it's friday, and it's time for "options action. i'm melissa lee live from the nasdaq markets in times square here with us carter worth, mike khouw, and a special appearance by denis savage. >> market volatility will be with us a while longer the options arena is presenting a opportunity few have ever seen we'll explain what it is, how long it may last and how you can take advantage now then, crude below $80.

we'll outline a safer way to get your profits pumping back to the bright side. even with consumer confidence slumping, now might be the right time to make a play in gaming stocks we'll show you how it's time to risk less to make more "options action" starts right now. >> before get to tonight's trade, let's go around the horn for a take on this week's trading. the nasdaq slightly lower. carter, doesn't seem like much happened buck actually lots of stuff happened this week, especially with the inversion and with the move in energy. >> that's right, we had a lot of earnings news and a lot of movement that was idiosin cattic and also a lot of macro stuff. movement, currencies the meta for equities was a punch for the most part. >> dennis, what's your take on that is that good news all this stuff can happen and the markets take it in stride >> yeah, there was a lot going

on under the hood this week in the marketplace, everything from walmart to target, hits, misses, a lot of different correlation stuff going on it is, like cool yoe would say, it's a stock ticker's paradise if you write on your research, this is a great week, where it may seem boring on the outside. >> mike, your take >> i think the news from target, if we're trying to take information there, i don't think as many have said that that's so great for the consumer i think the market managed to shake off some other things, like a lot of the nonsense going on in the crypto space with ftx. i might have expected the market to respond more negatively than it has, and obviously ending on an uptick today. but i still remain convinced, despite the fact we're in a seasonably good period for

equities sprk despite we have had a fallback from the highs earlier this year, i have a hard time believing we're going to be h hitting the highs. that seems out of reach to me. >> all right we'll see. let's turn now to oil. crude cracking below 80 bucks a barrel as recession fears rise and demand overseas continues to drop carter, are we going to fall back below the late september lows >> exactly 24 hours ago i was stand at this plasma and we were talking about oil. let's do it again. i don't think anything's changed except more of the same. it's been under pressure today it broke the trend line. here's the trendline from last night, and again it's so often the same setup or circumstance regardless of what the instrument is. today we broke you can draw the lines any way you want you can also call this a big old reversal formational doesn't matter whether you call it head and shoulders.

next chart and on we go so, what about the energy shares market, right? this is now the sector obviously driven by exxon, chevron, and a few others. is the s&p sector's relative performance to the s&p it's a ratio chart forget about the scale all we're looking about is direction of the line. if it's rising it's outperforming. the key is this period where energy has really outperformed the s&p. but next chart -- this move, this strength, and where does it leave us it's so important to mind your trends it goes right up to did, and guess what it's struggling. 700 base points. what that warrants of course is a big old down arrow, and there it is. i don't like it. in terms of the xle itself, let's goat one stock in

particular here is -- it's so often the case these lines draw themselves. i didn't make the thing fit this trend line it's how it is what we really have here is a double top and that deserves a big old red arrow, so i think we're going down further take a look at ox y. it's been a great winner it blew out the top. what you've got here is one, two, three -- down arrow, and we're going to come at least to the upper band if not further down into the channel. sell oxy. >> mike, what's the trade. we talked about it earlier this week we did see a number of large trades fading the energy space we saw some huge upside call sales in exxon, slumberger and did see big put buying in ox

okay si dental we don't old either of them anymore. i still have small amounts of halliburton. my thinking like carter's is there is some potentially some downside material. i think a better way to play would be to use a put spread i was looking at the january 70/57.5 put spread, but the reason rather than buying like we saw the large institutional trader doing is that number one, oxy oxy options are quite expensive. you would need it to fall below that to see profits. this would see profits at an earlier level. the decay won't be as pronounced and we're giving ourselves a decent time, to january. >> dennis, do like this trade? >> yeah, i really like this

trade. one of the reasons, and we're about to talk about skew, the energy sector is the one place puts are expensive, so by doing a put spread you're financing the hedge by selling an expensive put that sector, puts are expensive and oxy has the most expensive great trade. >> let's go to your talk on skew, right now in the options market, something rare is happening, and dennis is saying investors can harness it to risk less, boost your profits and create portfolio protection. what do you mean by that >> portfolio protection, when i lay the trade out, it's going look like it has a lot of risk buck it reduces risk in your whole portfolio. goldman sachs each on the same day put out derivatives or options about how flat skew is by saying you have a flat skew, people tend to buy options, tend

