lemonis: zoe, if you love zoe's as much as i do, will you please buy some damn chocolate once and for all? amber: and send some. lemonis: we're not sending anybody anything. amber: where's my finder's fee? lemonis: you don't get a finder's fee. you get a discount of 1%. amber: thanks, sport. happy friday, "options action" fans the lineup, chris marrone. mike khouw and tony zhang. the cannabis trade blazing hot we'll break down what is fuelling this frenzy and how to lay with pot without getting burned. plus the next big opportunity with chips is the name on a big breakout we'll bring you the trade. later we'll take your tweets if you've got a trade, tweet us @optionsaction. we might just answer your question on air. while the record rally

continues to play out in the u.s., there could be an even bigger opportunity emerging abroad let's go off the charts with chris varone take it away. >> what we're seeing globally, particularly emerging markets, this is a really important juncture for e.m you're breaking out of a 15-year base if we pull up the first chart, this is the etm -- etf think about the longer term catalyst here. dollars are weak flows are starting to move west to east, north to south. rates, oil, copper think the setup here is still very attractive for this to be the beginning of a longer-trm move remember, the last time em broke out to this magnitude back in '07, oil was 90, rates were 5%, dxy was 75 i think there's big macroimplications. if we go to thesecond chart,

let's not forget with just what a challenging last 15 years this has been you've hat ten 20% drawouts in e.m. over the last 15 years. this is not the place to make money until very, very recently. i understand it's overbought in the short term, but in the long-term picture, we think this move is just beginning let's go further back in history, chart number 3 here, and remiejd ourselves this breakout this week in eem looks a lot like the breakout back in 2004/2005. you were basically sideways in the merging markets from the mid-'90s to 2004 you went up to the next three years to an order of magnitude of 130%. i think that's a pretty decent framework or playbook to think about eem over the next number of years china is driving this move it's one of our favorite marks the china chart, these are the

"a" shares there's etf for this as well the "a" shares are the local markets in china they're starting to push up against the 2006/2007 highs. i think ultimately theically with oil still modestly around 60, rates still low, i don't think we have to own the commodity. i want to own the tech china web. kweb is the chinese tech, etf. you had a big breakout in the last couple of weeks i think u you can be a buyer of any pullbacks in kweb. what's most important for us is chinatech is starting to outperform u.s. tech if you look at it, that's where the big breakout is coming chinatech is starting to outperform u.s. tech we like the setup. it may be overbought in the short term

big week a may bjork major breakout. >> mike, based on that, what's your trade. >> yeah. i mean chris is hitting on some pretty important fundamental factors here so we've obviously seen equities all around the world they've really rallied very strongly we often talk about what the principal driver is for this of course, we talk about stimulus plans, monetization i have a quick chart people ought to take a look at. what i have here is a four-year chart of m 2 over gdp in the united states, and it just gives us a sense in the increase in the monetary supply relative to the size of nominal gdp. of course, that's going to that's what's going on here, folks. feds can manipulate rates. we could argue they are manipulating rates it's hard to argue against that. you also have to look for areas of real growth, and, of course, i think sensibly we would be

looking to merging markets we haven't seen quite the same growth as the gdp there. so i like chris's choice of kweb of course, he also highlighted this thing has broken out. we've seen a huge move it's up over 90% in just one year it's an eftf that includes all the big names. buy due, ten cent, baba. but if you are inclined to make a bullish bet and because of this basically, you know, big rally that we've seen, options are really the only safe way to play it. i was taking a look at the march 105-115 false spreads. when i was looking at this, you could pay 3.056789 sell the 1 net anytime you're laying out $2.60. the idea is this rally

continues, this momentum continues, you're going to be risking about 2.5% of kweb's price. if it falls back, you're not going to risk any more than that, but, of course, you do get some participation the ultimate payoff could be 3.01 if it reals up a little more than a month away this is a dangerous situation we find ourselves in. what if the stimulus turns out to be the market's last gasp for a while, because we are seeing signs of froth in my view. >> tony, what do you make of this trade. >> yeah. the charts there are very compelling as chris laid out, especially the period from june to january, the last seven months even though it's been performing on an absolute basis, there's been no relative performance to the u.s. sector. it's really taken off in the last two or three weeks or so. it's also outperforming eem here, and this makes a lot of sense based on the exposure as mike was saying to the sector in

terms of in a country that's largely going back to normal but i specifically like mike's trade because chris mentioned it's currently overbow there's a little too much too fast here. using a debit spread makes a lot of sense, risking only 2.5% especially when the volatility of kweb is still relatively high right now. >> chris, if you wanted to go stock proponent, which stock looks strong. >> a lot of them baba baba had a good correction they took baba down 3% or 4% i think it's starting to firm here i think what mike and tony are talking about in the context of the short-term story, using the options exposure to get exposure to eck requerequest -- equity is probably overbought. when you put this, again, in the context of the macropicture, we

