it's friday before the fourth of july here is what's coming up >> the nasdaq 100 approaching a rare ly seen inflection point, there's a window of opportunity. then from windows to floors. tony is looking to play an opportunity in name we don't cover very often in a very specific sub sector of housing finally, we know you're probably on vacation next week

professor is getting you set now. two weeks ahead of the big earnings because the early bird gets the income. it's time to risk less and make more options action starts right now. >> let's get right to it the vxx hit new low and the nasdaq behaving in way that happened only a handful of times. carter >> you bet unusual circumstance which is to say you can go up two weeks in a row or three now we have a circumstance where the qqq and nasdaq 100 on which qqq derived up seven weeks in a row. one could say it's not really statistics it's just data money facts are the facts and we look at them together first a chart, the nasdaq, 100, this is weekly bars and what we have now is an assent of seven consecutive weeks. if you look at the next slide or

table, you'll see exactly what this is in the context of this this has happened 17 other times. this is the 18th instance or circumstance where there's seven consecutive weekly advanced. nasdaq 100 goes back to february 1985 if you're take to take all rolling seven-week periods you have 1,894 of them this happened 17 you divide that's an instant rate on less than 1%. the real question is what's happened thereafter. the market is up albeit on the slight way take a look at the next table. we have here looking out next week they will matter week nine, week ten. you can see on the table there, while not all that robust, it's up the odds of being up are substantially above average next week and it becomes 50/50

thereof. the issue here is is right to maybe trim a little bit or sell some premium or take measures or stay more. all of that is fair. final chart. notice it down to tepenny. we have slightly made new highs. >> thank you for that, carter. mike, what do you do here? >> as carter points it out, as you just mentioned, the vxx has hit a post-pandemic low. we traded around 14.5 in the vxx today. to put things in perspective, the 150 day moving average for the vxx at the end of 2019 was over 15. that should just give us some context that we are now entering a level of market complacency, at least as it is implied by options premium look up 30 days on the s&p 500 that we haven't

seen since well before the pandemic what is interesting to remember when you have a circumstance like this, there is information contained in that. right now basically those markets are telling you that we have been in a low volatility environment and we should expect one, at least for the near term. how do we deal with this if you have a market that you feel is giping to get extended, if you're identifying fact that options premium have declined, there are ways you can try to take advantage of that i think one of those ways is if you're invested is to say maybe this is a decent time to contemplate putting on a hedge the hedge that i was looking at specifically referencing the nasdaq 100 that carter was talking about was the september 355 spread the 355 for about 1089 net net spending about $5.85

let's round it up. that's a little over 1.6% of the current level of the triple qs. if you're doing it after you have seen all time highs and and a two month stretch of gains, maybe that's a better time to take a look at it. >> what do you think >> the trades with these types of hedge, the trickiest thing is the timing aspect of it. mike, last week spoke about the index. talk about the skew we're seeing from options prices. that's very elevated historical record highs that we have seen that shows us that while the

potential pull backs here are relatively elevated. it doesn't mean they are problems if you look at the vxx which is the nasdaq 100 volatility index, most of those made a 52-week low today. if you look at the vxx term structure, the three month vxx is still fairly elevated at 19%. that three month vxx shows the markets are further complacent you have a lot of evidence there's a lot of complacency and this talks to the fact there's a more elevated probability of pull back but not necessarily a probable one that's what makes this the right trade to make. as mike said, he's only risks 1.6% of the ets value to put on this hedge what that means between now and september, if the markets continue to rise, another 5, 10%, you're only taking about

1.6% autoof that gain. you're not giving up upside in exchange for this downside protection i think it's a great way to protect the portfolio that could materialize over the next couple of months. >> that's fairly common thing we see. generally speaking you'll find that premium for options beyond labor day are going to be higher than those that could run through the end of the summer. we do tend to see more volatile till in the september time frame than in july and august. that's one of the reasons i think it's justifiable this gives us time on our hedge that we continue to see the melt up we have been.

