she's probably not gonna stop. i mean, she'll be 70 years old when she gets out. hopefully, i'm wrong. i really hope i'm wrong. -- captions by vitac -- it is friday and that means it is time for options action i'm melissa lee. tonight as market reverberations from the war in ukraine overshadows stronger economic data here at home, we're concentrating on protective positioning. first trying to find the most idiosyncratic stock. and then tony uses a short signal to find out why now is the time to do it. let's get right to it. big show tonight stocks in the red again tonight

as russia's invasion of ukraine adds to domestic concerns. carter weather isolated from all the worries as one could be. carter, what is it >> sometimes you're on your own on auto pilot and united health care meet all the criteria the first one is simply a comparative chart. it's a two-year rendering of the s&p 500 versus united health, and you can see how their paths are diverging. this is the really interesting thing. united health care leading the way, beating the s&p, but the s&p is also beating the sector which means united health care is really beating its peers which are lagging in the market. a few up close and personal charts, the first one way to draw the lines we know that move in the october

low is about 30%, up versus the s&p up 12 and now this pull back or pause the second way to draw the lines would be converging lines. the presumption is it resolves to the up side, a big leap for this sector and this stock trend is important here you have that is literally a 45-degree angle, perfect, and it is ascending in that channel. that's two years how about if we look at the next one. another 45-degree angle, stock is up and to the right what's not to like it's the definition of stay long, be long. and how good actually is unh check this out the next is a comparative chart, and this is united health care versus google and apple over the last ten years it has paced some of the greatest names in the market and final chart add the s&p into

that comparative chart and we see the s&p bringing up the rear, down on the bottom united health care, offensive, defensive to defensive sector, stay long, be long, get long >> even better, actually, than google and apple that's eye opening thanks, carter mike, you got a trade on unh >> yeah, united health is an interesting stock. this is from a fundamental standpoint sastellar performer this is a company that has not reported a sequential year on year decline for over 30 years it's growing eps double digits, we're looking probably 20% for full year 2022 versus last year, and it's a cash flow monster to put things in perspective that's going to be a more than six-fold increase over ten years, which is definitely one of the reasons why you're seeing the stock track some of those notable names like google and

apple and so on. in fact, that's actually faster free cash flow growth than apple and google have been able to deliver. the only thing that gives me a bit of pause here is the strong performance that the stock has seen recently, and i just hate to do a little bit of stock chasing here the other thing i'd quickly point out is that implied volatility is relatively high for this name, and we're definitely seeing short dated volatility is higher than longer implied volatility so the april options considerably more expensive than the longer dated ones. so for those reasons i'm inclined to use a call diagonal. i was looking at the june 500, selling the april 520s net net that would cost about $18.90 a share or about the value of four shares of stock. on important point also, the company is going to be reporting earnings on april 18th

and april eshpiration is shortened this year. there's still a premium in those options despite that fact. >> tony, what do you think of the trade? >> yeah, so mike refers to his concerns about chasing the stock at all-time highs, and i think that concern is valid. but carter's charts are the relative charts. that is important here if you look at the relative strength of unh to spy, the market or its sector xlv, you see unh printed a new all-time high today relative to bull, and that is a signal that generates why i think unh will break out to new all-time highs even though right now it's still about $10 shy of those all-time highs put in about a month ago as mike said this is a stock loved by pretty much every analyst on the street, trades at

a fairly reasonable multiple considering the revenue and eps growth we consistently see over the past decade or eso or even longer as mike was showing you and what you have a valuation that i think is quite reasonable for a continuation higher into the high 50s as an upside target so when you think about chasing these all-time highs and the concerns that mike has, that's really where you want to use a diagonal spread like this. and especially when you have a stock like unh where you don't have explosive moves to the up side, adiagonal is really the right structure for this up and to the right chart as carter was showing you. and by paying just shy of $20 for a diagonal spread that's $20 wide he's not going to see any losses to the up side if unh does explode here to the up side i reducing his overall risk on the entire trade to just 4% of the stock's value, and that's exactly how you want to structure a trade where you're effectively at all-time highs and you're chasing new all-time

highsch. >> carter, i want to let you get the final word in here and i'm wondering because i know a lot of viewers are thinking to themselves carter is comparing urgs nh to a google and apple. does that mean those two other charts look just as good as unh? >> they don't actually on a day-to-day basis if you look at relative strength of unh to those stocks it's also making new high here's the point of those exercises. who would think unh has been as good as apple and google over ten years? it's that good, and that's trying to hammer home that point. >> yeah, that's a good point to make let's get to a different defense now from a macro perspective that is. you can pick just about anything in short and for you that means a broad hedge. what do you mean >> it's time to consider being more defensive and placing a

