i'm melissa lee in times square we've got a big show ahead here's what's coming up. >> up and down plus and minus newton's third law of motion for many things in life, there are polar opposite pairings. tonight, we look at not one, but two of those such pairings and the eye popping market action we are currently witnessing amazon and google. gold and oil find out which of each carter and mike think is the better to

side with. and how. plus, after the biggest one-day drop in value in the history of the u.s. stock market, who could blame tony sang for making a play for meta. he'll show you how he's doing it it's time to risk less, to make more options action starts right now. >> let's get right to it it's been a busy week of big tech earnings and while investors were hitting the like button on meta, alphabet and amazon seemed to get all the love both companies surging after reporting, but did they really deserve it carter, start to unpack this idea for us. >> yeah. i mean, so much going on for starters, two weeks ago, we were playing google to the downside, looking for a netflix type, a facebook type profit indeed, it did the exact opposite what we're looking at now, a pairs trade. google relative to amazon. these are all ratio charts

you're going to see you. the first chart, it's just looking at one stock versus the other. divided, if you will, and the direction of the line is all you need to know this is google's relative performance to amazon and google's been outperforming as amazon's gone sideways it broke out of this formation and then on today, it's fallen back into formation. look at the next chart the same ratio, just longer term then look indeed at the next chart. just another way to draw the lines. we've broken above this downturn, google's been outperforming amazon for the better part of seven, eight years and it's really coming to life now and then two more. same chart, you can call it a head and shoulders bottom or you can call it a rounding bottom. but either way, as a bet in terms of three, six, nine months out, google, looking at the

relative performance chart, is likely to be the winner. that's the thinking. >> all right mike, you've got a pretty strong take on this what is it >> yeah. i mean, first of all, this has been a pretty extraordinary quarter. if we think about the traditional faang names, okay, what we used to call facebook, apple, amazon, netflix and google a couple of these have changed their names, but tickers remain the same we've seen some big moves. apple moved close to 7%. we saw alphabet and amazon goes substantially higher today facebook now known as meta, obviously fell considerably. but when i take a look at amazon and alphabet, i find it really extraordinary what's going on here i find the enthusiasm from the street on amazon's results to be quite puzzling why is that? what did alphabet give us? about $22.5 billion in net income

what did amazon give us? well, you know, at first blush, 14.3 billion not bad. except that 11.8 billion of that is from rivian if you exclude rivian, it's 2.5 billion. that's more than a 65% decline year on year versus their net operating income a year ago. google on the other hand, 65% increase so to me, you know, when you look at one of these making nine times what the other one is, they obviously are in a lot of the same businesses. some are very good and strong businesses some are clearly not as good and amazon is the one that's care ar rying the weight of some that are not profitable so i would be inclined to fade amazon and go long google. now you can choose a number of ways you can fade amazon if you own it, you could sell

it what i would recommend on google is that after the earnings came out, we saw options premiums decline. you can buy longer date l call options and sell nearer dated ones against it. normally, you would see volatility out of the near dated ones, but because we've been seeing the stocks move so much, it's not down as much you think. so the term structure, implied volatility, is approximately the same i was looking at the may 3000 calls then selling the march 3150s against it so net net, you have to bear in mind, these are expensive stocks so the options are similarly going to be expensive. be about 110 bucks now that's about a 10,000, $11,000 trade for the home gamers to think about because of course each contract represents 100 shares that might be a little bit chunkier than some would be inclined to see it, but of course, 100 shares of these stocks is going to cost you a

decent amount to put the trade on my inclination here is to believe the move in google, but maybe not so much in amazon. >> tony, what is your take on this trade >> yeah. so i certainly agree with this both on a fundamental and technical story perspective. because if you look at alphabet's trading at 21 times next year's earnings, given the picture mike was talking about, i think that's trading at a fairly substantial discount to where it should be trading probably closer to 25, 26 times next year's earnings i'm not as bothered by amazon's valuation as mike is but the chart has been in a slightly upward trend for the last 18 months and during that time, it's been underperforming its sector and the earnings announcement we saw yesterday that didn't rally the stock does not change that story at all if anything, i think the $3200 that amazon's currently trading

for is a temporary top here for the stock. so when you look at the fact that alphabet over the same 18-month period has been outperforming its sector, technically speaking, i think you have a strong case both on the mfundamental and technical side alphabet is an expensive stock $10,000 is still expensive, but it's only 3.6% of the stock's value, so you are getting substantial leverage if you will to be able to have exposure similar to being long the stock for just a very small fraction of the stock's value so using a call like this is a great way to call for a breakout higher for alphabet. >> carter, quickly on amazon specifically tony mentioned how the stock has been fallow. what's your take >> right, so if you think it's a precondition before the fallow period, a huge move. double going from 150 0 to 3500

