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before we get to tonight's trade, let's take stock of the market. we have seen a substantial -- on this? >> i think it was a positive week. i think it was a positive week because, we had low expectations in several names going into the earnings -- was a good example of this. the street responded favorably there. the results out of all the

other big names i think were pretty good. amazon, it is interesting, i do not think -- exciting. but, i think the price action is positive when we take a look at it. now, it looks like there is progress going on in washington. whether or not you happen to like what is going on with the deal or not, the fact there is movement, i think -- tailwind. you put all of those things together and, it is a positive. >> we have also seen a drop in the 10 year yield. that is helping the overall market as well. >> that is exactly right. the 2.6% we are currently on the 10 year yield is a pivotal level. a topping formation we are seeing. if we see below that we can see it down to 2.5 and that would be a huge tailwind for equities.

as we get to where we are now in the s&p heading toward the 4200 level, this is where we look to save the strength. we are still in the downtrend and the strength is an opportunity to look for -- because on the risk reward side, it favors to the short side. if we break out further than that, then we would simply say, we were wrong and looking at opportunities then. but, we would take on a fairly small loss between now and the next month or so. >> i am in the -- camp. connection. but we know is that the big earnings have come out but, we have expended a lot of energy. big moves from depressed levels. and -- nasdaq 100 leading on the way up. up 20 and in some cases 30%. and, earnings growth is 5%.

it is not impressive and i think we have come a long way. looking at a couple of tables and charts. what do we know? we know that year to date, if you look at a stacking order of who has got what, it is very much a case of the market being intact. i think we may have tables that will look at this. but the -- index, looking at its relative performance to the s&p, we had a big ricochet. but that leads us up against the difficult level. a downtrend line you can see it easily. what we have here is a rally to a difficult number. do you pick a stock and bet against it? i think you do. look at -- this is as precise as you get. it has -- five times to the penny.

our thinking is, it failed again. -- off its lows versus a stock up 24 versus the s&p up 14. we think it has expended the energy and not likely to be such a good bet for earnings. >> this is an interesting one. i indicated, when we kicked off here that, i did not think it was all that bad. when we look at -- versus intel, these two companies really diverged over the course of the past couple of years. going back to the end of 2017, -- is a $20 billion country and fast-forward to the present day, one of them is down about 25%. the other one is up 15 fold. they massively outperformed intel over that time. it is really an issue of execution. that is something intel is trying to catch up with.

why you would like -- and might not like intel. we can see that in the price action today. i agree with carter that from a tax standpoint, it seems like we have reached a difficult level. at 20 times forward earnings, it is not particularly expensive but not hugely cheap relative to the market. what i want to do is put on a trade that will give exposure in the event that the stock disappoints but, does not take any risk in the event -- when the report next week. what i was looking to do was, by the august -- spread. looking at this earlier, you can buy one of the august -- cost you a little over three dollars and sell two for about $1.65 a piece. what happens here? if -- earnings go sideways then

no harm. if it goes higher, same thing. if it declines you will begin to see profits down to that 85 level. at which point because you are short -- your profits will trail off. effectively, the worst case is they have massively disappointing earnings and you own the stock just below $80 a share. that is more than a 15% decline from where the stock is right now. those expire august 19. assuming you put this trade on next week, that would be a pretty steep decline. you will be owning the stock at somewhere in the neighborhood of 18 times or less. i think this was a way you can be tactical going into earnings. if they end with a result that is disappointing, you have an opportunity to profit. this is still, of the two

companies, the one that is executing. intel is not. >> the indicated as such in the last quarter. >> that is right. this is one where the charts and fundamentals are opposed to each other. the charts really show the strength as i currently have a couple of short positions here in the mice. i agree with -- and the strength we have to put into context. it is in a clear downtrend. the risk reward favors the downside. the fundamentals, -- quite strong compared to -- we also have -- that just reported that gives us a look at what -- may look like. and the chips act recently. potential tailwinds for -- extremely creative.

if -- does not declined -- or inside, rally substantially, he does not see a loss on this trade. but with these types of spreads, it is tricky to figure out the strength prices because you have to thread the needle to figure out what -- like the 85 strike he sold on the spread. that happens to be just inside -- the downside. that is the expected move in that particular timeframe. some of the best practices we typically like to look when you are trying to tread a needle. >> from chips to trips, check out the uber stock. down more than 44%. tony has a way to play it. >> i am taking a look at uber. which is a story of market share. they are taking more risk and growing faster than their

primary -- what we see is a primary downtrend since february of 2021. 18 months. but, what we are seeing over the past couple of months is what we typically see near a market bottom. an inverted head and shoulders formation. a pretty material move that we could see on earnings. the important part is looking at the businesses between uber and their primary rival, lyft. lyft has managed to turn a profit but, what you want to look for is the fact that the day, the revenue growth is less than half of what we see in uber. 70% year over year revenue growth. i think those types of numbers justify the richer valuation we currently see in uber. what is more interesting is the rich implied volatility implied. the market is implying a 12% move versus the historical average, which is less than

half of that. i want to harvest the elevated implied volatility and, look at taking a riskier position by buying uber stock. i am going out to august and selling the 22 and half -- just slightly -- which elevates the value of the option i am selling. i will be able to collect about $1.36 today. more than 5% of the value i can collect by selling this option. this gives me the option of potentially buying the stock if uber is below 22 1/2 by the august expiration. that is pretty much the all- time low. this gives me an opportunity to participate in the upside while collecting premium right now. >> do like this trade? >> i do like the trade.

