[engine revs] the pilot, bob riggle. >> show 'em how it's done, bob! [engine roaring] welcome to "options action." here is what is on tap tonight you can have a coke, but can you have a smile the consumers giant on deck to report next week we'll show you why and how to play it. and tonight we're taking more of your twitter questions firsttony zhang will show you how to trade twitter finally moderna, being called the tesla of drugmakers,

but mike is going to take a shot at it. time to risk less and make more. "options actions" starts now okay out with results and it could be poised to pop carter, we're just talking about this in the coke portfolio >> that's right, i think the set up here is quite good. we're looking for a macro catalyst or backdrop that is positive, we have that there is a very defensive tilt to the market right now. two, we have an event, and peps just popped. and the bottom panel is what i

want to focus on that relative straight line is starting to curl up. we they that is important. the next chart is just coke itself the set up here is a nice assent very orderly, and the potential for a break out here above the dops in play the stocks are up with of the few yet to return into this is a two-year kpart it putting in play who else is in that level we think the stock is headed to

finally it's prior high. the buyers of coke >> mike, what's your take? what's the trade >> it is interesting, the fact that it has not basically achieved the prepandemic highs is an important point. this is a stock providing about a 3% dividend yield. also just look at how they were doing right before the pandemic, the prior year was about $37 billion, that is very close to what we're anticipating this year for a full year but next year right now the expectation is for full year revenues that would be a year on year increase of about 6%

that suggests that coke is a reasonable value when you put it relative to everything else. one quick point. this is not a stock that moves a great deal and of course there is probably a little bit of information here i was looking at long dated called they were about $2.14. and i was looking at selling the august 57.5 calls. and 70 cents on a stock closing at $70 may not seem like a lot of premium, but think of it in the context. it is about a third of the premium. there is nearly 190 days until they expire.

the idea here is to continue to own the longer dated calls and sell premium against them to help finance that understanding that this is not a shock that rockets higher, it is just moving higher. >> yeah, first of all i think the chart here is very co comp compelling you have a potential break out here i think that $60 target is a very reasonable upside target. when the stock is paying about a 3.1% yield and we have a pretty good chance of this stock beating on top line revenue, that's where the valuations are fully justified. typically trading a call

calendar like this on a stock that we're bullish on is interesting to me. but the took is already up, and i think the upside is red lightively limited i think the call calendar that is a 2% upside is justified because of the skew that he noticed from that short dated option that he will be able to take advantage of. if you can sell more calls against it then you can own them for a significantly cheaper price to i like that point quite a bit. >> great points all around we also like to take your questions from twitter later in the show >> yeah, so i think last quarter's revenue miss and the stock selling off so heavily was

a little overdone. i think because it is back on track toward profitability and revenue growth, i think this is something that we should look at going into earnings next week. the stock found a base above the $64 level. and so far it started to form another base above this level and i think this is an opportunity for it it now continue towards that all-time high for twitter we're looking at about 30% top line growth, but it trades at a substantial discount so i think this is justified in terms of treating a higher valuation. especially with twitter blue just launching i think that could add another 5% to 7% to top line revenue

next year. the trade structure that i want to use reflects what the options are implying which is about an 11.2% move over the average that we have seen here. options are implying a slightly muted earnings so the trade structure is selling a put credit spread. and i'm selling the 66-60 put vertical here. about $4.70 for that august 27th put and $2.25 for that $60 put i'm collecting about 40% of the vertical width that is the type of raid that i want to take especially if i think the upside is limits because of what the options are

currently implying >> mike, what are your thoughts on twitter >> yeah, i mean i think the important point, tony was talking about an 11.5% move being relatively modest. i think the or not point here is the trade structure that he is choosing when you look at credit spreads you can collect more than 30% of the distance in that amount of time, that is a positive the stock can stay where it is, go higher or lower, and you win in two out of the three cases. so this is a trade structure that i recommend in general. the risk is less, and it is less than what you would do purchasing the stock outright. i like the trade structure and the timing of it as well

>> check out our website options axes at cnbc.com. >> moderna, now one of the big et est bioteches in the world plus, calling all options actions fans grab your phone and tweet us your question @optionsactions.