then the fallow resting period that's often the set up for a breakout, but instead, it broke down all it did on this week's recovery is return it to where it was three weeks prior the chart is broken. >> all right let's stick with big tech. meta platforms missing the mark on earnings and plummeting more than 20% to close out the week, but tony says this drop may be a perfect time to give this social stock a poke tony, what are you seeing? >> yeah, so i've held a bearish view on meta, but i think it's time to turn that around and reverse my opinion on this and focus less on the user story that really knocked the stock down on earnings and focus more so on the revenues and profits here for facebook, for meta. because if we first take a look at the lopg ng-term chart, thiss

a log rhythmic chart from 2012 lows to where it is today. you see a pullback to that trend line, as carter would say, to the penny. that's the opportunity i see from meta to potentially rally from here. now, if we zoom into the chart, it's pulled back to roughly around the 225 level, which is where the stock was trading in july of 2018 now, in 2018, facebook, meta, made about $22 billion in profits. right now, it's made about double that. 39 billion so the stock is trading at roughly half the valuation it was trading at in july of 2018 so i think the fact that the stock is currently trading at 14 times next year's earnings, it's extremely cheap and the revenue growth supports this stock being substantially higher from here i think it's worth taking a risk, catching a falling knife here on meta, and use a stock replacement strategy or a strategy similar to a stock replacement strategy a call diagonal.

so i'm going out to the march july 230, 265 call diagonals spending about $26 for the july 230 call options these are call options that are slightly in the money to reduce the amount of time decay i'm paying for these and i'm selling the march 265s for about $3.60 i'm paying $22.60 for this spread, which is just under 10% of the stock's value so i'm getting a risk profile similar to being long 100 shares for just about 10% of the capital required to do so. >> mike, what's your take on the trade? >> obviously i like the structure because it's one i was just talking about and you know, i actually do like playing facebook for a bounce here short-term, we know the markets are voting machine and in the long run, they're a weighing machine and if you weigh basically the money generating capabilities of meta, you have to kind of like this one on the long side.

10.2 billion i think for the quarter is what they did that by the way just because i want to keep digging on amazon i guess, is four times what amazon did. slight decline year on year, but this is a company that's immensely profitable and trading quite cheap in my view >> let's get a check on shares of peloton the shares are surging w wall "wall street journal" repo that amazon has approached about a possible takeover. we haven't heard back yet from peloton, but the stock is higher by 31% right now mike, what do you think? >> oh, sure. by all means, buy peloton. that would have knocked your net income down another 10% so instead of making 2.5 your net operating for the quarter would have been about 2.25 it seems like that's par for the course there look, we did see quite a lot of options in peloton it was above average today nearly 100,000 calls traded. this is good news for

shareholders, but another reason to avoid amazon. >> mike is not in a pro-amazon mood tonight carter, how did the peloton chart look >> stay with the things that are funny. i can picture my grandmother on her exercise bike and listen, there's nothing new here that's it. >> well said for everything options action, check out our website, sign up for our newsletter here's what's up next. >> still to come, pair trades part two we'll look at a couple of commodities on contradictory courses. then we'll stop with the alliterations. promise. 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 enptnsctn tu wh oio aiorerns. thinkorswim® by td ameritrade is more than a trading platform.

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♪ our second trade oil has has a massive climb, but the chart master says it may be time to throw in the towel and pick up a golden fleece. carter >> we're looking at oil versus gold in this instance, we're not going to look at ratio charts. just the absolute charts themselves so the first chart here, looked at this at the top of the hour this is the formation that oil has been in. it's a fascinating thing in the sense that it has touched the upper and lower band to the penny repeatedly like a pinball machine, and stopped and gone the other way.

