to me, it's the one that gets you the most money. it's not that, it's the one that's moved the furthest from point to point. (jay) i still like what i said better. (laughing) (donald) never let the truth get in the way. here is what's on tap for tonight. ♪ the giant asset manager that's the market and how could dependency ends well carter will explain. two sides to travel. tony's saying disney will remain the happiest place in earth. >> even if the cruise industry is adrift, you will keep sailing along. it's time to risk less and make

more "options action" starts now. welcome back back. trow price as the market goes up, so does trow, more so. as this giant heading up the creek without a paddle carter breaks it down for us, take it away >> that's right. really in a way trow if you loo at the biggest stocks. it's always thing like blackrock, those are passive managers with etfs trow is the largest holder of some of the biggest stocks which of course drives the mark. if one thinking maybe the market has a mission, it's a good time to head to trow. first, in terms of data, when we sold off at the peak of february 20th to the march 24th, trow

drops 41%. and it would be expected, look at the next slide on the way backup of course from the pandemic's low to where we are now, trow up 168 and s&p at 105. let's look at a slide or chart or two here is a comparative chart. you can see the line, t-rowe price verses the s&p 500 you see it pulls away from the market and steep this is t.rowe on its own. the trend line is ascending until it gets steeper and steeper incorrected. take some measure if you are long or trimmed. >> mike, how would you suggest we trade this taken into account the technical analysis from

carter >> of course one of the reasons you will see t.rowe correlated with s&p, the reason of course their fees are asset based if bond prices rise and not just in the united states, globally we would be thinking of all raw equity prices as they rise that provides a significant tail wind for t.rowe, especially those are appreciating greater than some of their expenses will be you will see widen margins basically everything is working in that kind of environment. that of course has been the case for t.rowe one of the reasons for that is pressuring the fees for asset managers, t.rowe is included

the potential obviously for asset price pull back, that could obviously create two head winds where one of those is a tail wind previously one of the things we can do here without shortening the stock steepen, usual option looking out to december, i was looking at the december. it's a little bit out of the money there. generally speaking when we use debit spreads, we like to limit the amount that we spend on these if they are out of the money both strikes to about 25%. that to $20 would cost about $5.10 cents. we are getting it roughly correct. if you go further out in time, one of the things that has

happened generally is that you need the price obviously the fall this is something where it has to fall down the lower strike. that would be a significant decline from here. the other thing is there is some limited strikes availability there. that was the reason i chose this particular one >> already, tony, what do you make of this here? >> this is a tough one that up friend has not broken yet. if you look at business itself is fairly run business it's hard to find a fault at the moment the bigger picture is what michael talked about earlier today that sits about 15%. that shifts from active to pass passive has been going on for quite some time. we saw about $600 million worth of out flows for t.rowe in the

second quarter that's the bigger picture we have to focus on i am neutral here on t.rowe than out right bearish. i understand mike's trade because he's going out and buying in december that could potentially be the catalyst where we see some more out flows and we see the mark correct a little, that could be the trigger for the debit spread to work out. he's risking under 2.5% of the stock's value. that's what i like about this trade. if the market keeps rolling on sideways or moving higher, you are risking a small percent of the stock value. >> interesting stuff let's turn to disney, we got big news out of the company on their movie plans. julia boorstin is here with that details. >> hi courtney disney announcing exclusive

windows for the rest of their films for 2021 five films come out, those includes marvel and steven spielberg. plus, this speaks to the success of the theatrical released of marvel of "sang-chi" which came out. it grossed $162 million worldwide. >> today's announcement shows a shift? strategy after disney simultaneously released "black widow" as well as "cruella."

disney's chairman and media and entertainment, he says as conf movie goers continue to improve, we look forward for it. >> that was a record for "sang-chi" and disney was paying attention to that. >> as you point out the number, yes, it was. thank you very much. if you think this announcement is a big win for disney, tony has a way to play it how are you playing the way of mouse? >> i am looking at reopening and restreaming on disney. let's take a look at the chart here on the stock itself the stock struggles since pretty much march i think now is a time for

potential break out here now that it has been forming this base the last four months. what we have to look is the river. the consumer discretioner, over the past month or so, we have seen some strong performance here but also against many of the travel stocks that we associated disney's theme parks with that's the key that i am looking for, for this potential out performance going forward. if you look at the business itself, earning and reserve news largely recovered the same levels as q-3 of 2019 prior the the pandemic the business is different. we have a disney plus business that's new streaming business. that's why i do think it justifies a somewhat elevated valuation compares to what it was trading back at q-3 of 2019. the trade structure that i want to use here takes a stronger

bullish here on disney i am going out to october/january. 185, 195 call diagonal where i am buying the january 185 calls for $11.75 cents and i am selling the short term october 190 call against that for about $2 or so bringing the diagonal spread of $9.75 cents. roughly 2% of the stock's value. the goal is to see those october calls expire worthless and reduce the cost of those january, 185 calls and take that long-term bullish view here going into next year >> mike, what do you make of tony's trade here on disney? >> yeah, i think there is a lot of reasons why this may be a better approach than going out and buying the stock obviously this week signals that markets while they have been obviously very strong, that's not always going to be the case

necessarily, this week was evidence of that acetone any points it out. the valuation for disney you are limiting the premiums you are spending to much smaller amount than you would be and there are limiting to downside risk verses purchasing the stock. selling that upside call, the 195 strike is going to mitigate a lot of decay the cost of having that call is mitigated. of course expectation is going to go right. rather you are going to get the opportunity to sell additional premium against it this is kind of a way essentially do a by right but mitigate the downside risk >> got it. the opposite side of the world, travel sphere because cruise lines are adrift professor ko is pointing

