they are. i want him to see my name on his bankroll. he has to pay me. i don't care if it's 99 cents. [ chuckles ] so, yes, my $15.54 check -- love it. so, yes, my $15.54 check -- love it. [ laughs ] love it. happy friday, "options action" fans i'm scott wapner in tonight for melissa lee. we have a big show lined up for you tonight. here is what is on deck. >> announcer: will u.p.s. pick up where fedex left off? pass the packing tape because professor carl is ready to deliver for you. then playing to wynn tony zing is laying out all his cards on the casino stock. and a look back and look ahead carter worth powers through the next leg of the energy trade why idling could actually 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 over the past year as online sales surged to record levels, posting a big beat this week, mike coe says another name in that space is ready to deliver big time for investors the professor, that's what they call him he kicks it off today. hey, mike. >> we're taking a look at u.p.s. this is an interesting situation. we have the s&p here trading not far off of its all-time highs. we're seeing some pretty epic valuations in a lot of spaces, but taking a look at u.p.s., this is a name that actually is trading at a relative discount to the market. trading at about 17.6 times forward earnings when you look at this, you might say, well, there could be some valid reasons for that among those, of course, we did see that big uptick in e-commerce as a result of the pandemic but the problem for

transportation companies like u.p.s.t quite as people are looking beyond the pandemic maybe the tail wind turns into a head wind. the secular shift in e-commerce is still fully upon us, but actually some of those pressure on margins could be alleviated even if we see a little bit of a pull back, people go back to shopping in-person, i don't think that's going to be such a big draw back. personally, i think u.p.s. represents a bit of an opportunity. they reported earnings in february we're looking forward to them reporting next time in april as i was taking a look at this, one of the things we could look to do is buy some essentially at the money calls. i was looking out to june, those 165 calls and selling mirror dated april 170 calls against it when i was looking at this earlier today, it would cost a little over $5 to put that trade on those 165s were about 7 and a quarter, and you're collecting a little bit less than 2 to sell those 170s in april.

i guess the idea, as always, is to try to collect premium on those faster decaying near dated upside options oftentimes when we put these diagonals on, what we're trying to do is we're trying to get basically a net debit or we're spending premium less than the strikes. in this case we're spending the difference between the strikes but remember that near dated options expires earlier than that longer dated one. so this is a situation where actually the stock has to run well through that higher strike before that actually creates problems for us. i think u.p.s. is one of the few place places we can look for value and some concerns are overblown how they come out of the backside of this pandemic. >> yeah, mike, thanks. carter, the stock chart looks pretty good. what about the technicals, how does it shape up >> it does the premise here is often you get a good beat out of one we see this in home depot, lowe's, coke or pepsi. you 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, you have a stock that was range bound three years. you can see the line i've drawn. then you have a powerful resolution of that three-year standoff and then second chart, the stock is consolidating again, right. so periods of equilibrium are typically the set-up for the next directional move. and that is the betting here, is that this sideways action -- i mean, after all, it's been a massive under performer to the market so, frankly, has fedex fedex coming to life in line with its good results. the thing is that u.p.s. will also come to life. so the final chart is just a comparative chart, it's very straightforward. you can see the railroad tracks. this isser u.p.s. and fedex. they converge on a here and now basis. the thinking is just as fedex came to life, having been a dullered, we think u.p.s. 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. i think both on the technical

and fundamental side, i like this trade you have a great technical set up as carter showed you the trading range 158 to 168 looks like it's about to break out. the break out today is the template we can use to look for a break out here as mike said, the business, if you look at the fundamentals, it looks quite strong here. 21% year over year revenue growth, and the fact that the margin collapsed this year i would expect that we're going to see some meaningful recovery on that. for those reasons i think trading at 18 times next year's earnings, this is a company that's fairly inexpensive. now, when we look at mike's trade here, he's choosing to sell the april 170s, and as he was saying, he's paying a little bit more than the vertical width hereof that diagonal, which means that starts to under perform if u.p.s. starts to break out above 170 significantly. based on the technicals, that is what i'm expecting i'm expecting a break out here up into the 180 area i do think i would probably

choose to sell a slightly higher strike price to give me myself a little more room to the up side. >> mike, i give you the last word since you had the first word with your trade >> yeah, i mean, i think the key issue here from a fundamental standpoint, we've got new management, new c.e.o., and i think they definitely are a company that has been challenged in the past operationally, but they're really focusing on developments in the i.t. space and investing in that area i think that's going to help them tremendously, and it's particularly managing those peak periods, demand periods they've struggled with in the past i actually really am optimistic going forward. and i think what tony is saying is a valid concern if some of you have that concern. then obviously you can look to adjust that strike a little bit higher personally, i think the market right now is looking at a level where it's hard to see it really shooting higher at this point. i just want to be long that longer dated call. >> yeah, i mean, we were just talking as well about gambling during fast money in the trade there. let's turn our attention now to

