happy friday, options action fans, i'm scott wapner in for melissa lee. we got a big show, here's what's on deck. >> will ups pick up where fedex left off pass the packing tape because professor co is ready to deliver for you. then, playing to win tony zang is laying out all his cards in the casino stock. and a look back and look ahead carter powers through the next leg of the energy trade.

why idling could be the best thing for your profit engine right now. it's time to risk less and make more options action starts right now. >> let's get into it right now delivery stocks seeing big gains in the past year as online sales surge to record levels fedex posting big beat on earnings and another in the space ready to deliver big time for investors. the profess y50r kicks it off for us with your call to action. hey, mike? >> yeah so we're looking at ups. it's an interesting situation because we have s&p trading not far off it's all-time highs and epic valuations in a lot of spaces looking at ups this name is trading in a relative count to the market about 17.6 times forward earnings you might say there could be valid reason for that. among those, of course, we did see that big uptick in e

commerce as a result of the pandemic but problem for transportation companies like ups that manager ibs are not as good -- margins are not as good as b 2 b looking beyond the pandemic people say maybe that tailwind turns into a headwind. i think the secular shift in e-commerce son us but the pressure in the margins could be alleviated even if we see a pull back, people will go back to shopping in person. i don't think it will be a big draw back. ups has reported earnings in february and we look forward to april earnings one thing we look to do is buy some at the money calls. i was looking at june 165 calls and selling in -- when i looked at it today, those

165 a little bit less than 2 to sell in april the idea is to try to collect premium in faster decaying near dated upsided options. often what we're trying to do is get basically a net debt or spending premium net less than the difference of the strikes. in this case we're spending about the difference between the strikes but remember that near option expires earlier than the longer dated one this stock has to run well through from it creates problem. i think ups could create value and some are over blown out of this pandemic carter thanks. the stock chart looks good, what about the technicals how's it shape up >> it does the premise is you often get a good beat out of one you have a chance to get it out of the

other. while earnings aren't immediate let's look at three charts this is the set up which is to say the stock for three years, you can see the line i've drawn. then you have a powerful resolution of that three-year stand off. second chart, the stock is con solid dating again periods of equilibrium is the set up for the next move, that's the betting, this sideways action has been a massive under performer to the market. so has fedex and fedex coming into line with it's good results and ups will come to life it's very straight forward you see the rail road tracks, this is fedex and ups. over time they emerge. the thinking is just as fedex came to life we think ups is about to do the same thing. >> all right, carter thank you. tony, does the professor's trade pass the test or what?

>> it absolutely does, both on the technical and fundamental side i like this trading range between 158 and 168 looks ready to break out to the upside especially fedex's earlier break out. today is the template we could use to look for a break out here and as mike said, the business, if you look at the fundamentals it looks quite strong, 21% year-over-year revenue growth and the fact that the margin collapsed this year, i expect we'll see meaningful recovery on that for those reasons, i think trading 18 times next year's earnings this is a company that's fairly inexpensive. 3450ik -- he's paying a little bit more of the vertical width of the diagonal which means will under perform it ups breaks out around

170 and i expect a break out into 180 so i would choose to sell slightly higher strike price to give myself more room to the upside. >> mike, i give you the last words since you had the first word with your trade. >> yeah, i think the key issue from a fundamental standpoint, we got new management, new ceo, i think they definitely are a company that's been challenged in the past operationally but are really focussing on developments in i.t. and that's going to help them tremendously. in particularly, in managing those peak demand periods that they have struggled with in the past i actually am really optimistic going forward. what tony is saying is a valid concern, if some of you have that concern, obviously look to adjust the strike higher the market hard to see it shooting higher. i want to be long that longer dated call. >> yeah we were just talking as