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sure, so many of the viewers here may own carnival cruise line, the largest cruise operator in the world. this is really an oligopoly. there is some returns of cruising and booking have been keeping up a pretty impressive pace the company is going to be announcing earnings next week. i would urge people to exercise a little caution here. the first is we certainly have not returned anywhere close to the prepandemic level of cruising carnival themselves just recently announced at least 15 ships elated to go back to service next month, that's delayed by another month and another five expected to be in service by the end of the year have been pushed next year that's a potential slow down at

the very list. when you are investing in stocks generally, one of the things investors care about is return of capitol shareholders which comes in two forms they suspended their dividends, we are not going to have -- >> the delta variant presents its own head wind as well. that's because the cdc themselves identified that cruise ships can be a higher risk environment and many people will know that the demographics of those tends to skew at a little older population. it's going to take probably a lot more than just lower prices and we are seeing some of the lowest prices since the post september 11th, to get travelers back onto the sboat

that's not great mentally speaking in a situation like this, you own the stock and you are trying to squeeze out of it and you are not getting dividend, what can dow? options going into earnings, the possibility of price is looking at the opportunity to sell it's one of the most common strategies that people can use on stocks that they own and this will offer you generally speaking a higher probability of profits while possibility mitigating how much those profit it is can potentially be baas you because you are selling on the under line call. when now 77 cents may not sound a lot. put it into context of the current sharing price. that's well more than 3% of the current stock price that one would collect by selling the

right to somebody else to purchase their shares from them at a share price higher than the stock is today $25. your profit would be capped at the $25.75 cents level give or take up to 8% or so. >> what's in the chart there what are they telling you of the technic technical levels and mike's trade and what it suggests to you? >> what mike is articulating is sometimes you don't have to get all that big of a move let's look at two charts this is a comparative chart, you can see those two lines, they are literally like parallel lines. you got boeing verses carnival cruise and etfs, they're

identical. they're all sort of stocks and that's what's going to happen. look at the final chart. so we know this was 7 during the pandemic it rallies as high as 30 now were trying to wallowing it. i don't think there is big movement coming. >> very interesting. so wallowing in the cruise lines are some of these other travel places as well up next, something to chew on we'll explain, you will have to stick with "options action," we'll be right back. "options action" is sponsored by think or swim by t. t.d. ameritrade. ♪ ♪

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welcome back, chewy's quarterly results. the market is implying on a 9% move when you take into the account that the stock is trading at a fairly rich valuations, upside is limited volatility is so elevated. the trade structure that i prefer to use going into earnings is to sell a put spread going out to the october 1st weekly options

i am selling the $90, $83 put vertical when i was looking at this, i was able to sell the october 90, $6 net net here i am collecting about $3 >> okay, so since then the stocks kind of gotten chewed over tony, what do we do with this puppy? >> yes, so this chewy missed both earnings and revenues expectations, the stock is down almost 15% here since we put out that trade that is prime example as to why we use limited risk strategies, to put vertical to play catalyst events like this the stock is down 15%, you can buy this put spread for about $6.50. earlier today. that's a loss of $3.35 which is only 4% of the under lying stock value. it's time to cut your losses and

move onto the next trade >> carter, what do you make of the chart of chewy and technical analysis of what may be coming >> when you get a heavy volume drop and gap that's news related, this was. by definition it was bad news. it's usually right to stay away from drops and gaps, one of the great marks ets and you don't catch a falling knife. >> mr. ko, what do you make of this one >> this is one of those situations, remember also when you are dealing with vertical spreads, they don't typically go to the complete value of the distance between the strikes right away that happens at expirations. in situations where you say a credit spread, a credit foot spread to make a bullish spread. if you get the direction wrong, you have a little bit of time before the maximum loss imposed on you to take your licks and move on. that's what you want to do here

and that's what tony is s suggesting >> take your licks and move on >> up in thnext, your tweets an final call >> "options action" is sponsored by think or swim, t.d.a t.d.ameritrade 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. we're carvana, the company who invented car vending machines and buying a car 100% online. now we've created a brand-new way for you to sell your car. whether it's a year old or a few years old. we wanna buy your car. so go to carvana and enter your license plate answer a few questions. and our techno wizardry calculates your car's value and gives you a real offer in seconds.

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with a personalized education from td ameritrade. visit tdameritrade.com/learn ♪ what is tony's opinion on the low of october 15 other, $190 hold or cover, tony >> i am not sure of the sound of that tweet the fact that lows is holding above $200 resistance level leads me to believe -- if you are short those puts, you can hold con do those. >> our next viewer looking at fort motor it made a high in june and consolidated the past three months is it about to make a run for

the upside carter, why don't you take this one? >> well, it did make a high in june. but what it has done is drop 25%. i am not trying to call that consolidating. forbes is going lower. you can look at october, $12.50. >> our final viewer asks, shopify, rolling over on a relative basis around 1560 dl1 1560dollars. can you recommend a trade for it please, mike >> that's the way to get to it >> carter, mike and tony, that does it for us on "options

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