the reopening trade because that plays a big part of it tony is all-in on casinos. he's about to lineup a trade that could be a real winner. get it tony >> i get it now. i want ted to take a look at wy this week. not only from casinos but from as you said march madness in fast money if we look at the long-term chart hereof wynn, it's been an under performer 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 a potential reversal from this long term under performance here from wynn if we zoom into the break out, the stock broke out from 117 and quickly rose to 137 and has spent the last three weeks consolidating moving sideways, pulling back a little. and i think that is the opportunity to seek some exposure for the long side and when you look at the

business here for wynn they are fairly diversified in the casino space. they have an exposure to macao, and boston on the east coast they established their majority stake in the online mobile betting bet bowl this is really the segment of the market that's fastest growing here is that online gaming so for those reasons i like this stock. i think it's likely going to break out here when you look at theoptions here, the implied volatility is at 52-week lows. the options are extremely cheap relative to its history. so the trade structure i'm looking to use is to go out to may and i'm buying the 135, 155 call vertical here, spending about $11.20 for that may 135. that's the at the money call option collecting about $4.35, selling the may 155s, net-net here i'm spending about $6.85 on this call debit spread.

this is risking only about 5% of the underlying stock price, which is important to me given the fact this stock is trading at a 52-week high. we are going into a slightly softer market here and i want to make sure i protect my downside using a vertical spread like this. >> got you carter, tony makes a compelling fundamental case he gave a list of all the reasons why this is a great trade to make now. what about the technicals in the charts do they match up with tony's fundamental case >> sure. and you heard him refer to the break out above the down trend line as well as the recent pull back which are obviously very technical in terms of those thoughts the key here is there is some overhead supply at 150, and so it's a case where you do want to do it through options rather than being outright long in the stock. one thing we know is there is bifurcation in the space caesar's and lbs big new highs and wynn and mgm laggards.

that is either the opportunity or the risk. >> mike? >> yeah, i mean, i'll leave it to these guys to talk about the technicals i will say that fundamentally it does seem fairly fully valued to me here. tony was talking about 2018, and that's the last time it saw valuations as high, about mid 2018, well before the taper tantrum. that's when they did $6.7 billion in revenue. of course, they've taken on about $3 billion worth of debt since then we're not going to see those revenues again until full year 2023 actually the losses from last year and this year essentially are going to wipe out all of the earnings basically, from the tail end of 2014 all the way through 2022 when i'm taking a look at that, i'm thinking maybe we're going to make three, four bucks a share in 2022. maybe not even as good as that to me the valuation looks a little bit on the rich side, so i think if you're playing for a break out, that's fine use options. but i wouldn't be buying the stock here >> yeah, i mean, it's one heck

of a chart up almost 200% in a year for everything "options action" check out our website "options action" at cnbc.com. while there sign up for the newsletter here's what's coming up. >> announcer: coming up, carter worth updates the energy trade it ain't a stool without a leg and why you should just sit on it we'll explain. plus, calling all "options action" fans reach into your pocket grab your phone. and tweet us your question at "options action. if it's nice, we'll answer it on air. when "options action" returns. >> announcer: option action is sponsored by think or swim by td ameritrade

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♪ ♪ welcome back to "options action." it's been a rough week to say the least for the energy trade there's your chart the xle etf tracks the space falling 7% since monday. two weeks ago on this very show, mike coe bet on this exact situation. >> you have very high implied volatilities as well that's not surprising because a lot of these companies have relatively high levels of debt and they're based on a commodity which itself is exhibiting a lot of volatility and they're tied to something volatile as well which is the reopening as i take a look at this, i think this might be an opportunity to expect that xle could hit the pause button here. and so i was taking a look at potentially using a calendar put spread i was specifically looking at

the april 9th weekly june 50 put spread as a calendar spread. now, i was looking at those weekly options because those were the ones where we're seeing a very high implied volatility >> all right, 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? i mean, you got a problem this week rates up, dollar up, oil down. >> right, so crude oil dropped 14%, gasoline down 12. of course, energy stocks had a concomitant sell-off let's look at three charts what we know is that from the october low, just think about this the xle is up 100% versus the s&p up 20. a five bagger versus general equities and you've had three distinct draw downs i've annotated them there in the first chart. down 10%, down 13% in this one actually peaked the trough down more than 10%. the second chart puts the draw