so one could say it's fundamentals i would argue it's almost all technicals we're up against the upper band all of the stories were bullish. but often, when everyone's aware of something, it's right to take the road less traveled, so we're making the bet to fade oil here. now there is an etf or fund you can choose it's symbol uso. you'll see the exact same formation. so you can trade this if you don't have a commodities account or you can trade crude now as to gold, the third and final chart. in a way, the most important or fascinating dynamic this week is not so much the movement in big stocks stocks often move when they have good or bad earnings it's not so much the extension of crude oil it's been going up for weeks and months it's the ability of gold to hang in to remain literally in the

face of real rates rising the way they did not in the u.s., but around the globe. so our hunch is that this formation, which continues to form, right, converging lines, obviously has to be resolved at some point i think consensus is that it's going to break down. my hunch is that it will do the opposite >> mike, how do you trade this >> we'll touch on the last one first. so just taking a look at gold. you have a situation where technically, it looks like it's going to you know, basically make a move. either higher or lower carter's bet is that it's higher i'm inclined to agree. but if you get into a situation where you have this kind of a binary outcome, this is one of those situations where options can serve you very well. if you take a look at gold or look at the etf that tracks it, gld which you'll notice is that

th three-month at the money volatility is less than 13%. what that means is that you can buy an at the money call option, june 178s were just a little over $5 or a little over 3% of the value of the etf and if you think this thing is going to move sharply at some point in the near future because it's about to resolve this moment of tension, then 3% isn't a great deal to risk if you're inclined to bet it's going to be to the upside. so that's the way i would play gold now, looking to oil, this one's trickier i was a member of the new york mercantile exchange. the thing about the energies is in my experience, they always tend to move farther than you think they will. both to the upside and the downside now from a fundamentals standpoint, i realize there's a lot of people quite bullish on

it still ne nevertheless, it is going to look bullish until it doesn't. so if you're trying to pick a moment where you're going to take your profits, which i don't think would be a bad move here, or make a bearish bet, i wouldn't be inclined to go short. here, i think we can use a put di agoal to make the bet this isn't a hugely bearish bet. it's modest. i was looking out to the july 64 puts a little over six bucks that's about 10% of the strike so considerably more extensive than options on gld. then selling the near dates march 59 puts for a 1.51 to help off set the decay as a percentage of the value. but i do believe that gld has reached a moment of tension and i think the precious metals have long sdl by the way are going to see their chance to shine. pardon the pun sometime soon.

>> tony, what's your take on these trades >> yeah, so if you look at oil, i sernlly agree with carter's charts i think we're near a temporary top and due for a reversal so the you look at mike's spread here, it is a mildly bearish trade. short strike is around 59. that's the breakout level we've seen recently. so he's not targeting significant downside i think that makes sense because my long-term views for oil is quite bullish based on more fundamental factors. when you look at gold, this has been trading into this major apex that carter brought up for about 18 months. so while i agree we're going to get a breakout, i'm not convinced it's going tout higher this is a very time sensitive because he's got time decay on both sides that is something to consider and one other thing is that if you are trading this as a pairs

trade, gld is about two and a half times uso in terms of price. so if you want to structure this as a pairs trade, you need to buy about five contracts of uso for about two contracts of gld to have a pair trade on this particular trade structure >> up next, wree' taking your tweets there's more options action in two.

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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 ♪ time to take your tweets our first viewer is betting a bet, excuse me, on one casino named caesars, thaony? >> caesars has seen a bit of compression here the line in the sand is the $82 level. the fact it hasn't climbed above makes it more speculative.

i like looking at march, the 80, 90 call spread reducing the cost of the particular trade, reducing the amount of premium. fundamentals look compelling >> our next viewer is eyeing a monster merger i think activision will rise i was looking to sell the march 87 call and buy the june 80 call for the cost of about three shares mike >> so atvi is trading around 79 bucks a share now. the all-cash deal microsoft offered is 95 a share. that's a 20% discount. that's quite remarkable. i think people are concerned about antitrust issues i don't think that's in play on the gaming side, it will be the third largest. one of the points the microsoft ceo was making about not expecting a lot of pushback. i like the idea of buying at the money calls. the issues holding it down aren't going to go away and

earnings will be reported in may. i think the deal's going to happen >> carter, your thoughts on either/or both of these charts >> well, i, you know, i would say this look, once the stock's in play, you're betting on an outcome that is largely known, but not 100% known it's off the table, if you will. microsoft on the other hand is just a pair of twos. >> a pair of twos. and just for the poker i-- that' bad, right >> without having five random cards. >> up next, final call 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.

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♪♪ ♪♪ ♪♪ final call carter >> gold long >> tony. >> meta.

call >> mike. >> buy now google not amazon >> we're off for the next two weeks because cnbc brings you live coverage of the 2022 winter olympics, but keep an eye on our twitter account for bonus content. "mad money" with jim crater starts right 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. i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. i'm trying to make you some money. my job is to not entertain you but educate and teach you. call me or tweet me. at the end of a completely crazy week, a day where the dow only dipped 21 points, s&p gained and