one of the reasons -- not just the fact the stock has reached depressed levels and could potentially be the first year the company actually has positive earnings. really, a pretty critical earnings if we are going to get the kind of visibility on if that is a possibility. if we do get what the street is expecting in terms of how the higher revenue growth is translating to the bottom line and cash flow, i think it could actually be an attractive entry point for a stock i really have never liked very much. one of the things i like about what tony is doing is that, we are bouncing along the bottom and we have elevated premiums and, that is one of the reasons why, i think you could look at selling a -- if i had been thinking about it a little more maybe i would have sold the way tony is advocating.

>> we have two things in conflict. the absolute chart has all the elements of an early stage head and shoulders bottom. the relative performance -- nasdaq 100 is -- i think he is doing it the right way by selling premium and not just getting the stock -- >> check out our website and newsletter. 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. ah, they're getting so smart. choose the app that fits your investing style. ♪♪ - common percy! - yeah let's go! on a trip. book with priceline. you save more, so you can “woooo” more. - wooo. - wooo. wooooo!!!!! woohooooo!!!! w-o-o-o-o-o... yeah, feel the savings. priceline. every trip is a big deal.

welcome back. check out caterpillar closing out its best day since march and it's best week since june 2020. if you have been lucky enough to have this in your portfolio, congratulations. >> we are going to talk about covered calls going into earnings. the stock has had a phenomenal run up more than 16%. now, we have earnings coming up. the question we need to ask ourselves is how much further can this go. and if it has had much of the run it is likely to have. is there a way we can achieve a little bit more.

i am looking at selling covered calls to essentially collect premium. when you do the trade, you want to make sure you preserve at least some near upside potential. the further out in time you go, the farther out of the money you want to choose your strike. and you want to try to look for potential levels of resistance. i was looking at the august expiration, specifically the 210 strike calls. here is an important point. as a general rule of thumb, i am looking to collect probably something along the lines of 12% annualized or better. just to make sure i am making it worth my while. if it gets up to 210, it will have had a run of about 26% off of its recent lows.

i think that would be quite an ambitious move. as good as the news is for caterpillar, probably looking at 9% year-over-year and a decent multiple. i think we are probably going to start running into resistance as we start approaching the higher levels coming out of earnings. i think this is when you want to start taking a look for opportunities to enhance your returns and positions you already hold. >> i think that is exactly right. -- be cautious because it has moved a lot. the first two charts are just for fun but, the telly big story. this is s&p versus caterpillar since 1980. they are dead even. what if we added john deere? john deere has doubled the performance of cats. now, as to caterpillar itself, the selloff of the past year and half took us right down to the peak of 2017. and we -- the line.

the balance is too far too fast. we have come up from the absolute low -- and finally, if you put lines in, what is this? essentially a rally to the midpoint of the range. where interested sellers are lying in wait. >> what is your take, tony? >> i like it quite a bit. i highlighted a short era of caterpillar in early june and we have the same chart set up that we had in early june. a sign of exhaustion into this $200 level. the fact we recently broke below 180 and managed to climb back up of it leads me to believe we will -- rather than bounce back up. i think what is interesting is that the cover call, -- premium just to put into -- a stock

that generates about 2.4% yield. he is generating more than half of that in just 21 days. the yield you are getting is quite high. but, if you are -- and concerned about a downturn below 180, you could potentially use the premium on the cover calls to buy out of the money put options and buy yourself some protection. depending on -- stock, and i think we could see further downside, it might make --

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advanced security that helps protect your devices in and out of the home. i mean, can i have a bite? only from xfinity. nah. unbeatable internet. made to do anything so you can do anything. we listen. like jack. he wanted a streamlined version he could access anywhere, no download necessary. 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. a few weeks back, tony laid out a -- >> the stock has recently

formed a bit of a double bottom. after declining 55% from its peak of last year. that happens to be the same breakout level we saw in september 2020. what this indicates, the decline we have seen is perhaps coming to an end and, now is the opportunity to potentially gain exposure. going out to the august 12 expiration and looking at -- about 39% and about two and half -- >> since then the -- has gone up nearly 20% with the climate funding plan from congress. >> the end earnings was the catalyst that drove this. i think it confirmed the rotation. when you sell it credit spread like this -- $.13, we have made 95% of potential profit on this

trade. time for some tweets. amazon has gone up too much too fast. so is selling the august a good hedge. >> i also question the move we have seen, selling covered calls is what you are suggesting. i think -- collect premium but, it is not so much a hedge. if you wanted to hedge it you can do what tony was suggesting and use the proceeds to purchase -- >> our next phan asks -- for august and september. it so, is there another trade at these prices? >> as we said at the top, my view is still -- we got a little further than i expected on apple. the answer to your question is

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and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back. time for the final call. >> many stocks have rallied substantially. the some both. >> as you were continues to dominate and focuses on profitability, now is the time to start investing by selling put options going into earnings. >> intel earnings were

disappointing but -- is not intel. that said, if you agree with carter and think there is a move possible between 90 and 80 -- >> that does it for us here on options action. we will see you