downs in context, right? we've been in this well defined channel, a period in which xle has doubled. and how long does it take to recoup a draw down of 10-plus percent? that's the key and 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's the problem or if one is bearish, it doesn't get to the top it goes all the way to the bottom of the channel. is point is after trade from two weeks ago which is making the bet to fade this, it's likelyt be fallow now. i think being short volatility, if you will, is the thing to do for energy >> okay. so, mike, you've seen the analysis you've seen carter's work. what do you do next? >> yeah, i mean, look, just talking about what i think is going to happen for both the price of oil and energy is generally the whole complex and

also the stocks. i mean 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 essentially the economic shutdown that we've experienced. of course, we're now seeing the light at the end of the tunnel and one of the reasons that you have so much volatility in oil when that takes place is because we are both supply and demand constrained. it is not so easy to ramp and decline the production of oil and also on the consumption side that's what creates that near term volatility when that supply/demand imbali merges. we're probably going to see that destabilize. at levels where we are right now. i think that was one of the reasons we expected it to begin to falter at the levels that we saw it and one of the reasons we expected to stabilize here the other thing, of course, we were talking about is the fact that the near dated implied volatility, that is the price of

options that expire in the near term, we're talking about the ones that expire in march and 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 as you may remember was the april 9th june 50 put calendar. we were buying the june 50 puts and selling those april 9th weeklies against it. that trade has moved in our favor. those june 50 puts are higher and the april 9 puts are lower the dynamic still exists some of you may have this trade on i suggest that you stay with it. but for those who don't, it's -- i think there is still time to put the trade on the principal reason for that is those near dated options are going to decay more rapidly. these types of trades when you see higher probability in prove than a lot of other trades in the options space where you're looking for something to happen, here we're not looking for something to happen. short premium is to sell and make ongss which carries unlimited risk this is a more risk limiting way

to basically try to cann taal e -- capitalize on that same dynamic. >> tony, does it make sense? what do you think? >> it makes a lot of sense carter was saying he was referring to selling straddles, selling volatility one of the ways we do that is selling straddles. if you don't use that type of strategy on "options action," it takes a lot of capital the trade mike is using, a calendar spread, is a limited risk strategy that limits spread it requires a limited amount for the trade. the timing on a short straddle, many investors think it's better to sell a short straddle when they identify an established range. our research shows it's better to sell a straddle after it moves. that's what we've seen here in crude "up to the minute. we've been looking at the exhaustion in you'd oil the past few weeks. we got the major correction. now that we have it stabilized

at the $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. we are back right after this >> announcer: "options action" is sponsored by think or swim by 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. ♪♪

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 to "options action." time to take your tweets our first viewer tonight asks, how would you trade cover -- covered calls for apple off its high 20% and stuck between 120-$128 for the last couple of weeks? mike coe, why don't you take that >> yeah, this is actually a great question, and i think it's important for people to remember that covered calls are really an investment strategy. that's when you sell calls against stocks that you own, and stocks like apple tend to be long-term holdings for a lot of folks in their portfolio so if you've been selling calls steadily as the stock has been rising at a very steady rate, up from last october to that high that we saw, and then you

continued to do that on the way down, i think this is an investment strategy you can stick with why? because the implied volatility in apple still remains relatively high. it's about 35% for a company that doesn't carry any net debt really, this is a good investment sftrategy. i think it's something you can stick with despite it's not trading at its all-time highs. >> carter, to you. jonathan rodriguez has a question what's going on with bank of america? is it going up or down, and when the $40 call or 39.50 put? it brings it full circle to our call at the top with fast money in the banks carter >> sure. essentially this, what's going on with this stock in particular, it's straight up and to the right with all financials they outperformed the bka the past four years. it's flagging a bit. i think you go with a 39.5 put and favor this very strong move.

>> okay. tony, to you our next viewer asking, on walgreens, thinking of going long since may first everyone can get vaccines do i sell two of the july 62.50 calls and buy the january 21st, 2022 at the cost of three shares what do you think? >> i like the technical shout out of walgreens i like the fundamental thesis and generally like the trade structure you have the only comment i have is the july options four months from expiration are a little too far out when it comes to selling i prefer to sell a shorter dated option, collect a little less premium, but do it faster so i can do it more often before that january expiration for the long option >> carter, we got one quick one. last one for you slv or the silver miners in general? >> in general i like it all. this is the sort of no-man's metal. you have industrial metals which

have been great, copper, metal, under pressure silver is range bound. looks a lot like the u.p.s. chart. i think it gets resolved up, not down >> all right, we'll take a quickie. when we come back we have the final call next. >> announcer: "options action" is sponsored by think or swim by td ameritrade. cation 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, you're up first. >> u.p.s., exactly the same price it was seven months ago unch that's a long time going sideways, resolution going likely up. >> all right, tony >> i'm betting on the reopening trade with wynn buying a call vertical here. >> all right mike coe >> call diagonals in u.p.s. are the way to make your bullish play and stick with that xle put calendar >> all right, good stuff great weekend, everybody

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