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♪ welcome back moderna is being called the tesla of drugmakers. you think this is looking expensive? >> yeah, this is interesting if you have been following the stock you're aware how much it is up other the last few years right now the options on moderna are exceptionally expensive. so when i look at this thing we

have several katt lists coming up and you look at what the price target for this is and it is substantially lower than where the stock price is you might feel there is some considerable risks you'll find that the near dated options, that is close to 80%. they're nearly three times more expensive. and after this big move that is maybe not that sir vising. the other thing we have seen a huge growth in is revenues those are up substantially and we'll look at close to $18 or $19 billion. it is a high dependence on covid vaccines as a source of revenues and there is a lot of questions about how that will look going forward. there is real dill lem that ma

about whether or not it will be consistent so when i look at this to me it looks extended and we'll get carter's view on the charts, but we need to look for ways to look for ways to mitigate the costs so when we're trying to time a time a potential downturn, i was looking out to october those were about $15, maybe a little less, and i want to help finan finance this with the august 240 puts when you use calendars the best possible price is for it to land on the strike that you selected. you're trying to thread the needle a little bit here

you sort of have to weigh this tradeoff a little bit. i want to own the longer dated puts, i want to finance a portion of it. i would not short this >> carter. what are the clarks looking like >> it is important bha what mike said i think there are 17 analysts responsible for this stock with health care background and trying to come to a background and they're price target is at $780 the first chart. it gapped right to it's internal trend line the second chart is very orderly

the other is 35% so two four-month pull backs and the final chart, and it is about two thirds of the proceeding which is two thirds of the proceeding 375. i think this is a moment when you certainly ar vest gains. >> what do you think of moderna and mic's trade. >> it is priced to perfection. it is decoupled as carter was saying there is fist of all the hype of being added to the s&p 500

we saw the same with tesla, but they're also adding three times more than what they did in 2021. that is one big if there is another compelling reason for the stock to be trading at rich valuations and that is really using the mrna vaccine process and there is a reason why it is better, but that process is probably at least three to four years away from generating substantial revenues and mike's trade structure, that is great for using this. it is 3% of the stocks value, but timing these things are very tricky the stock even if it is to trade sideways, and he went all of the way out to october

so buy quite a bit of time to wait for a potential correction. and then as he continues to collect premium on the short leg of the put diagonal he can potentially buy himself more to the downside >> mike, we'll give you the final word on this >> i think that is one of the important points, too. there is a lot of good news, but a lot of that is already known i think we're running out of those. that is one of the reasons i think it could take a rest or a downturn here. >> coming up next from silver to gold answering your twitter questions next, stay with us 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

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because platforms this innovative, aren't just made for traders - they're made by them. thinkorswim trading. from td ameritrade. welcome back to "options action." one viewer says slv is now below all major moving averages.

puts for 5 cents seems like a nice way to make a bear ish bet. >> you'll note that the $150 and the $200, they're at the same level. the moving average is an automatic trend line silver is one month it was one month ago. and i don't think there is any decertainble trade here. >> our netflix viewer asks what are your thoughts on a goldman sacks november spending $380 to potentially make 20? >> on this particular trade you have about 16 pakista% chance og the whole tried. i think the strike price should be around 380 or 400

slightly lower risk reward ratio, but i think that is a better trade to make andy in florida says long dated out of the money tesla options, most are low involve. i optioned this options with other stocks >> yeah, the first cause of those is swing prices. it closed close to 900 at one point. an tooks that are highly volatile, the sensitivity if they're out of the money to price money will also be greater. and we saw the implied volatility themselves change and of course in those longer dated options it dropped quite a lot since then by probably down

to 50% or 60%. so those are contributed to the stocks like tesla. okay, mike, the next viewer says how can i properly hedge my m mega-cap logs. >> it is to by put spreads in the qs for a couple reasons. that mitigates the cost and the skews are relatively cheap >> carter a layup for you as well what's your take >> sometimes these are very actual and sometimes they're not. the risk here is that the upside is cap and the downside is --

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time now for the final call, carter, you first. staples beat the market today, in the past month, and coke, the big staple, beating in second we like it for a breakout. >> all right, those value plays. to tony >> i think you see a strong quarter next week. i'm selling a put credit spread into earnings next week. >> you mentioned that product pipeline mike finally to you yeah, picking tops and bottoms in stocks and markets is very difficult to do and one way to help with that is calendar and

diagonal spreads, like the one we saw with moderna, which is quite extended here. >> we have a busy earnings week next week, have a good weekend and rest up, guys. (upbeat music) - [announcer] the following is a paid presentation for piyo, created by chalene johnson. she's a new york times best-selling author, a top-ranking podcaster, lifestyle entrepreneur with millions of online followers and has sold millions of best-selling fitness dvds. and today, she's got special free offer especially for you. - hey, is all of the change that you're experiencing, starting to weigh you down? like maybe you're worried about finances, your routine has changed, there's so much pressure on everyone right now. and all that stress makes us gain weight. and to lose the weight, you gotta exercise,