hedge is one of the ways you can consider about doing so. this is three-month implied correlation chart, and what you see here is it made a new one-year high. now, this tracks the implied correlation of the top 50 stocks in the s&p 500, and when you see these levels rise what this certainly means is a lower benefit to diversification and stock picking and an increase in terms of systemic and tail risk, and this is really the concern a lot of investors currently have with the overall market, so this is confirming the concerns that investors have, and if we look at the spy, what you have on a long-term weekly chart is a trend line that recently broke over the past couple of weeks. this is trend line that's been in place for the past two years. this is showing us there's some concern on the down side we're just testing this 425 major level that's been retested multiple times here over the past couple of months.

and my concern if we break below this key level we're headed down to the low 40s or high 390s, if you will, to the down side as a target it trade structure i want to use to try to protect ourselves against this potential down side is to use a put vertical i'm going out to april and buying the 425, 390 put vertical spending about $15.30 for that april 425 put and collecting about and net net here i'm pay paying about $8.90 for this debit spread, which is only about 2% of s.p.y.'s value >> mike, what's your take on this >> yeah, so when tony is talking about implied correlation, really what that is a measure of the options market prices on index options and etf options

like those in s.b.y. versus the price of the options on the single stock of those indices or funds. it's just telling us index options are higher relative to the cost of those single stock options. and when you see that take place, that suggests that those options are a bit more expensive. and that is one of those circumstances where it makes more sense probably to use a spread the way he's suggesting than to go out and buy say puts outright so i think this is a good trade structure to take a bearish position or to hedge your portfolio while recognizing that if you've been looking and i'm sure many have that the cost of ensuring your portfolio right now is relatively high >> yeah. carter, what's your take on the charts and where we're headed? >> well, consider this, the market is driven by the big growth names we know this, right? and those names are concentrated in the nasdaq 100, and the nasdaq 100 at the of last year

just completed 13 consecutive years of positive returns. that's never happened in the history of the dow and transportation average going to back to the 1800s. it's a great run presumptively the down side risk is bigger than the up side reward >> tony, final word on this. >> yeah, i couldn't agree more if we look at the qs, the qs certainly looked much weaker here than s.p. y. s.p.y. is currently holding these support levels still to come, the time of today's trading halt of several russian etfs took some by surprise using the scenario as a teaching moment how to use options. we'll be right back. thinkorswim® by td ameritrade

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♪ ♪ ♪ ♪ welcome back to options action it's been a big market week so we'll start answering your questions earlier this evening professor highlighting himself this one still unsure will i be able to sell my rxs puts tomorrow. what's the answer? >> yeah, to understand the question first we kind of have to take a step back and take a look at some of the things that

have happened since russia invaded ukraine to the market there and to some of the markets here that are impacted by them so if anybody's been following, one of the things we saw early was that the russian stock market closed, so that prevented anybody in that market from buying or selling the ordinary shares now, of course, in the united states we have several etfs that track russian shares an example of this is rxs, that's arguably the best known etf, and that's an etf whose investment objective is to correspondent to the 30 largest publicly traded companies in russia there were several others, but arguably this one is the most well-known now, some of the additional news that we saw this week was first of all some of these etfs were halted periodically by the exchanges, and exchanges can halt etf trading for a couple of reasons. they can halt for volatility they want to maintain an orderly market, so you'll sometimes see situations where they'll halt

the trading just to do that. other reasons can involve regulatory reasons, and we've seen some halts and in fact there was even an announcement by the new york stock exchange after the close today they were going to halt rxs again this time for regulatory reasons. and then another bit of news we saw is that the issuers, were going to suspend creation of new shares now, this was the news that prompted a lot of the questions we saw about what was going to happen to people's options during the week. so i think we need to understand what the creation of new etf shares is first. so the creation of new etf shares is when authorized market participants such as market makers need to essentially create new etf shares. they make a market in these things as people buy the etf from them, they're getting that short they'll buy the regular shows in the local market and they can deliver those shares to the issuer and swap them to the etf.