tony, what is it >> the stock i want to take a look at here is mohawk a stock we don't think of very much within the home builder in index. it's one of the largest makers of carpet and flooring if we look at the chart here for mohawk, a long term chart. this is a six-year chart you see that $175 represent a fairly significant support level that broke below that in about 2018 we finally got back up it here in march we come back to retest the level at support and bounced higher. this is the opportunity that i see for substantially further upside especially if you lookt the long term charts if you zoom into the short term charts here, we have seen about almost a 25% pull back in the past two months. recently, we broke out above that bearish trend line. i think on the short term charts

you have the timingfor further upside when you look at the business itself, this is really where i think this is quite interesting. you know you have a company that's growing revenues about 15% this year and it still trades at about 15 times earnings which i think is relatively inexpensive considering the business generates about 30% gross margins and 1.3 million in free cash flow last year. this is a business that should be trading closer to 17 to 18 times earnings somewhere around the $230 mark the trade structure uses what i believe is a stock that's over sold but still sound and relatively inexpensive is to go out to august. i'm buying the 195, 220 call debits here. i'm paying about $11.20 for that august 195 call option and collecting about $2.90 for that august 220 paying net net here about $8.30. it's the underlying stock price

betting this will rally up to the cent highs around 2:30 or so >> carter what do you make of the charts do you see that rally coming >> what's interesting is where the stocks stop and pivoted just recently off the holiday that's an important circumstance just to say, it has a certain look, if you will. it's a stock that's been prospering since the market low. it's almost double the sell off the move at homebiuilders. that's the opportunity. none, as well. you see you can have a lot if

things continue to progress. are we in a market that's extended and is going to reverse. are we going the continue so see what we had? this stock had a recent set back i want to do so in way that limits my risk it's a little pricey consider the vxx is 15 this is the equivalent of 40 that's the reason why tony is looking at a call spread in terms of the trade structure and why you would be using options than going out and purchasing the stock or purchasing a call outright makes a lot of sense >> all right don't forget we have a website there's a newsletter sign up. here is what's up next

>> professor koe prepares you for the next earnings semestering with the call for action calling all options action fans reach into your pocket tweet us your question at options action if it's nice, we'll answer it on air.

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vrms people do this. it's to give themselves an additional source of yield and that can certainly help as bond investors know your investment performance over the long time and can help nuke the volatility of your investment performance this is a trade that typically will do on stocks that you don't think have a massive amount of upside why is that? by selling the call, you are going to be foregoing some of that upside. now the two week events that we're talking about are a slew of earnings from all the big financials, goldman, city, bank. all the companies will begin reporting in a couple of weeks

it does tend to elevate options premiums in the near term. i was taking a look at city bank and look at the august 6th, 75 thread call. the stock was trading today. you could have collected about 71 cents if you sold that when i was looking at it earliered to that's more than 1% the those options expire 35 days from today. you have elevated options premium and this isn't investment industry. do this again and again. sometimes it goes through that quick thread but you can start using the volatility on the stocks >> krcarter, you view financial

in much of the say way as you do energy >> it's are you getting paid for the risk to really not keep up with the marnket. it's a problem first is excel we notice that's the sector etf and you can see there that we bulk in trend. the bigger issue is this look at the next chart this is the exact same time frame and it's basically taking the it out before the pandemic hit. we have a sector that has not recovered on a relative basis to where it was the bottom panel performance through the s&p. look at citi, the next chart it's sitting on the top. the final chart and this isn't comparative line, this tells the