to buy puts in equities in general. that tends to drive the price of puts higher than the equidistant twice of call. if you have an as set trading 9 hundreding a put is going to trade a $110 call. it's been that way for the 30 years i have been trading this until now. now what we've seen, after the softer than expected cpi number last week came out, the market crashed to the upside. we were up 5.5%. from the lowing in october, we're up 15% some this is a huge -- if you turn that chart upsate down, people think it's the end of the world, but the options market is agreeing with that so what that presents you with is an opportunity to buy protection on your portfolio and not have it cost you any money it would cost you potentially upside exposure w we put a trade together looking at the spdrs, which are trading -- you can buy 10% of

the money put, which would be the 355 put out in june, and then the money you take in from that -- sorry, the money you spend on that could be financed entirely by selling a $435 call. the thing that's interesting about this trade is we pointed out a trade like this almost a month ago on the show, and that was when mark was trading $375 the market as as rallied up to $395 opportunity to restrike a hedge on your portfolio. the market rolling over the 15% we just rallied recently this is a great way to do it and not have it cost you very much fun. >> professor khouw i know you noticed this, too, so what you think of this trade, this protection for free >> yeah, i really like it. i mean, there's a couple things going on here.

it's important to remember that if you own spy, you also between now and june expiration are going to get a couple dividends as well. and part of what has also driven up the price of calls, and the volatility component is one thing that dennis highlighted. also as interest rates rise, all else equal the value of calls and pieces and value of puts decreases. this is a dynamic we haven't seen in a couple respects. the flat volatility is something i haven't experienced in my experience in options either buck we are getting back to a normal rate department and that helps the risk/reward relationship you think about it right now, do you think we're going to break out to all-time highs in the s&p 500 sometime soon, or there's potential risk to the downside in here you have equal participation either way, and i think this is a good way to protect your portfolio. >> for everything "options action" check out our website and newsletter much more after this

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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." check out the casino stocks cashing in big time over the last month caesar's penn gaming, las vegas sands all up 20%

mgm up 20% has a rally already craped out professor khouw says no, it's not too late to toss your chips on the table. >> taking a look at these gaming stocks they obviously have a good bounce off the bottom we have to remember just how far these names have fallen. if you take a look at where these were, they were substantially higher than right now. i'm taking a look at penn gaming which is one of the smaller players, and it's purely domestic this is a company that reported earnings two weeks ago, and one of the things we saw is they were managing to be slightly on margin, slightly on revenue, that suggests the guidance folks are getting from management are relatively conservative. we did see increase in margins and revenues as well, and the thing is relatively cheap at about 11 times earnings or so. one quick point i would make, though s that the options on this thing are not so cheap.

so when i'm looking at ways to play for potential upside, i want to make sure i can mitigate suspense and i was looking at using a vertical spread. in this case, a call spread out to december 30th this is the weeklies that end -- the end of december. in this case, buying it at the money, 37 strike call and selling the 43 strike call against it it will lost you over $1.70 a contract to put this on. remember, 100 shares per contract but this is a way you can risk a relatively small amount of the current stock price to make a bet. when you see the elevated options premiums, that's because the stock has potential to move quite a lot, so $6 may seem like a lot, but this is one of the ones that has potential to make a move. >> carter, what do you see in the charts >> it's all systems go these are turns, bearish,

bullish reversals. first let's start with an aggregate. what we have is the russell 3,000 gambling sub industry group. you can see i've drawn these lines already, but the thing is, that bottom line is important. june low october, s&p made a new low. this group held. let's put in a friend line, and what we know is that the moving average, whether you use an automated trend line or actual trend line, take a look, you get the same circleumstance so now here's penn on the cusp of flattening. we can put in the double bottom. we might have one more, penn with the actual trend line so whether you use a line you've drawn or a moving average, which is trying to approximate a trend line drawn, what do we know? we have well defined touch points and what has happened? we have moved through it, put in our double bottom, give it a big

