

vertigo. >> mike? >> call spreads in adm going into earnings. >> have a great weekend. see you back here next week. "mad money" with jim cramer starts right now [announcer] the following is a paid commercial program for rotorazer, sponsored by razor tools llc. (upbeat music) - uh-oh. can't find the right saw for the job? you need a handsaw for this, a circular saw for that, a bandsaw, a miter saw, and a jigsaw? and with all the different blades, that job's turned into an expensive jigsaw puzzle. not anymore. (saw buzzing) hi everybody, i'm joe fowler, and this is the rotorazer. over 3000 screaming rpms of workshop muscle,