whole story. citibank is below where it was before the pandemic. financials as a sector is up 20%. the market is up 40. mostly banks are all well above where they were. something must be. >> calling citi tragic, tony, caught my attention. what do you make >> this is one that i'm somewhat conflicted on because when you look at the bid itself, citigroup is one that i really like we're expected about 11% eps growth this year after what has been a flat year last year it trades at fairly steep discount to its peers. the technicals as carter showed you are very poor. there's no other way to put it you have that failed triple top at $80 that's concerning to me and it broke below the 10-day moving average is concerning it will continue down to the 150-day moving average most importantly is the relative

to the financial sector. the underperformance is the right strategy i think citigroup should be trading 75 to 80 the 75 strike price is the right price. that's about a 22 delta. i like go a little lower in terms of deltas because i tend to prioritize capital appreciation of the underlying stock over income. in this particular case, i do think because of the poor technicals, it makes sense to be tactical sh choose a higher delta. it will collect a little more income 1% of the stock's value in about 30 days or so. that will help offset some of that volatility and provide a little bit of downside protection going into earnings >> mike, last word >> we still have about 8% upside in the stock if we do this any way, i think tim addressed the important point about 30 minutes

ago when he talked about the yield curve. you like to see a steep yield curve is usually a tail wind for financials we don't see it. >> up next, lost in the amazon don't worry, your guides are still here with you. we'll explain after there. 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. ♪♪

when traders tell us how to make thinkorswim even better, we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary.

and kim. she wanted to execute a pre-set trade strategy in seconds. so we gave 'em thinkorswim web. because platforms this innovative, aren't just made for traders - they're made by them. thinkorswim trading. from td ameritrade. it's above the down chain line on the bot dom. good stet up, absolute interesting developmental action relative butterfly. this is frtrade we talked a lot about. selling two of the 3850s and one

of the 39. >> what do you do? the stock didn't work out at the moment but continues to be a name i like. we have a bit of time to go. that's one of the reasons why i have a thread like this. i'm going to stay with it. >> let's take some tweets. our first viewer said i'm looking to sell the july 23rd, 27 call last week. is this too short dated? tony, your cost. >> july 23rd is three weeks out, not next week. i don't think that's too short generally speaking i like to go about 30 to 45 days out. you'll have to manage them more frequently than the longer data short options. >> mike. >> a little bit of calendar

school yeah, i think that's right selling shorter dated options is a trade i generally like >> next viewer asks las vegas sands or disney in second half of 2021. carter, how do the charts look >> well, disney is what i call a pair of twos the stock going nowhere. sort of tiein ing up capital caesars even better. >> pulled a third one out. that wasn't a choice we'll allow it mike, your thoughts. >> one thing i will say is i think, we really don't know what is shaking up with the delta vary yants but i like disney plus it's true. las vegas stands had a long period of weakness >> this is interesting how do you play the recovery what would you say

>> i think that you have a little bit more leverage from las vegas sands and you have online betting thrown in there i think that has a little bit more upside than disney. >> mike, how you might structure a trade here what would you do seeing that volatility is so low and these are definitely reopenings? >> they are. a name like las vegas sands isn't going to enjoy the low we see in spy options and q options. the trade that tony was talking about earlier in mohawk is the kind of trade that i would use if i was talking a look atlas vegas sands. way to offset volatility in that name is a little higher. >> all right it's time for the final call carter, what do you say? >> qs can expect a little more on the upside. it's time to hedge >> tony. >> carpets and flooring with

mohawk i'm buying a call and play for upside >> mike. >> hedge when you can, not when you have to. i like puts and also consider covered calls on stocks. ve that does it for us ha a great july 4th weekend. special edition of "fast money" up 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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♪♪ hey there, mad money fans. i'm leslie picker, jim's off tonight, but you are in luck we have a special edition of "fast money" coming your way just ahead we're serving up summer stock sizzlers. what you should be doing with your money as we head into the second half of the training year including three big names you might want to bet on plus, is this the new target of the reddit revolution? this name rising the ranks on the reddit boards, what is it and how you can play it, and later, we want to hear from you. tweet us your stock questions at cnbcfastmoney. we'll answer some of them live