well about gambling during "fast money" and the trade there, let's turn our attention now to the reopening trade. that plays a big part of it. tony is all in on casinos about to line up a trade that could be a real winner. get it tony. >> i get it now. so i want to take a look at the pull back here from win this week as a way to get into this reopening trade, not only from casinos but also from march madness in "fast money." we look at the long-term chart of when it has been a underperformer since 2018. lower lows since 2018 but over the past four weeks it started to break above that down trend higher highs higher lows. this signals potential reversal long-term under performance from w yrks nn. it - wynn has spent the last three weeks pulling back a little bit. that's the opportunity to seek

some exposure for the long side when you look at the business for wynn they have equal amount of exposure to even the east coast and recently established their majority stake in the online mobile betting bet pool the segment of the market that's fastest growing, online gaming so i like the stock. i think it is likely going to break out. when looking at the options the implied volatility is 52 week low. the options are cheap relative to its history i'm looking at may buying 135. 155 call advertise spending $11.20 for may 35 and $4.35 selling 155.

net net i'm spending $6.85 risking 5% of the underlying stock price which is important given you it is trading at a 52-week high we are going to a slightly softer market and i want to protect my down side using a vertical spread like this. >> got you carter, tony makes a compelling fundamental case, a list of all of the reasons it's a great trade to make now what about the technicals and charts do they match tony fundamental case? >> sure and you heard him refer to the break out above the down trend line and the recent pull back, which are very technical in terms of those thoughts the key here is there is some over at supply at 150 so it is a case you want to do it through options rather than being outright long in the stock we know there's birfurcatation

in the space crease ares and mgm -- easar's a- >> mike? s sfwl. >> i will say fundamentally it is fair value. tony said 2018 last time they seen valuations this high. when they did $6.7 billion in revenue and they've taken about $3 billion of debt since then and won't see those revenues until 2023 the losses from last year and this will wipe out all of the earning from the tail end through 2022 and i'm thinking maybe we'll make three our four bucks a share in 2022 maybe not even as good as that to me the valuation is on the rich side.

if implying break out use options. i wouldn't buy here. >> a stock up almost 200% in a year for all options action check out our website. and while there sign up for our newsletter here's what's next. >> coming up carter updates energy trades. it ain't a stool without a third leg. >> and why you should just sit on it. we'll explain. >> calling all options fans. tweet us your question at optionsaction. it's nice we'll answer it aonir when options action returns.

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all right, welcome back to options action it's been a rough week to say the least for the energy there's your chart tracking the space falling 7% since monday. er just two weeks ago on this show, mike bet on is this exact situation. >> you have very high implied volume ats as well -- volatility as well and they're tied to something volatile which is the reopening. i think this would be an opportunity to expect xle to hit the because button, i was potentially looking at calendar put spread looking at april 9 to june 19 as calendar put spread looking at the weekly options we are seeing very high implied

volatility >> mike, so far, so good there's still plenty of time left in the trade. what do you think. let's get back to the chart master, carter, right, you got a problem this week, rates up, dollar up, oil down. >> right so crude oil dropped 14% gasoline down 12%. energy stocks had a sell off let's look at three charts what we know from the october low, just think of this, xle is up 100% versus the s&p up 20 five-bagger versus general equities and you had three distinct draw downs. down 10. down 13. and that one a bit more than 10. the second chart puts the draw downs in context we've been in a well-defined channel, a period xle has doubled. and how long does it take to recoup a draw down of 10 plus

percent. that's the key after drawing down like this, final chart, this is just the channel, just to get back to the top, typically more than a month, so, if one's bullish, it's time that is the problem. or if one is bearish, it doesn't get back to the top, it goes all the way to the bottom. the point is after trade from two weeks ago, making the bet to fade this, it's likely to be falo now and i thinking about short volatility, if you will, is the thing to do for energy. >> okay. so, mike, you've seen the analysis you've seen carter weighs work you've seen carter's work. what do you do next? >> just talking about what i think is going to happen with the price of oil. and energy it's going to be complex obviously one of the things we had to expect was that there was going to be a sharp rebound in oil prices, net of basically seeing the tail end of the

