a case of mistaken identity. how to keep from being scrooged this holiday season. and speaking of gifts, tony has a couple of gifts. and finally, facebook has become the poster child for the

word antitrust professor shows us how it could -- recently there has been a growing frenzy of activity in the banking sector if time has taught us anything, when there is growing frenzy in the banking sector, it may be time to slow down and take a breath carter >> with the bump up in rates -- so we are going to look at some of the areas of the market in relation to s&p and zero in on blackrock. you have three lines the top line is s&p. a three-year chart

up 38% the two other lines are like railroad tracks, identical and separate groups in the s&p the first is s&p 500 investment banks and brokers, like morgan stanley, goldman sachs and trusts like t rock, invesco. imagine on a three-year basis no gains in a bullish period for the s&p. now look at a chart and juxtapose these. what you see here are gains, but both investment banks and as set managers up 175%, market up 350 managers up 175%, market up 350. the final chart is adding blackrock. it has taken on a life of its

own. what you can see is that blackrock has outperformed the s&p. it is a beta trade on the market blackrock at this point is fairly steep, uncorrected and by our work too far above trend, too far above the 150-day moving average. we think you will get a downdraft. if you are long, take profits, and if you are in the short selling business, sell short >> mike, how do you combat that downdraft. >> blackrock is arguably the biggest and best 20 times earnings, not ujly expensive given their top line growth of 4 or 5%. there has been pressure --

of the markets generally that is good for asset managers. as assets grow, so do fees in general, we are seeing elevated options premiums. i am not really -- there is a $30 call spread. the high for the stock was around 7/18.

net-net with this you will collect about $9.50. but notice the break even would be around the 7.20 level so the stock would have to break out to new highs if the stock trades sideways or falls, those are all instances where this trade would be profitable >> tony, what do you think of this trade >> i like this trade a lot and credit to carter for calling this in the end of october with the fiscal report and economic recovery slowing down, what we might see from the fed is rhetoric or longer term push of yields lower. i think that will stem what we see in financials and blackrock being a good proxy for this.

i think it is a good opportunity to fade the momentum in financials the trade structure being used, in my opinion is the right structure. even if blackrock doesn't fade, you will be able to profit if it stays around the $710 level. but what i like about the trade is mike didn't go out to weekly options. he chose monthly options you only have about 32 days left to expiration so you will have more income per day you hold on to this trade but also elevate down if blackrock fades quickly, you may get your profits in quickly. >> what do you see >> over time we think yields go higher this pullback under way now

probably has more to go. it is not a tailwind banks have moved a lot, but it is not a tail wind for now >> are you bearish on banks? >> i think over the last couple months i have indicated i was positive on financials i thought it was a laggard you couldn't say whether or not they deserve to get a bounce, but in many cases it is material, by the way u. a trade isn't so much we are going to go back to august or september levels what i am saying is i don't think we will see an unabated increase over the next 30 to 45 days >> if bank stocks aren't a hot

gift for you, how about this with people hungry at home, the video game trade has been hot. take 2 took the lead up nearly 55%. tony, take it away >> i want to look at electronic arts the rise in covid cases around the country have put stocks like electronic stocks back into favor. i want to look at a communication sector which will largely outperform the markets you can see it breaking out above the resistance level and coming back and now it's starting to trend higher if you look at electronic arts, one of the stronger names within the sector, electronic arts has

been consolidating here since august recently breaking out higher here and the breakout above 135 to the relative strength to the communication sector, i think iit makes sense for electronics arts to continue back ea is very strong in the mobile space so during lockdown mobile games have been extremely strong and look at others, they are gaining traction if you look at ea, i think it is relatively cheap compared to the other two. the trade structure i am looking to use accounts for the fact that markets are using a little bit of momentum here i want to be sure i limit the amount of downside risk i have

on this while playing for the upside i am going to use a call debit side i am going out to january 29th because ea doesn't list february options. i am buying the call vertical and spending about $6.55 for the 135 call calls are elevated i am paying only about $3.70 for this debit spread which is only 2.7% of the stock value and that limits the risk to only 2.7% of the stock's price. >> is it weird or unusual that ea doesn't list options for february and what about this opposed to going beyond february. >> the only other option was going out to march i thought that was too far out

it comes down to liquidity ea isn't one of the most liquid and that's why they didn't list options for february right now >> mike, what do you make of the trade? >> electronic arts is one of those companies where their product offering has better visibility in many respects than others we are not dealing with -- digital distribution for on going users to pay while playing these games and people are playing more of them it isn't just a one-time sale. these companies have better upside i do like ea i think the short-term tony is using isn't just an issue

