and i'm not gonna let that s.o.b. be a part of my thoughts, be a part of my anxiety. he'll have his day and i -- either he's having it now or god's got something else in store for him. but he'll get his. right now on "options action," stocks closing deep in the red. and we'll drill down on where to go from here plus, apple's next big reveal ahead of next week's iphone event we'll chart the next move for the tech giant. and a look back at lululemon. up more than 6% on earnings. the professor is here with what you should do now. i'm courtney reagan in for melissa lee, and this is

"options action" live from the nasdaq market site we have carter worth, mike khouw and our guest. the chart master here to lay out where one hard-hit name in the sector is heading from here. carter, what is the chart telling you? >> sir, ure, we're going to loo capital one. the big news this week was two-year yields and ten-year yields, after showing quite a bit of life faltered and basically, lower yield the is not good for financials in principle. but we're seeing this in the reports of the big banks,

long-range is starting to tick up as they get ready for quality deteriorating in the loans they have let's look at capital one, which is not a high-quality, if you will, lender just a few simple charts we know this this was a huge winner off its covid lows $38 on the low and hit 178 now down some 43%, it's exactly a 50% retracement. but does that mean it holds? no, i don't think it does. the second chart, same time frame shows or annotates it's finding support, but it's not likely to hold let's drill down more immediately. the chart is just the chart of capital one itself, and it is an

unrelenting down trend, and it hoo looks to my eye anyway that we're going to break again and make new lows. and finally, relative performance, which is one of the most important factors, this is a relative strength line it depicts capital one not relative to but in comparison. it's going down more than its own peers for the sector in which it resides not good for sellers >> hmm the charts do make a strong case mike, what's the trade here on this one >> it's interesting. when we deal with cyclical stocks, and stocks are cyclical, they often look cheapest at market tops and most expensive at market bottoms. and that is because of the economic cycle that we have to deal with. if you look at it on a forward

basis, it's looking pretty cheap. lower for next year, about 18 bucks, but even that is less than six times earnings. one of the things that's interesting is what carter pointed out about loan loss revisions. we did see an uptick between the first and second quarters from 608 million to 1.1 billion and someone might say $400 million increase in loan loss provisions, that's only .1% of a $400 billion balance sheet but i would flip that around if you have as we do a weakening economy, what is the impairment you should look at for that $400 billion balance sheet? it means that it is fairly modest, and real credit headwinds could see significantly more loan loss provisions going forward and this is a company that has relied very heavily on intensive

marketing, which many people watching now are probably familiar with. options premiums are slightly elevated, look for a put spread, i'm looking out to november. i was looking at the 190 put spread that was going to cost me about 2.5 bucks. and that's usually the number i'm looking for. a risk-reward relationship of payout of 3-to 1 to 1. again, one of the things that's important to remember is that you're always going to see companies looking very, very cheap in situations like this. it's going to be a revision in the actual financials that are going to basically bring truth to the prices that you're seeing >> bohn win, i know you're worried about pain to come and were heeding what the fed was

telling us the consumer may have more cracks and credit gets more strained, i can kind of guess what your take might be on capital one, but you tell me >> it's fine, we tend to be on the same page. i'm willing to let you speak for me anytime let me know. there's a couple things that stick out to me. the performance tells you quite a bit. if you look at the performance year-to-date it's down over double what the xlf is then we talk about, you mentioned pain mike mentioned, he didn't mention it, but he alluded to value traps. and i think essentially, that is exactly what capital one is here you need to think about where we are in terms of the credit cycle and jamie dimon and others have said listen, we're expecting there to be turbulence going forward. you look at where capital one is, tan is probably or likely to be one of the first to show

cracks i think a bearish trade gives you the best opportunity that if there is going to be credit erosion you're dealing in a name that's likely to have that >> from capital one to kroger. mike's got a way to play the supermarket stock for grocery names, what are you doing, mike, with kroger. >> kroger is kind of the opposite circumstance as a financial like capital one, which is probably lower on the demographic scale in terms of the credit worthiness. we're talking about a consumer staple, it is relatively cheap, four bucks of eps give or take the company has been executing well they obviously have seen increases in cost, at a growth market at 21%. but quite reasonable i think they're executing quite