economic shutdown we experienced and of course we're now seeing the light at the end of the tunnel and one reason you had so much volatility in oil when that takes place because we are both supply and demand constrained. it's not so easy to ramp and decline the production of oil and also work on the consumption side that's what create that's near-term volatility when that supply-demand emerges you start to see a lot of price volatility but we'll probably begin to see it stabilize at levels right around where we are right now. i think that's one of the reasons we expected it to begin to falter at the levels we saw and one of the reasons we expected it to stabilize here. another thing we were talking about was the near-dated of volatility, that is the price of options expiring in march, april, and late april, relative to those options that are a little bit further out in time is quite high. so the exact same dynamic that existed when we first initiated

this trade which you may remember was april 9, june 50 put calendars that trade is in our favor june 50 puts are higher and april 9 50 puts are lower. the dynamics still exist. if you have this trade on stay with it. for those who don't i think there's still time to put the trade on principle reason is because the near dated options will decay more rapidly these type of trades when you see stabilization in price have higher profitability than other trades where you need something to happen. here we're not looking for something happen another thing is to sell naked option that's carry risk this is a more risk-limiting way to capitalize on that same dynamic. >> okay. so, tony does it make sense what do you think? >> it makes a lot of sense as carter was referring to

selling -- being short volatility and one of the ways we usually do that is being short straddles but don't use that here on options action because it has risk and takes a lot of capital so the calendar spread mimics the short straddle trade and only requires a -- amount to enter the trade. the question is the timing many feel it's best to sell short straddle when they've identified a established range our research shows it's best after a big move, exactly what we've seen in crude oil, looking at the exhaustion past few weeks and now stabilized around $60 level. i think this is the right time to get back into this trade if you weren't already in this from last week. >> all right, good stuff, guys, thank you. coming up, you ask we answer

tweet us your burning questions for options action and you might just get your answer on the air. back after this. 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. voila! maybe a couple throw pillows would help. get a strategy gut check from our trade desk. ♪♪

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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. ♪♪ blam >> . welcome back to options actions. time to take your tweets read read mike, why don't you take that. >> yeah, this is a great question it's important to remember covered calls are an investment strategy it's when you sell calls on stocks you own and stocks like apple tend to be long-term holdings for a lot of folks, if you have been selling steadily as the stock has been rising

from last october to that high we saw and you continue to do that on the way down this is an investment strategy you can stick with because implied volatility is high at 35% and for a company that carries any net debt really this is really a good investment strategy we're at relatively high valuation for apple, it's something you can stick with despite the fact it's not trading at all-time high >> carter, jonathan has a question what's going on with bank of america? is going up or down and when $40 call or 39.50 put. brings it full circle to the top of the show with the "fast money" in the banks. carter >> sure. essentially what's going on with this stock in particular it's straight up to the right with all financials what's important bank of america outperforms the index every year for the past four years and now flagging a bit i think you go with 39.5 put and

fade this very strong move >> okay. tony, to you our next viewer asking on wall gree greens going long -- [ reading ] >> what do you think >> so, first of all, i like the technical shot up of walgreens and the thesis you have and the trade structure you have the only comment i have is the july options roughly four months from skpiexpiration are too fart when it comes to selling i expect to collect less premium and faster so i can do it more often before that expiration for the long option. >> carter one quick one, last one for you. slv or silver miners in general? >> in general, i like it all

this is the no-man's metal you have industrial medals, copper, nickel and tin have been great and monetary metal under pressure silver resolves up not down. >> all right, we take a quickie coand me back with the final call, next 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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♪♪ ♪♪ all right, guys, let's do it, final call carter, your up first. >> ups exactly the same price it was seven months ago that's a long time going sideways, resolution, likely up. >> all right, tony >> i'm betting on the reopening trade with wynn buying a call vertical here. >> all right mike >> call diagonals in ups are the way to make your bullish play

there. stick with the xle put calendar. >> all right good stuff great weekend, everybody, that does it for us on options action we'll be back next friday 5:30 eastern. don't go anywhere. ""mad money"" starts now my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it "mad money" starts now >> hey, i'm cramer welcome to "mad money. call me at 1-800-743-cramer or tweet me