it's friday, in dice you didn't know. that means options action. welcome. here's what's on tap tonight >> maligned, marooned, meaningless. just three m words the market thinks of when it thinks of 3m carter worth thinks very differently. find out why this left for dead industrial could be on the verge of its own revolution. then, keeping with the theme, tony zhang is also bringing good things to life find out why he's jumping into

ge when others are ejecting. finally, speaking of ejecting, professor mike doe is constructing a test set to parachute just in case, because he seize more turbulence ahead it's sometime to risk less and make more. options action starts right now. >> name this stock it's an old industrial that seemingly everyone loves to hate it's got businesses in everything from your facemask to your adhesive backed note pad. it's 3m. carter thinks this left for dead name could come roaring back to light. carter, what's on your post it >> sure. it's the only really true conglomerate left in the united states with health care lines, consumer lines, industrial adhesive, ought moefs, goes on and on and really the biggest in the world. what we know is it's one of the worst performing dow

constituents other stocks, 3m is the worse. let's look at a couple of charts the first is a comparative chart of the spider xli versus 3m. this ends at the pandemic low, both the sector and 3m knifing lower. if you see the second chart, there's been a big rebound, in industrials specifically but 3m has lagged that's either the problem or the opportunity. it is the low stock. almost has no buy ratings, if you will, but i think the way it's acting of late is the beginning of an important bottom sothree charts that will look at that. the first is lines drawn here. this is what i would characterize as a bearish to bullish reversal the second, you can characterize it as a head and shoulders bottom and the third is the stock gap down some two years ago dramatically from the 220 level

to essentially where it is now, and any sort of quick news-related reinstate tracement will give you outsized gain. an opportunity, a laggard, a great old name, we're buyers >> all right thanks for that carter what's the trade off for this, mike >> yeah. i mean, this is an interesting stock, rights. we've seen up ticks in volatility in a market that's obviously in a pretty extended bull market here this is a low beat stock, 4.85 i would point to i think carter's charts sort of indicated this this stock carried a higher valuation. the business was probably about $141 billion so at the tail of 2017 2018 they made about 12.14 a share. they're actually forecast to do about 12 and a half bucks in 2022 and 11 the year after that. it has low beat beta and decent

ems growth i think this is a stock that you'd like to own. if you're looking at how it's behaved this year, it is considerably up off the bottom how to participate now, only a small amount of capital and incremental gains if the rally we've seen this year should continue it actually plays out over time. i was looking at the july 190, 210 call spread, just over $5. when i was looking at this early today, you could get it for about 2.80 normally we're looking for a three to one pay out on the vertical call spreads. there aren't as many strikes in this stock and the july expiration it's almost 200 stock. bearing in mind that when you deal with the vertical spread, the out of the money option will

decay more quickly that's one of the reasons with we're comfortable going more out that we normally would this is an attractive stock that has had already a bit of a decent run and committing very little capital to do so. >> tony, what do you think >> i think this is exactly right. mike and carter hit it on the nail this is one of the few businesses in the s&p 500 we can call cheap trading 18 times next can year's earnings they have seen no revenue decline in 2020 and margins continue to improve. for those reasons fundamentally i like this company. as carter pointed out, you have a breakout level since 2016, the 180 level has been a major resistance level for this stock. you have a breakout here that's the technical catalyst for getting into this trade right now. if you look at the trade structure, the debit structure is in my opinion, the best way to play this potential breakout

here you're risking only 2.7% of the underlying stocks value. you're looking at a three to one payout if it rallies up to that 210 lem. he's going out and buying himself quite a bit of time for the stock to rally up to that level. >> i'm curious what do you like better about the stock? the notion that there's a rebound that's in store in terms of the technical picture, or this whole notion that the reopening of the economy and everything is going to turn hot with industrials benefitting >> i think it's the industrials benefitting, and i think it's also the fact that it's trading at a relative discount to the market you still are seeing some dividend yields. i think that's really a hard thing to identify in this mark right now. we have a lot of spaces that have done exceptionally well so far. it's very difficult to chase some of those stocks on the heels of that. so we have to try to look for some value i think this is a value play on

the reopening trade. >> another industrial that's had more lovers than haters. tony thinks this is a name to get into when everybody else is ejecting tony, take it away >> yeah. exactly. i want to take a look at ge, because this is a bit of a counterintuitive trade the stock down about 15% this week i think that's actually an opportunity for investors who may have missed out on the recent breakout to get some long exposure especially as ge looks a little more focused as a result of this keel being able to focus on their aviation business, the power business and the industrials billings the stock has outperformed the sector in the past five months it's been hard to chase this particular stock if we look at the long-term chart, ge has been bottoming here in the 2018 the $12 level is the level it's been struggled to get back above that it broke out a month ago above