shouldn't forget the last time it was at these levels the dxy was 75 copper was 5 bucks so i think this also says or speaks to the idea that a lot of the the macro indicators have a lot go. >> let's get to the semis, office to a flying start the chip reportings are later this month and tony's got a way to play it to the upsood and put a little bit of money into your pocket so, ftony, explain. >> i want to take a look at the video because we saw a massive breakout earlier this week i think there's significant upside here. if we take a look at the longer-term stock here, the stock has ran a little bit to a september second high of 5.85. but it spent the last six months consolidating into this wedge formation. just this week it started to break out higher this year now if we look at nvidia relative to its sector, despite

this, ever since that september 2nd high, it's actually undersupported the sector etc. but in the breakout it started to outperform the sector that's a type of relative strength i like to see going into the earnings event here in two weeks or so. if we switch our attention to the earnings it itself, there are two parts we have to focus on one is the bitbitcoin. also on the cloud computing space, which actually has been a drag for this company over the last six or nine months, i expect nvidia to play a little bit of catchup on the cloud business so there's a couple of things to consider when we're placing a trade here first of all, the implied volatility of nvidia at all-time highs is still actually elevated it's at 25% in all-time highs, but the other chip makers that

have reported earnings in the last couple of weeks, that is some of my concerns as far as how high nvidia can go in the short run. for those reasons i'm going to use a put credit spread. i'm going out to march collecting buying the 550s for about $4.95. net anytime i'm correcting $15.55 credit. the goal here so i can be profitable even if nvidia doesn't rally sig nif can'tly right at the get-go and pulls back and tests the potential. >> there's the ship shortage, cyclical nature of chips what do you make of tony's trade. >> yeah. i mean it's interesting because in the prior half hour, you know, i was listening to pete talk about intel and how they really aren't deliberating in

terms of product, and that obviously is one of the shoatcomings there nvidia is kind of the opposite case it isn't just the demand it's the nature of the chips they're producing. they're basically the standard right now and earn high demand for everything and not just bitcoin but gaming and things like that. in many cases they're sold out you can't even get them. obviously it's very good when you make a premium product and they're in such demand you can't keep up. the thing is it's had an incredible run it's one of the reasons you're seeing an implied volatility a lot of stocks have seen big, big run-ups and are already at heavy valuations like nvidia i like the trade he's doing here obviously when options premiums are elevated, you don't want to do i you don't want to sell them

naked. he's obviously identified a cat catalyst going to come several weeks before it expires. if the trade goes wrong and the stock goes down, it actually isn't going to go to the full value, the $40 different between the strikes. so it isn't really a situation where you're going to make $15 to potentially lose $25. it's probably a little better dynamics unless the stock really falls out of bed he's not taking a huge amount of risk by taking a bullish play in this stock, which like so many others has seen just a spectacular run. >> razor's edge jumped out at me, chris. you can probably use that phrase for the entire sector, which has seen a massive -- i think the stocks, that's a new record today. >> not only that, you have 100% on the moving average. not only is it big names leading here, this is really broad if we focus on nvidia, i like how tony draws the line. i think he's right on where this

goes over the next number of months remember, from the marked lows until about september, inindividuainnvidia was up no one made any money here until this week. this was a big breakout getting up to $5.90. stock trade, 598 to 600. 600 to 700 rage is where i would focus on this going. in addition to nvidia, even in tell acting better this is a broad-moving semis i get nervous when groups start to narrow or participation starts to thin we haven't seen it in semis yet. >> for everything "options action," you can check out our website at optionsaction@cnbc.com you can sign up for the news letter. >> announcer: it's the options market wain stocks smoking hot this

week we'll break down what's fueling the cannabis ways and lay out a way to play pot without getting burning. plus, calling all "options action" fans reach into your pocket, grab your phone, and tweet us your question @optionsaction. if it's nice, we'll answer it on air when "options action" returns. >> announcer: "options action" is sponsored by thinkorswim by td ameritrade.