if they can't pi those shares in the foreign market then part of this mechanism essentially breaks so you can't create new shares, but that doesn't necessarily mean the etf can't continue to trade. in fact, many of those etfs did continue to trade, and there are several that suspended creation a long time ago but have continued to trade that has been good news for investors. why? because where russian investors couldn't buy or sell the stocks they held u.s. investors that had or wanted exposure to russia still could. c consequently we saw a huge explosion in volume in both the underlying etf shares and in the options, and this provided liquidity for u.s. investors here's an important thing, though with all of the things that are going on, it is still possible for exchanges to continue to halt the shares. so if you have exposure to it and you want to unwind that exposure in the event the etf

continues to trade, take that opportunity to unwind, and so for the person that tweeted us that question, and they obviously made a very good bet because it sounds like they bought some puts and rxs has done nothing but go lower, if you get the opportunity it'll probably make some sense for you tike to take the problems. >> good advice i would think carter, your thoughts here >> if you think about one of the greatest sins in markets, you can be wrong, you can be right, it's illiquidity there's only one thing worse than that. it's called a closed market, right? your limit up and you're short a commodity or long commodity, limit down in this case we have a frozen market and to some extent all bets are off as it relates to sort of the russian stock exchange if you look at the rts, what we know is its worst decline ever was in the asia contagion in 1998, it dropped 95%. we know in the financial crisis

it dropped 75, and right now it's down about 60 and it's halted the presumption is it's going to undercut the lows of 2009. >> pretty dismal tony, your take. >> it's important to understand even though the options have halted in trading the right to exercise still remains so if you have an open position here, you may still have -- or you still have risk, and it's also a concern for traders who have a short options position because you don't have control over that right to exercise. for traders who have a long position here in options, you still have the right to exercise it is a tough game to try to figure out whether or not to exercise because you effectively have to guess where you think the stock or the etf may resume trading here that's really some of the things it's important to understand because of the options have halted, it does not mean these options simply do not exist anymore. >> a thorny issue here coming up next we're taking

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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 ♪ welcome back to options action about a month ago carter and

mike laid out a way to play for some consumer relled gains >> what we have here is basically a very symmetrical orderly bottoming out process and the presumption is the stock is going to return to or close to its all-time high >> so i was looking out to march, the 100 strike puts, those were trading at about $2.65 or so. when yoofs looking at this earlier today, so you would sell that put, collect $2.66 it turns out per share. if you sold that >> philip morris has made some big swings and now down about 2% but still in the green for the trade. carter, your thoughts from here. >> that's right. we've got a nice pop about 8% i guess. we've given that back. on the chart basis it's simply returned to the level where it was interesting in the first place. if you're not in, i would do some buying. >> so, mike, what are you doing now? >> okay. so for those who may have put this trade on, the first thing is that on february 17th you had

made virtually 80% of all the money you possibly could have collected. that thing traded down to about 60 cents or below. and probably folks who are in that situation did the smart thing, then, and covered that short put. if you did so and wanted to reinitiate that trade i would, only i would choose immediately out of the money strike and i would go one month further out a little bit more time has passed, we're benefitting also from the fact in the meantime imp plied volatility as the price of options has increased, and of course philip morris being the international side of the tobacco business, they may want to spoke them if they got them coming up next, your tweets and the final call ♪♪

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the low 180s carter, what do identify say >> it's tempting but i would resist the temptation. boeing has problems. the stock peaked three years ago. it was march of course up at 450. here it is at 180, and something's not right. and i'm sure someone would say well the debt is bigger or they can't seem to get these planes to operate doesn't matter something's not right. the chart is bad i would resist the temptation. it does seem maybe cheaper where you could think long-term probably be around forever just don't do it >> my next viewer asks my ira does not allow cash secured puts it does allow calls. for example, the amd april 14th 85 strike buy right basis below 85 is my premium similar to selling the put, right? anything i'm overlooking tony, what do you say? >> yeah, so from a theoretical perspective you are correct.

because of a put call parity when you sell a deep in the money stock option you have a risk profile in theory identical to selling that out of the money put option, but practically speaking you will have some issues where you want to roll these calls early you may not have enough cash in the ira because you can't deposit the cash to hold those early, so there are some cash secured systems you have to consider >> mike, your quick thoughts >> yeah, i agree with tony and also of course if it's a stock that pays a big dividend there's potential an assignment risk which is another complication frply there won't be a tax consequence but it is a little different. >> time now for the final call what do you say? >> united health care and stock in the s&p >> tony zhang? >> concern about future

volatility in the market buying a put hedge on spy. >> unh diagonal done to the up side there >> that does it for us on options action mad money with jim cramer starts right now. >> announcer: this is a paid advertisement for csn. >> you know, many times, i've been out here with a new coin release, and i have asked for a drum roll. and in all honesty, in the past, it's really just been nothing but hyperbole. but this time, i really would like a drum roll. i don't think i'm gonna get one, but i really think i should have one. this is, i think, the singular most important numismatic event certainly of the last quarter century, perhaps in my entire professional career, in terms of interest, in terms of collectibility, in terms of