effectively and focussing increasingly on digital. we have earnings coming up this is a name we own in our portfolio, and we do have earnings coming up next week that's going to present a potential catalyst for the upside what i was looking to do was a call side risk reversal with a little bit of a twist this time. i was looking out at january and was going to buy the at-the-money calls and then i was going to sell a near dated strangle against it, the 45-52 to be precise. net-net, the idea to capture the premium you're going to see going into a catalyst like this one. and because it is a low-beta stock, the down side is a reasonable one to take on, given the fact that the stock has actually experienced a hlittle

bit of weakness >> so we're moving from the consumer name to the technical name >> kroger is low beta. just consider this kroger has the same sales as home depot, and yet its market cap at30 billion is one tenth that of home depot at 300. it's because it's a low market business, selling sugar, and rice and salt. kroger, since 1979 has paced the s&p. here's a one, two-year chart, that's the definition of trend line look at the second chart, another time frame this is over five years. it's still a perfect uptrend look at the all-data chart, the final chart. it's a perfect uptrend this stock, again, has kept up with the s&p since its ipo in

1979, but it's done it on a lower beta basis and in a steady way. we think it's the opposite of capital one and the place to be on the long side let's turn our attention to anything up nearly 20%. and we've already seen some nice moves here, bonawyn. >> you need to be mindful of where you kind of position yourself, stops or trigger points if you will in terms of where you want to get long a name speaking of beta, this one is actually quite high beta, and that's the reason i've chosen this over say a name like xle. i'm looking at the xop november 145-170 call spread, and i also

have the twist the option to finance this with a down-side short sided put. we're going to sell the nov at 170. so about three and a third you're 107% of spot. so we have this down market and it's a situation where analysts are still constructive in terms of earnings revisions. this is, you know, an area where you can kind of try to buy on a f back rather than a risk define if you want to take advantage of higher volatility, you can make it even cheaper. >> what's your take here on

bonawyn's xop trade? >> i own xop right now that would be a risk that you'd face that you would own it at a lower price than where it's currently trading. obviously, if i owned it, that's the same as saying i'd be willing to buy it here being willing to buy it at a lower price is even more reasonable still to come, we're gearing up for apple's next event, the first in-person event since the pandemic we'l we'll lay out what to expect from that stock. there's more "options action," though, right after this

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. ♪♪ why is roger happy? it's the little things carvana does. see, roger wants to sell his car stat. little things like getting a real offer in two minutes really make roger happy. so does carvana's customer advocate caitlin picking up his car at promptly 10am. hi, are you roger? berglund. with the honda accord? yes i am. it's right over there. will i be getting? and he loves that caitlin pays him on the spot. yep, rog. it's the little things that drive you happy. we'll drive you happy at carvana.

this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these and so many more in the xfinity app. in order for small businesses to thrive, they need to be smart. efficient. agile. and that's never been more important than it is right now. so for a limited time, comcast business is introducing small business savings. call now to get powerful internet for just 39 dollars a month. with no contract. and a money back guarantee. all on the largest, fastest reliable network. from the company that powers more businesses than anyone else. call and start saving today. comcast business. powering possibilities.

. welcome back to "options action." the biggest day in tech is coming up. apple set to announce the iphone 14 this thursday at its first in-person event since covid. what should you expect and how should you play it you're all here to help us

tackle this tech titan and upgrade our portfolios this is really such an important company really to the broader economy and the market >> yeah. it's interesting because if you look at the company from an operating standpoint, in many ways, it's almost the ideal company to be involved in in the current environment. we have rising rates, you want to be in low-duration equities companies that are generating a lot of income and cash flow now, as opposed to companies that may have negative earnings and negative cash flows now and just a prospect on the future the problem i have, at 25 times earnings for next year, $2.5 trillion market cap, it's not particularly cheap, and that's really where we find ourselves in a little bit of trouble. it's not going to grow at the same pace it has historically. and for a while that was the attractiveness with microsoft

and others years ago the premise was the companies were so big. that's still true. the cash flow story supports it, but the multiple is a bit of resistance on the upside >> the issue is sometimes stock isn't necessarily at an inflection point when it was stretched and uncorrected, 35% off its low, double the s&p it was stretched. but it has sold off 12%, almost 13% now. on the other hand, buying just because it's down 13% doesn't seem like a technique i'd want to pursue. i think it's kind of where it belongs. one has to be directional, if one has to trade it, i'd rather be short than long