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action." reefer madness paymentpalooza, silver surge that's just a glimpse what is playing out right now in the options market mike did some number crunching and found out that some retailers accounted for a whopping 9% of the total options volume in the u.s. this week the options market's a jungle right now. mike, why don't you guide us through what is happening and where things might be headed. >> yeah. it's absolutely amazing. i mean, first of all, we had it the reddit rebellion, those are the gamestops. many were trading millions of contract as day. this week we were actually highlighting a lot of the cannabis stocks. those things similarly seeing these big upticks in volume. and then interestingly because some of these are much bigger companies, mastercard, visa, paypal, these are not $300

million companies suddenly getting attention of some of these traders. these are $300 billion companies, and even these are getting moved around that, to me, is quite extraordinary. by the way, there's more than 1,700 securities that have options on them trading in the united states. when you say ten stocks trading in the volume, keep that in mind it's not 10% of the market or 1% of the market. it's a much smaller number that's very interesting. the o'thing is our systems were just picking up on how these types of options flow were impacting the stocks one that has the most bullish sentiment, we're talking five lots, one lot, two lots, people risking a come hundred dollars, a thousand, maybe $1,500, but these things are moving stocks around the top most active stocks outperformed the market handily, more than 5% increases in just the range of about three days some of people often talk about the real money in accounts,

wellington, fidelity, putnam, things like that, but really what we're talking about are small players. apparently when they band together they're as impactful as moving stocks. >> apparently. tony, what did you make of this action? and i'm guessing -- you know, mike had mentioned the lot size, but it's also, i'm sure where -- how far out these contracts are. short-term seem to be the favorites among the retail investor. >> yeah, exactly very short data. usually no more than one to two weeks out, which is, generally speaking, the types of contracts we don't trade on very much here at "options action." we saw a lot of this back in september, the september high we recognized in so many of these names is a result of what's but in they drove apple andtesla. it speaks to the retail markets that we're in.

i couldn't be more proud of a show that's been advocating. >> let's zero in on one of these areas sparking up this week. pot stocks, they are smoking hot right now -- forgive me for the pun -- and tony's got a way to play without getting burned. tony, walk us through. >> exactly so we've seen a roller-coaster ride this week with cannabis stocks and i think for investors looking to seek some exposure here, an etf might make sense, mj etf, and capture some of the volatility we've seen this week. mj is an etf that gives you exposure to about 34 different cannabis stocks, 53% exposure in cannabis, 34% in the u.s. and the other 15% globally if we take a look at the chart for mj, since inception, the stock has held a $24 support level but broke below that level in september 2019 when it just completely fell apart all the way down to the $9 level but

managed to climb all the way back up after the biden win and georgia elections here got back above the $24 level this week chlg we saw quite a bit of volatility this week as a result of reddit pushing this etf all the way up to the $34 level but came quickly crashing down to the $24 support level i was referencing, but it has held that level, and i think that's the opportunity to potentially get some long exposure in the particular etf now, just a couple of things to consider when putting on a trade here you've had extreme volatility in this particular stock, so mj's implied volatility actually made a new all-time high yesterday and is still the -- the 30-day volatility is at about 109% chrk is in the 70th percentile over the past year. when you consider the high volatility and extreme moves we've seen here this week, which

generally after this type of extreme moves you see a period of quiteness, it takes advantage of both of these things, which is the same put spread i'm using in nvidia. mj doesn't list the weekly options. i'm going out to march and selling the 21/25 put spread $3.10 and paying $1.25 net anytime i'm collecting $1.85, which is about 40% of the width. >> chris, what did you make of the chart here. >> i am think we have to remember for the longest time you had mj trading in the 30 to 40 range think about the last several months here. the low back in march was 9 bucks. the high this week was 34. you split that in half, you come to 22. not too far off from tony's 24% support zone when you see moves like this,

the corrections, you tend to give back half of the advance. giving back half of 9 of 34, it's 22. i think it's pretty good support. coming up next, we're taking your tweets. so send them our w way @optionsaction we'll be back right after this. >> announcer: "options action" is sponsored by thinkorswi d amary trade. 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. ♪♪

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♪♪ welcome back to "options action." we've got time for a tweet our reader asks it looks like 71 was formerly resistant and is now a stock support. chris, what do you tell them >> i think that's a very timely observation. this is a stock that's bottoming. this is a stock that's getting better, and when prior resistance becomes support, it speaks to the improving technical picture. you're going to break this thing out through 77 and then you're going to go to 90. this is a much, muchism proving tactical picture we like it here. all right. up next, "final call." >> announcer: "options action" is sponsored by thinkorswim, by td ameritrade.

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♪♪ visit tdameritrade.com/learn ♪♪ ♪♪ >> final call, chris.

>> long, kweb, chinatech >> mike. kweb call. >> tony. >> put credit spread on mj. >> have a great long weekend ""mad money"" with jim cramer is up next. - [announcer] the follog program is a paid advertisement for nuwave oxypure smart air purifier sponsored by nuwave llc, featuring deborah norville on award winning journalist and new york times bestselling author. - we are all living in strange and unsettling times. never in history has everyone on the planet been challenged by the same thing. covid-19 has changed the way we work, the way we interact and we're all still trying to figure out what it means for our future. amidst the uncertainty, all of us are trying to take care of our families as best as possible. i've lost track of how many masks i've made