if i keep this up, but... (man) reggie, can you count to 10 for me, sir? (reggie) yes, 10, nine, two-- uh, four. -perfect. -if he can't get it, i can fill in. (laughing) it's friday. that means it's time for "options action. the market losing about 5% across board this week, a comeback rally looks increasingly like a bear market bounce looking for shelter,we've charted an under the radar bond report in the storm. we continue our consumer conversation from the top of the hour looking for some deals to snatch up in walmart, uber and las vegas sands. i'm frank holland filling in for melissa lee. joining me tonight carter worth, before we get to tonight's

trades, let's triage the markets. carter, we're going to begin with you >> it's always tempting to say the worst is over but it's usually better to anticipate more trouble and get increasingly encouraged if it doesn't materialize. it's been a bad week, a bad year, i just don't think it's over. >> carter saying better safe than sorry. >> i'm inclined to agree this was an exceptionally tough week the inflation data we received didn't surprise me, but it doesn't matter if it surprises everybody else, then the market reaction was sufficient to surprise me there. a lot of people who have been observers of this probably were expecting maybe better than the whisperer inflation number apparently i'm not exactly sure what was going on there as holders of adobe, as holders of fedex this was a painful week fedex is the one that concerns me a little bit more the adobe situation is

indicative of how the market is going to react to news they don't particularly like. they didn't really like the deal they announced and punished the stock severely and then you take a look at fedex and the fact they can't give us or illuminate what the rest of the year is going to look like is grim. what is also concerning to me is that it seems like we're hearing that same kind of tenor from across various industries. you know, when we heard barry stern earlier today, he was making similar kinds of comments about the people he's talking to so overall, it didn't feel like a good week, and it doesn't feel like it's going to get a whole lot better soon. >> scott. >> frank, i think the reaction to the inflation data was absolutely appropriate, but i think the market made the wrong reaction to the fedex data fedex has never been particularly profitable margin wise it has huge inefficiencies between its ground business and express business, and since the company has started making eps

estimates public, in nine of those ten years they've gone on to lower that target at least once so fedex, congratulations you're normal so i just don't think that this is the sort of barometer that the broad market should be paying attention to, and i think the market figured that out. the s&p had a tough day today, but the last half of the day was p pretty good. yes, we closed 26 points lower, but we gained a lot of it back and we actually closed 36 points above the low. so yeah, i understand why it was a tough week i don't think fedex was the reason to focus on that though. >> are you saying wrong reaction or over reaction when you cut your current quarter eps guidance in half is that really a wrong reaction >> well, it may not be the wrong reaction you make a good point. maybe it's a way over reaction to some disappointing news from a company that's going to have a lot of trouble anyway, particularly on the labor front. labor costs are going to eat

them alive, and so the fact that the s&p was down 50 at one point based largely on fedex is an over reaction. >> bearable cost also an issue with the ground contractors. with all this in mind, where should one turn to for stability? we're all looking for that carter worth, he has the answer. >> i think i have one of the answers. there are probably many. let's get to it. so there is the thinking that we can get a handsome yield without too much maturity. a very simple table, one-year, two-year, three-year t bills here is the 3.5% we have yet to break out on the ten-year. take a look at the two-year, next chart, we have broken out, and so the question is at this point is it -- is it time to actually attack the inverse trade and maybe buy short-term paper. shy, the i shares final chart is a pretty good instrument if you want to capture a 3.8% yield

plus or minus and not go out in too much duration, what we're thinking here is you want to be and we're going to make it up to the trend line and you want to buy shy. >> carter, thanks a lot. mike, what's the trade here? >> yeah, so interesting situation, of course, because we're get sbing into territory that we haven't seen since before the credit crisis if you take a look at the immediate precredit highs for the short-term rate, it's probably close to 5% if we got to 5%, what would that translate to probably looking at about 80 bucks. that's really your downside if you were to buy it here. of course if you're speculating that rates are going to turn rather than buying this for yield, an inexpensive way that you could do thatwould simply be to go out to december, i was looking at the 83 strike calls those things cost about a half a percent of the current share price, about 40% if you wanted to make a bullish bet.

i would make a different point here as well sometimes it makes sense to trade options and sometimes it makes sense to just simply buy the underlying shares. if the purpose that you are looking to shy is so that you can collect that yield, then buying the shares could also make some sense because of course optionsdon't provide an yield. they do quite the opposite they will decay over time. you're not risking a great deal. in general, i think buying shy is another way to take a safe haven trade here. >> scott, what's your take on carter's premise and mike's trade, the safe haven trade if you will >> carter's premise makes all the sense in the world and doesn't it cast into sharp relief the problem that equity investors have right now i mean do you really want to be rolling the dice with equities in this environment when you can get a safe 4% annual yield in the two-year and so that really is the problem for equity traders you know, mike's trade makes a

tremendous amount of sense we talk about implied volatility the implied volatility for something like this is going to be very low, so you can buy that call, that 82 call, and not pay very much money in absolute premium, and so -- and then you get the exposure that you want and again, 4% probably makes a whole lot of sense right now >> all right, still to come, unexpected opportunities each trader will present a different way to play, the consumer, yes, even in this economy. and for everything options action, check out our website news letter. there's more options action right after this "options action" is sponsored by think or swim by td