whether there are february options. this is basically a win or lose situation going into the holidays will they do exceptional sales they probably will, but if they don't a payout that will pay out by january i like the trade structure, its duration in particular and i like ea. >> don't forget, we have a website. check it out we also have a newsletter so you can sign up for it on the afor mentioned website. mon op lis particular practices. lately facebook has become the poster child for a lot of things, starting with the letter m. tonight we will add one more, markets. tweet us your question at options action ift' is nice we will answer it on air

when "options actions" returns

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♪ ♪ welcome back we want to call your attention to a big mover in after hours. dropbox moving in after hours. not sure why there was takeover chatter that included dropbox and mongo db but they have gone up 6% after

hours on pretty heavy volume >> you are dealing with a cloud faced company. if there is m and a, we have seen a lot of activity in that space. we are in an mna happy environment. secondly, this thing traded up to about 23.70 earlier this year when you hear takeover chatter, what might the share price be? it was likely going to be higher than 24 bucks a share. when you look the ebida are not out of step with reality would the price be north of $24 where it's currently trading

i think so recent volatility has us thinking about, well, volatility while vix is low, there is something brewing under the surface that has investors spooked, but it shouldn't spook you because all three of the traders are here to break down the volatility index mike >> we have been talking about what the options actions have in the early and maybe into the middle part of next year what we are seeing is elevated volatility right now the qqq which is fairly tech heavy, the six-month implied volatility of qqq is about ten years. if you look at the xlk it's

about 45% higher than 10-year average. and if you combine that, that's about 70% higher than long-term average. translate that into what is going on we are not at the total red panic zone and not at the fully complacent zone as far as the options markets are concerned. we are in this cautious area higher valuations and still a great deal of uncertainty and traders should be ware you can expect to see your portfolio bouncing around more >> carter? you are the chart master, what are you looking at? >> basically, it's the fourth

best month of the year odds of being up are around 63%. the mean game is around 1.5% but some of the greatest drawdowns have started in january. or more recently consider the drop from late january, 2018, the ten sessions plunge was the steepest ever recorded including any ten sessions of 1929 or 1987 big drops do occur in january. it's something to keep in mind >> tony, what is a trade that can wrap this all up >> the one stock i wanted to take a look at is facebook as technology shares start to underperform compared to earlier this year, in terms of momentum, those holding facebook stock, news hasn't been strong with the

antitrust suit i think that has spooked some investors. if you think about the news, the antitrust suit itself doesn't mean that it's necessarily a good time to sell your stock the risk of a break-up is relatively low and likely to drag out in courts for the next two or three years so for investors holding facebook stock, i don't think it's a good time to sell your stock, but due to the high volume of mike and value of facebook, it's a great time to sell some cover calls. with volatility you can collect quite a bit of premium so best practice is go out about 45 days from expiration and sell about a 30 call option with its recent all time highs here selling that call option will

collect 2.5% of the underlying stock value over the next 45 days that's quite a bit of premium. i like this because for the stock to get called away, they have to get the all-time back by the end of january >> that's a juicy option carter, what do you make of that >> -- the stock market extended. now the stalling whether the pause before going higher or stall before a rollover. streaming above is a great technique. >> mike, what do you make of it all? >> two things. when implied volatility, you are

collecting about 2% of the share price over a relatively short period of time and that in a low yield environment generally. the worst thing that could happen to you, if you own facebook right now and you do this trade versus not doing it, is that you will be compelled to sell the stock 1% above its all time high which isn't a bad outcome for any shareholder, whether you bought it today, last month or three years ago. >> instead of shielding, you should look to yielding. you should embroider that on a pillow we will be back to answer some of your questions on air. 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.

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amd reached all time high this week tony, do you have an answer? >> yes, looking at amd, the breakout above $90 seems high. but relatively performance of amd to the semiconductor space is quite poor and that's concerning to me >> carter, what do you make of the chart? >> semi has had a very bad week this week. i don't think there is enough time to pull off a 96-103 strike. >> okay. up next, the final call. stay tuned 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.

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>> i like electronic arts buying a call vertical. >> my mission is simple to make you money. i am here to level the plain field for allinvestors. there is always a bull market some where, i promise to help you find it. "mad money" starts now hey, i am cramer welcome to "mad money. i am trying to make you some money. my job is entertain but to educate and teach you call me at 1-800-743-cnbc or tweet me @jim cramer the nasdaq declining