but i don't think lizzie ever grieved. i think the only time lizzie has ever felt remorse is when she's alone at night in her little cell in federal prison. -- captions by vitac --

this feels a lot like previous peer markets i have experienced. i point back to the tech rut. march 2000 was the peak for nasdaq. we had increases in volatility. we saw some breathtaking rallies. we still took some time to see this play out. this has a lot of the same hallmarks. we have had a prolonged bull market and what you will find in a situation like that is that people are tempted to buy the dips. there are places where you can still do that. there are a lot of places where they should not do it and where there is excess they will come in and buy some stock and you will see big rallies and then they will think better of that and you will see further weakness. from my perspective this is the hallmark of things that we have previously seen. >> maybe for different reasons

which makes the reaction a little bit on the back foot. we have not had inflation like we are having right now in a very long time. we have not had interest rates moving up this aggressively. i was shocked. i was shocked when i heard that the half-point increase was the first time since the year 2000 that the fed had done that. they have different predicates this time. yes. different. if you look at the major markets as mike was referring to, there are opportunities to look for buying opportunities. look at the s&p 500 and the dow book they have major support levels. that is constructive. look at the nasdaq and the russell 2000, that is where the weaknesses. they broke support levels. you could see downside there.

i would stay away from that. you mentioned that despite the fact that we are unchanged on the week, doesn't feel that way. we were up three% and then downpours three%. that doesn't feel good for investors. >> yes. down 22% and the dow down nine . as you point out, lies:and russell, those the ones that have been limping the most. we are thinking about defensive plays right now against that volatility and you can't do that without talking about gold and carter, you say it is it doing his job. explained. >> yes. in the modern era going back to time and memorial, gold has been around and it is the one hedge that has always done is job. have a slide if you want to start with that. the whole populace can be

categorized in one to three categories. this is just a fact. there are people who never owned gold and will never own it. there are people who buy gold as a hedge but then want to move away from it and then there are people that always have cold. there is nothing wrong with any of this. there are a few points that need to be made. the next point to be seen on this slide coming up, let's look at some major market selloffs and this screen it depicts those. that is the performance, the first column. the 1987 crash. the s&p drops and gold goes up. the relative performance is 37%. then the.com. peak s&p drops a 50% and gold

goes up 11% for spread of 62%. then the housing peak and the financial crisis. the s&p drops 60%, gold goes up 25 and look at the spread, 83%. then the covid peak, covid low. now in this instance gold went down and so did s and p. there is no way around it. than that last one is what we are living now. look what is happening. gold is doing his job. so for those who are interested in hedging, there s no way around this. then you say that is during a crisis. what about holding it? >> this chart makes the case for holding it. what we are looking at is the performance, three lines and

very straightforward. the blue line is the s&p from the.com peak to where we are now. then we have dividends reinvested. it's a big difference on total return. the orange line is gold. gold has killed with it dividends reinvested for 22 years. gold has been better than anything they have done. >> why don't we talk more about gold if it has been doing this? >> why is it the orphan? >> it's pretty funny, the barbers relic and then all this money and manpower and you dig and dig. you call it and give it above ground and then you buried in the ground again and put in the vault. it's the one thing that has been around. >> this is the chart. >> whatever that metal thing is behind you, and i want to

meltdown the metal. it looks like it is probably worth a lot. >> i just painted it that way. >> what is your trade? >> the numbers are compelling. >> the last time we had inflation my father bought me a silver harvester. you could recover silver. precious metals tended to do very well in inflationary times. that is what we are in. it's the first time investors have seen this. options are way to take exposure to an asset where you have the right to purchase it but you are not obligated to if the price falls. give yourself some time to have this play out. for most, you will probably trade stocks but not futures. this is proxy for cold.

i was looking to january of 2023. what i was looking at that today you could purchase the january one calls for about $10. i think i picked up a few for last. i'd like to see how things are going on in etf land and that is a way you can get exposure to gold. $9.85 a share might not seem that cheap. consider that gld is just under 180 so if you are spending five% of the current price and if it rallies, you have a opportunity to participate above 100 a.d. and they won't decay that rapidly. i think this is a decent play to dip your toe into the water with the assets. >> interesting. your take on this trade?

>> gold has held at 175. it is constructive for long exposure in gold. especially as we look at the inverse. this risks a small percentage of the value in this case. there requires a nine% move to the upside for this to break even. that is resuming back to all time highs and breaking out above that for to be profitable. it has to work out relatively quickly to work out. it's something to be aware of in terms of the type of structure you use with an out of the money long dated call option. >> lawyer viewers know this show advocates for market hedges and a way to hedge right now and part of hedging is

adjusting those trades and for you, it's time to do that for two traits. take it away. >> yes. we have a put spread on the triple queue. they are below the strike. when you have hedges on you want to monetize. when i advocate is to close the existing position. roll down and out so you have additional protection. iw m is a little bit different. we have a push spread on this for a middle of the strike. in this case, one thing you can do is roll the long strike down to where it is, about 180 and that way you take some gains you have seen off the table while maintaining some downside protection worker believe those tech stocks have the potential

for further weakness. >> okay. still to come on options actio , if you have your head on and you want to dip your toe back into the market, on the long side, tony and mike have safe strategies to help you. check out our website options action at cnbc.com. check out our newsletter and here is what is coming up next. >> trading isn't just a hobby. it's your future. so you don't lose sight of the big picture, even when you're focused on what's happening right now. and thinkorswim® is right there with you. to help you become a smarter investor. with an innovative trading platform full of customizable tools. dedicated trade desk pros and a passionate trader community sharing strategies right on the platform.