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good luck. td ameritrade, this is anna.

hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back. welcome back to "options action." despite the headline decline, there's still some opportunities to make some money those that will trade down and those that will trade up in terms of their buying power. scott with the special guest appearance, kick us off with walmart. >> that's right i want to be long equities, but i don't want to be a hero, and so i want to focus on low beta names, and that is the staples, the staples sector think of them as the companies that make the stuff you have to buy or that sell the stuff you

have to buy and i want to talk about walmart because the staples sector was the only sector in the equity space that was higher today so walmart is one of the kings of the staples i love what they have to do. they're going to do a great job when it comes to maintaining marginsme margins. i want to get long exposure to walmart. the way that i did that today, i did this earlier today in the october expiration i bought the 140 strike call. i paid $1.50 for that. you can actually buy it a little cheaper later in the day that's the october expiration. as with in time that we're going to buy an option, our max risk is what we pay, that's $1.50 my goal here is for walmart to get back to the bottom of the gap from may when they reported disappointing earnings and i think that they're going to do that last quarter they had really nice earnings. again, they make the stuff that you have to buy. if there's a problem with walmart options, it's the

implied volatility is low, so there's not a lot of meat on the bone if you want to do something like a spread. but you know, as mike had said, sometimes all you have to do is buy a call i love the fact that i'm going to get long exposure to the equity space and the staples. >> the chart masters hitting uber's technicals to see if this name is about to make a u-turn. >> it's kind of exactly what it's doing on the chart. it kind of looks like a u-turn we got a beautiful down trend and the stock has failed to the penny, to the penny, to the penny. it's why trends matter and then what did it do? it gapped up on its earnings above trend, how can we draw the lines. one way to draw the lines would be as followed it's a well-defined, call it whatever you want to call it that's with a reversal formation, cup and handle. another way to draw the lines, call it whatever you want to call it, it has all the elements of a bottoming out formation

uber on the long side. buy it >> thanks a lot, carter. mike, what's the trade on uber >> yeah, you know, scott made an interesting point when he was talking about walmart, which is that it's a very low volatility stock as a staple, low beta, that meant that the options premium was not that high. the exact opposite is actually the case for uber. the other thing is when we take a look at the charts that carter was just illustrating for us, we do have that bottoming formation which gives us sort of a place to draw a line in the sand so i was looking at a trade that i like to use in these higher implied volatility situations where we do start seeing a move off the bottom, where we are thinking about the possibility that we might purchase the stock at that bottom by using a call spread risk reversal i'm looking at the 25, 32, 40 call spread. i'mlooking to put them on for something close to even, trying to get near upside participation

but not to have that immediate downside exposure essentially, and so here effectively you would get long down at that 25 put strike, and long at the 32.5 call strike and have exposure all the way up to that short 40 strike call. now, in this case, we are laying out a little bit of premium here, about a buck 30 or so, but that actually represents a relatively small percentage. that's a little over 3% of the current stock price. and bear in mind that that decay that you're going to be paying is what you would experience if you carried this trade all the way to expiration. in between, it's going to behave a little bit like the stock would. but you can see on this chart here where your real exposure lies, you get more upside for a move of 10% to the upside, then you take downside ruisk for a comparable move. >> mike just laid out his trade, what do you think? >> let's keep that chart up because i think this 25 level is really important that's where the stock wallowed between july and august, so i

would not expect it to get any lower than that right now. fundamentally, it's going to take advantage of the fact that gasoline prices are down 13 weeks in a row also the fact that more of the company's business is coming from delivery rather than ride share. we now see that about 43% of the company's revenue comes from delivery, and that's growing so the company is not cheap by any means, and so i think it makes a lot of sense that mike is using options because i wouldn't want to run out and buy a stock like this, which is trading at 80 p/e when i can do a lot better by creating a strategy like mike has. >> all right, from running around town to running the tables, carter you see more play in the gaming sector >> yeah, also an opportunity and completely different here's the chart with no judgments, no lines, no arrows let's put some lines and arrows and judgments on it. same thing, bottoming out formations they look the same because charting is old fashioned and i think you better

p put a big green arrow. the next iteration, same chart, same time frame. there's this one, it has all the elements of a bottoming out formation. now, one more way to draw the lines, converging trend lines. either way, i think the big green air rrrow is what it deses it was up this week. this is a relative strength chart, so we know that this is -- it's just a ratio. lvs has been an underperformer from the s&p, but guess what's happened since, it's been bottoming out. it has all the elements of a bearish to bullish reversal, big strong week, great consumer name, lvs. >> mike, over to you how do we roll the dice on this one? >> you know, it's funny that they call themselves las vegas sands because of course they don't really have much exposure anymore since they sold the venetian back in february. this country is really marina