that level but it quickly rose beyond that level very quickly if we zoom in here, the breakout above that $12 squikly ran up to $15. but on the news this week, we managed to get all the way back to that $12 level. as carter would say, we tested that level to the penny. it held that level and i think the risk/reward looks more attractive take advantage of a support level that we've identified that we believe is going to hold that $12 level, so i'm going out to april 23rd, the weekly options and i'm selling the 12.5, 11.5 put vertical here, collecting about 78 contents for that 11.5 put -- i'm sorry 78 cents for the 12 and a half dollar put and paying about 38 cents. net-net i'm collecting 40 contents for a with one dollar

widespread i'm collecting 40%, so i'm only risking 60% of the width this allows me to potentially own ge stock at about $12.10 if the stock is below $12.50 at expiration which is a better price to own this at rather that chasing the stock over the past few months >> carter, what do you make of tony's technical take? >> exactly as characterized. meaning to pivot point a stock that breaks out and falls back to the level from which kit broke out essentially is a level of support. a 17% decline in the past three sessions from the peek high to the news low this is an opportunity in fact, ge was up today weakness to take advantage of versus weakness to stay away from. >> mike, what do you say >> yeah. i mean, i'll let those guys opine on the technicals. i'll just speak to the options trades itself. one of the things that's nice

about picking a credit put spread is three things can really happen here the stock can decline, its can go sideways or it can rise you're going to make money in two of those cases in the downside case you're going to be risking 60 cents on the profit of 40 cents i think this is a good way to play it. this is one of those situations where we're trying to find places where we can sell options premiums at the elevated levels where is we're still seeing them ge is one of those ge is about 50% or maybe higher. that's pretty high that means that you are collecting 40 cents which doesn't sound like much but this is a $12.50 stock. so the yield on a stand-still basis is quite good. i like the trade structure if these guys say the technicals are good, i say go for it. >> tony, i'm going to ask a similar question as mike

how much of this is a play on a cyclical recovery and how much of this is a play on the turn-around that is in place at ge that's ongoing basically? >> to me, it's the cyclical play it's looking at the aviation business, the power business, especially as they continue to grow their renewable energy business when they're able to sell off the aircraft leasing business that allows them to focus on that, that's a turn-around story and it's finally starting to pay off here >> all right check out the wiesht and sign up for a newsletter here's what's coming up next >> among the professor's notable quotables. you don't buy insurance when your house is already burning down find out how he's putting up policy in play right now plurks calling all options action fans. grab your phone and tweet us your @optionsaction.

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♪ ♪ ♪ welcome back to options action the tech sector getting hit again today on risings yields. professor says what? mike >> we mentioned it several times. we've seen this big uptick in volatility, especially in the highest flying names i'm taking a look at the nasdaq index, which is best represented for most of the viewers by the qqq etf. this contains all the biggest

technology stocks as its biggest constituents when you're thinking about hedging or holding qqq or something that looks like qqq and many of you do, you have a powerful that's essentially where you were at the beginning of the year. qqq is up about 55 basis points year to date you're wondering whether you should remain invested there's a lot of reasons you might want to remain invested but we have volatility which makes you not want to be what we're looking at is helping. the important thing about hedging is that you should hedge when you can, not when you absolutely have to the other thing is that when you're talking about hedging, this is more about positioning than simply timing if you knew when the market was going to rise or fall, it wouldn't be necessary to hedge you would simply sell on highs and pie on lows and everything would be easy and you'd be living on the beach. it isn't as simple as that if you have a portfolio and want

to hedge to protect yourself, you need to consider the cost as well if all you did was run out and buy puts all the time, the cost of that would add up considerably i was looking at the may 300-270-340 put spread collar. you're buying a put spread and helping to finance the purchase of it by up side call. i chose some specifically levels you can consider that if you simply went out and bought that put only to protect your portfolio, that's going to cost you well over 3% of the portfolio between now and may. you can see how that adds up selling the puts for $4.55 and selling the 340 calls for $4.95. net-net, about 2.50. that's less than 1% of the value of qqq right here. the other thing is i'm basically

trying to capture a put spread that is about 10%. when we think about a market correction, 20%, maybe we're trying to get protection against that kind of a drawback. the other thing is selling that 340 straight call, the high on the qqq so far this year was 338. presumably, if we could recover up to or about that level, we're probably going to run into a bit of esistance as carter often says, people who have bought at that level, lost money and are getting it back, now are probably looking for the exit sign. this is a way you can spend less than 1% of the value of qqq. down to about that 2770 level. giving yourself about 10% down side protection while still preserving the opportunity to recoup losses if you were one of the unfortunate buyers who paid the year's highs. >> these guys are really quoting you tonight, carter. you've got some charts walk us through. >> i'll go off in a dream for