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welcome back to options action. the s&p 500 is within 100 points of a level 4000. some investors warn that the economy is on the brink of recession. it can be scary to think about getting along and equity and that is why options exist. that is what mike will explain. dipping your toe into the murky waters of the market without getting all soaked. here, mike, the floor is yours. this is a situation where a lot of stocks coming maybe you

own a little bit but you want to buy more but they were too expensive. a lot of stocks are a lot cheaper now than they were. the one i was looking at is home depot. that's not surprising because home depot, the retail sector has been hard-hit. this is a company that has the average forward-looking price- earnings has been about 22.5. give or take. recently higher than that, closer to 30. right now, less than 20. you can actually, think about this as of value opportunity, if you don't think the retail side will completely collapse and right now you can risk 10% of the share price to get participation to the upside and with options, the long options, your exposure to the underlying

asset increases as the price rises and decreases as the price falls. is not just a linear exposure to the market. i was looking out to january of 2023. those cost about $27 or so per share. this would be the way i think to consider taking a long position. if you look at where the stock was only recently, it was substantially holiday or than that level. if you're playing, this is a way to do so while risking less. the other thing is that if you have this on and the stock begins to rally, you can do other simple option such as cell calls to offset the decay.

>> okay. what you make of home depot? take us through the chart. >> sure. >> the first one is straightforward. it is 2009 and 2022 advance. you will see it on the screen. i see the current high. what we have is something that was close to a perfect 45 degree angle as you could have. look at the second chart. that chart is a mathematically perfect 45 degree. home depot is at the midpoint. that is what is sort of important port. the third iteration shows a drawdown greater than 25%. so to put those in context on the table you will see there

have been six instances where the stock has dropped 25% and the median decline is right here. the current selloff is slightly more than the average at 31.2%. it also leaves us, look at this next chart, down to a level of support. 31% selloff. down to an area of congestion where rebound potential is high. then, this is very important, this chart. home depot has been grinding sideways and that is stellar because the stock market is going down. this is relative performance and it is very good. >> any thoughts on home depot and the trade? >> yes. the risk and reward favors to the long side. it pulled down to 290. that is why we should think

about this. the business looks solid. given the growth we are seeing and demand for home improvement has not softened, the biggest risk is inflation and lumbar pricing. they likely will be able to pass him on to the consumer. the trade structure makes a lot of sense. the trade structure is not at the money. that has a balance in terms of the risk and reward to game this. >> you have another reentry trade if you want to do it by moving overseas to do it. a better opportunity abroad. what are you watching? >> a.s. hr. it is the epf. what we are looking at is

equity markets sold off and they have potential bounce opportunities. look at the chart and we have seen a 40% decline. it has declined to an important level. a trend line since 2018. we have bounced the trend line down to the penny and now we are bouncing off of it. looking at the economic conditions in china, this is one of the worst months we've seen, april. a collapsed room what has been a fairly strong rebound out of the chinese market. retail sales are nine% decline. then if you look at the forward- looking markets, 70% of manufacturing is back online and look at travel starting to come back, this is where i see an

opportunity. i want to go out to january of 2023, $25 call option. these are in the money by about five dollars. of break even at three and half%. as long as the etf rallies by three and half% this will be profitable risking 18%. >> okay. we have to leave it there. up next, a wild week of four stocks and a wild week for your portfolio. we're taking your questions on the market. we will answer your questions in 2 minutes.

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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® by td ameritrade welcome back to options action. take your tweets. i am new to options i want to make money even when the market is bad. what's easiest way. tony? >> if you have holdings you can sell covered calls in this market and if your stock is called way you can sell puts. >> way to make money in a sour

market. >> this is for carter. the next viewer is looking ahead to disney earnings next week. they asked, i was looking at the may 21 and buying 124 a little bit more than a share. it is for you. >> it's a good play. you are talking about a 50% decline. this is the set up where you get a pop and make an option strategy like that payoff. >> thank you. we will read more of your questions when we come back. >>

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>> use some of that capital to go into fall and dryden like home depot. >> we have joe home depot, d's disney, thank you. that does it for us on options action. we will be back next friday. don't go anywhere. mad money is coming up with jim cramer right now. >> following is a presentation sponsored by trusted luminess. - i have a lot of problem spots, redness, fine lines, dark spots. and now with the breeze, all that's changed. the breeze advanced foundation is amazing. it gives you skincare and makeup all in one. it's like a thin veil, but it has extraordinary coverage. at my age, all the other makeups made me look older. it was uneven, you'd have to layer them yourself. it never quite came out the way i wanted it to. the great thing about the breeze is it does your blending for you. i love the way the luminess smooths out my rough skin texture.