>> bonawyn, what's your take on apple? >> well, you know what, we've alluded to it quite a bit in the past and apple tends, to and mike again mentioned the cash balance, that has presented itself as a margin of safety so i can understand the argument in terms of flying to quality in turbulent times. you haven't really seen the pull back in this thing like you have others a lot of other ex-high fliers. you talk about bank stocks apple has not suffered the same type of down-side movement from other names that also generate high free cash flow. so here again, i'm not here to trade for the sake of trading, but again i find it very hard to be long at this current valuation. >> yes, it is a very rich valuation to be sure coming up, we are stretching into one of mike's retail calls and the lulu trade don't miss the special "back to business", coming up right here

after "oa", but there's more "options action"s still to come right after the break. it's time for the biggest sale of the year, on the sleep number 360 smart bed. why choose proven quality sleep from sleep number? because proven quality sleep is vital to our health and wellness, only the sleep number 360 smart bed keeps you cool, then senses and effortlessly adjusts for your best sleep. and tells you exactly how well you slept, with your sleepiq score. our smart sleepers get 28 minutes more restful sleep per night. so, you can be your best for yourself and those you care about most. don't miss our labor day weekend special. save 50% on the sleep number 360 limited edition

smart bed, and free home delivery on all smart beds. ends labor day.

when traders tell us how to make thinkorswim® even better, 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 to "options

action." last week, mike showed a way to play lululemon >> it's a higher end demographic, a more resilient customer base. and big as the company has become, it still has a lot of meaningful growth opportunities. i was looking at a one by two put spread i was just looking out to september. the 310-260s, buying one the 260s >> trending lower this week on the back of yesterday's results. what are you doing with lululemon now? >> we own lulu going into earnings we still hold it it's been quite a rollercoaster. bri believe it or not, the stock is essentially unchanged, week on week i think the company is trading at a reasonable multiple to growth 27 times, grew 33% on the bottom

line year on year. and i think they're demonstrating that they can execute. with respect to the put spread as a hedge, and i think i misspoke hanging onto that for now, i think it represents a decent hedge to the down side between now and expiration two weeks from now >> bonawyn, have you got a take on how you would play lulu from here >> i'm looking at this slightly differently. what do you do when you have a name that's really made a move you want exposure because one, the type of consumer it services is higher end. you don't want to chase here i'm looking at the lulu october 275-330 risky. so i'm selling that put and buying that call for a cash outlay for about three and a quarter. you know, you don't really start to participate on the upside up

until 110%, and your down side is that you buy the stock down at about a 15% discount, actually a 14% discount because you made the 1% cash outlay. that's the way i tend to look to play names that have already had a significant move i believe in the name, but i don't want to think that i'm chasing it late to the party >> when you look at the charts, what does it tell you? >> the rollercoaster expression that mike used this was a stock that before the earnings was down almost 9% and saved by the bell if you will. but still, it's burdened it has overhead supply my hunch would be to take advantage of this reprieve, this stock that's been struggling for quite some time and just exit. >> okay, exit. lulu up almost 7% there. up k up next, your tweets and final call

thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts 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.

welcome back to "options action." it's time to take some tweets. our first fan says i own the tesla september 2273.33/261.67 am i at risk of assignment >> this is an excellent question and the short version of this is yes, that is because there is a narrow window of time after the markets close when options traders can file something called a contrary exercise advice so on expiration it dropped below the short strike that is a possibility many of course it's only going to be sophisticated options traders who are going to do that member firms have a slightly longer window that customers do. the next tweet says i think the chip selloff is a little

overdone and am looking for a balance from nvidia. what do you think of a september 30 call spread what are your thoughts on nvidia >> you've targeted the right level. but i don't like the stock are semis in position to bounce? i would just be inclined not to be long or involved in nvidia. the last tweet asks, would you buy ung and sell calls against it bonawyn? >> i would, but i'll keep it quick. short dated and upside there is too much geopolitical turbulence for you to get called out of a position. all right, got it. time for the final call. carter, kick it off. >> buying kroger kr >> selling capital one as well

>> use put spreads on your capital one. >> weig >> we covered a lot of ground. a special "back to business" starts right now - [announcer] the following is a paid presentation for emeril's all new forever pans, sponsored by tristar products incorporated. - emeril lagasse here with the most innovative pans i've ever cooked with. they can sear like stainless, caramelize like cast iron, and they have a super non-stick surface that will never lose their non-stick coating. introducing my forever pans. - [announcer] forget about non-stick coatings that don't last. the problem is they have a single layer of non-stick that quickly wears away with everyday use. - the pans say non-stick and they work great in the beginning, but then as time goes on,