the rest of the week before we look at the single chart, it's important to say that of course the qqq hundred stocks meant to mirror the nasdaq 100, the top rk microsoft apple nvidia so here's the real issue decisions or judgments about the qqq are essentially decisions and judgments about the market take a look at this table. in the history of the index, going back to 1985, on any given session when the ndx is down, qqq, the s&p is down 81% of the time and in-turn, when the s&p 500 tech sector is down in any given trading session, that's 9,000 of them going all the way back to 1985, the s&p is down 80%. after judgment about the market is a judgment about the ndx and vice versa here's a chort of the ndx. what we know is that we have a

break in trend so well defined trend off the march low, 45 depg angle and we're trying to get back above it there are stocks that are better than others. microsoft is a favorite, for instance hedging in this kind of up stance is the right play >> i'll go back to mike before we go to tony. given the stats that carter laid out in terms of the correlation for the past, i don't know how many decades at this point, is it cheaper to protect using the s&p as a hedge, given the volatility in the nasdaq 100 mike sorry. >> that's a great question yeah so that's a great question of course it's going to depend on the structure you use if all you were going to do was just go out and buy, say, an after money put that expires in 30 days, 45 day, six months. it would be cheaper to buy that put on the dow jones industrial average. it would be cheaper to buy that

put on the s&p 500 but of course we don't limit ourselves to buying at the money put. we can buy the more expensive option and help to finance it by more expensive options on the wings, which is what we're doing here it is about how you structure your position and the cost and benefit. these are the thing. these are the broadly held stocks most people who are looking at their accounts, almost everybody i talk to who have chosen stock for themselves other than say their big broad market poehls, these are the stocks that they hold if you're trying to hedge against these stocks, this is probably the best proxy you're going to find. >> ok. still to come, what to do when your bank check bouns. 'lexaith nt.ce i have an idea for a trade. 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.

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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. ♪♪ >> welcome back. wie got some changes to tell you about concerning the s&p 500

pen national gaming, generac and caesar's will be ending the index. the change will be effective monday march 22nd. you look at what's being added penn and caesars, two gambling names. tony, what do you make of this >> yeah. penn and caesar's, both gaming stocks i'm guessing that that's going to propel the stock even higher especially as it goes head-to-head against draftkings. nxp semiconductors, a strong game >> that one's up 5% after hours on this news time to look back one of our open trades. cohen keert said regional banks might be headed for a bumpy ride >> you can see the channel that kre has been in. it's very well defined

after basically breaking out of the upper band, which is a move of excess, you're likely to check back to the middle or lower range of the band, so that's considerably lower from here we're a seller of kre. >> the trade i was looking at on kre is a pause trade more than an outright bearish trade. you could collect about $1 is.90 for that close to the 40% or so that we like to get to the up side credit sell if we're trading. >> mike, what do you do? >> yeah. so there's something to think about here first of all, when you sell a credit spread and you've pretty much given back all the credit that you've received and that amount again, which is where we are now, worth about $3.50 time isn't as much on your side. the risk-reward relationship from here is more favorable. you're paying to be in this

trade rather than collecting to be in this trade i think we'll have to turn it over to carter >> carter, quick on that >> sure. it's extended. now it's more extended in principal, the rate move is helping it, but real rates are still negative and way below where they were the last time at kre anreond gial banks were at all-time highs >> all right up next, 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. 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. well except now you're binge learning. see how you can become a smarter investor with a personalized education from td ameritrade. visit tdameritrade.com/learn ♪

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♪♪ ♪♪ welcome back to options action we have time for tweets. one of them asks do you recommend setting stop loss orders taupe, why don't you take it >> yeah. absolutely a general rule of thumb which i usually use with a long call or a put or a debit spread is to set a stop loss at about 50% of the premium that you paid. >> all right it is time for the final call. carter, braks on the, worth.

>> 3m, 210 or 12% higher buy. >> tony zhang. >> bounce on ge. sell and put credit spread >> mike. >> put spread callers make cost effective hedges >> that does it for us here on good evening i'm scott wapner jim cramer is off this week, and this is "on the edge." ♪ ♪ i'm on the edge of glory and i'm hanging on a moment of truth ♪ >> good to have you with us again. the billionaire boom, how the wealthiest cashed in during the pandemic and what that says about big tech spac attack has the blank check bonanza gone too far why bill dates is raining on the crypto craze we'll meet the digital artist taking the nft world by storm and taking on tesla, what safety