bay and macao based company, that's singapore and macao i think everybody knows that macao in particular, you've had a lot of restrictions and that has hurt their business. i would like to offer the following. number one, they have a good amount of cash right now available because they had some periods of negative cash flow, but they've got over 6 billion bucks in cash net debt around 9 billion. here's something to think about. the company right now, round numbers. it's actually slightly lower than enterprise value around 40 billion versus an all-time peak of around 60 this was a company that was able to generate north of $3.7 $3.7 billion annually in free cash flow at its peak, and if you're making a bullish bet here, what you're planning on is that we're going to start seeing people return to the tables. you can't really look to the last couple of years to represent how you think this company is going to do going forward, and when we take a look at it in that sense, i think that there's -- believe it or not, over the course of the next couple years, as much as 50% potential upside of course in this market

environment, it's hard to look a couple of years out. we're really looking a couple days, weeks, or months out and this is a company where the situation is not unlike the one that we saw in uber. because the stock has fallen so far and because it is reasonably vola volatile, we are seeing significantly higher elevated options premiums, and so i'm looking for a trade that is actually very similar to the one that i was using in uber going out to november, once again and looking for a call spread risk reversal, and in this case actually able to get it for very close to even, paying only 11 cents to buy the november strike calls and sell the 46 strike puts and the 36 strikes against it at just under 39 bucks, the stock would have to fall $5 for you even to begin to consider where you're getting long. that means that you could have a more than 10% decline, and you have none of that exposure to

the downside contr contrarily, if it went up by a like amount you're going to collect about 8.5% in terms of profit versus the current stock pr price. up 10%, how do i make debt versus how much do i lose down 10%. i think in a market like this, it's very easy to expect that we're going to see those kinds of muoves you want to set up trades that gif you considerably more upside in those types of moves than you have downside. >> all right, scott, what's your take on mike's trade he's basically saying similar trade for two very different businesses. >> yes, and it shows the power of this structure and mike and i have talked many times about how this can be a wonderful structure. i'm not certain that las vegas sanc sands is really a worthy subject. if i owned uber down 10%, i'd be happy to own it down 10% because i like the business. if i own vegas sands down 10%, i'd be worried about more

lockdowns in china and worried about the business in general. so if you would be happy owning las vegas sands down 10% or lower, then this is a great strategy it's also a strategy if you don't want to have anything to do with the business, then maybe there's happier hunting someplace else. >> all right up next, we're taking to twitter and answering some of your most per pressing questions there's much more "options action" after this we are back in two minutes stay with us >> announcer: "options action" is sponsored by think or swim by td ameritrade.

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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." it's time to take to -- it's time to take to some sweets. i'm tongue tied on this friday, carter help me out. our first tweet is asking with supposedly so much bearishness, why is the vix so low? scott takes this one. >> frank, hank asks a great question it goes to the heart of option implied volatility we think of the vix as the fear index or the fear gauge thanks to steve sears at barren

whether there's a lot of fear of bearishness, that's what the vix is trying to measure, implied volatility it's a volatility index, hence the name, and there's a correct level for the vix. we just have to do a little bit of math. a close today at 2630. if we do a little bit of math, we know that that implies a daily move for the next month of 1.6% close to close each day today we had a big move but it ended up being less than half of that level you can say at 2630 it's too low, but i think it's actually at about the level it should be. >> mike, you agree right at the low it should be or too low? >> yeah, it doesn't feel all that low to me and actually, as i take a look at options premium going out in time, it doesn't feel that low i'd like everybody to think about this, if you consider the

equity markets might return on any given year say 10, 12%, 20% returns over the course of a year either higher or lower would be pretty outsized, but that actually is what the options market is currently imp implying if we look out about a year, we are seeing that that straddles price at about 20% of the underlying for the s&p so it is maybe not the eye watering numbers that we saw in the depths of the credit crisis or during the pandemic when we saw vix numbers going to the high side of 60, 70, maybe gettingg getting close to 80 at one point. those are crash situations we're really talking about how the market's going to behave day to day over the next 30 days and well over 1% moves daily, that's pretty big, pretty volatility. >> next tweet, amazon $125 call from march 23rd it appears attractive what do you think? carter, that ake this one. >> that's about 12% value of the

stock. i think you have a lot of time six months, i would do that. i actually like amazon it filled today by dropping the upside gap from its earnings from july 27th i think you've got something here >> scott >> well, let's remember that over time options will end up costing more than they're worth. we can take advantage of that in a couple of different ways, but if you like amazon, maybe you just go out and buy the stock. and seasons tince the split it'h more reasonably priced name. you can buy 100 shares and not break the bank if i were going to do something bullish i would probably do a spread. >> coming up next, the final call stay with us >> announcer: "options action" is sponsored by think or swim by td ameritrade.

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>> mike. >> call spread risk reversals in those high volatility names like lvs and uber. >> that does it for "options action." "mad money" with jim cramer starts right now >> this is a paid advertisement for csn. >> you know, the world's kind of upside down right now. at least from a metals standpoint. well, from a lot of standpoints, but metals. we are in, you know, kind of uneasy times -- i guess that's the best way to put it -- in so many different ways. and usually in these times, times of whatever, you have gold and silver has absolutely, positively skyrocketed.