green arrow. i'm a buyer. >> that was clear. dennis, what's your take do you agree >> i really like the trade, the options trade, the structure of it what you're paying versus what the payout could be. do i love the stock? i don't know if i love the stock. penn priemarily concentrates in the u.s. and canada. there's a lot of speculation about world cup coming on. how much world cup betting are we going to see in iowa on a riverboat? i don't know that's why i love options because it limbs your risks if you're completely wrong. >> do you think that the direction of the trade is wrong, or is it just -- like you like the structure, so if you're going to do it do it this way, but -- >> do i have a real strong opinion about this stock no if i think it may go up, this is the best way to do it, because it could limit your downside they don't have exposure in china. how much -- is las vegas sands

really las vegas sands or something overseas they don't have that exposure. since they don't, i'm not superexcited about the stock, but i'm not a gaming stock analyst. as an options trader, i love the trade, because it limits your risk. >> mike, you're an options trader you're not a gaming analyst, but you do know a thing or two about gaming so is it oth you like both these aspects? >> i do like both these aspects. it's interesting, we had prop 26 and prop 27 here in california, which is probably -- could have potentially been one of the best sports book events penn is one of the lesser known contributors to trying to get prop 27 passed it did not it was defeated. and yet the stock behaved well, and i think the reason for that is it is trading quite cheap, actually it's probably around 11 times earnings so i think a lot of this bad news is baked in the cake. and they are seeing some pretty good results coming out of their bay area -- and i don't mean san

francisco, i mean boston area. so i think there's potential to the upside, and it's a fairly stable business. >> all right up next, we're taking your questions. we'll be right back. it's hard to run a business on your own. make it easier on yourself. with shopify, you can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we

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welcome back to "options action." time to take some tweets our first fan says, i'm sure you get bombarded with all the tesla questions, but in this situation and environment, what would be the best way to trade maybe a slight drop from here around plus or minus 5% to 10% but protecting the share's health. earnings not until january, so looking into december. what do you think, carter? you were just on "fast money," and you said sell tesla again. >> that's right. what i think i'll do is address that, and mike or dennis will jump in with an options trade. myself, sell calls or buy risk reversal as for the stock itself, think

about bad it is if you hav equities globally bouncing dramatically for the past four weeks and the top five or six sock in terms of the planet has no bid i think you could fairly say the ceo is distracted. >> he's got a lot on his plate mike, so what would the trade be >> the viewer actually told us what the trade would be. concerned the a 10% decline, and if you hold the shares but you want to hang on to them you should be hedging them, and the best way is a put spread you will collect something for that 10% out of the money put because volatility is high in tesla. >> our next tweet, northrup grummon showing weakness is there opportunities for further downside >> there could be, but the options market is saying no.

their pricing options, one of the few stock where is the implied volatility of the stocks is below they normally trade at premium the stock is also down from 580 to $520. i don't know if this tweet was sent before then become you the stock looks bullish, options look inexpensive if you're worried about a downside event, buy the $500 put. i don't think you need to sell another option against it. while it's an expensive $500 stock, the implied price of the put is inexpensive. >> what's your take on the chart? >> this is a very bullish chart. that's right, dennis up and to the right, not too speep, and up to the penny where it bounced. >> next, nvidia stockholders on how to augment their position? >> nvidia sets up for what a

call a stock recovery play whenyou have stocks that declined sharply, you hold the stock, don't want to own it, the fact is returning to your prior highs is unlikely. so what you will look to do is put on a one by two call spread over your stock at something close to zero cost, and what that's going to do is essentially double your returns between the strikes without any outlay of premium, and nvidia is a good candidate, because it has ahigh implied volatility, abou 60%. you're going to want to go out 20 and 30 days when you're looking at expirations for a trade like that one. >> our next twitter user wants to know, given apple charts today, is it a good idea to buy a 125 or 130 put >> very specific you're talking about down 17% in apple in one of the largest stocks in the world.

when i'm looking at cataclysmic things like that, i'm looking at, what apple a part of if i look at a 15% out of the money put on qqq, where's that trading? you're kind of -- it's really tough for apple to be down 15% and not the broader market to be done a significant amount. so if you feel it's specific to apple, yeah, you should buy some puts if that's a concern of yours. i think the puts are a little expensive, down 15% my march something bad's going to happen in the world, i wod thulraer by the qqq puts. up next, final call.

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sink mat... pet feeding system... anti-fatigue comfortmat and more. order the weathertech gift card instantly for the perfect gift at weathertech.com you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. time fort final call carter >> if you're short tesla, stay if you're long, take some off and put it into penn gaming. >> dennis?

>> i like carter and mike's call on energy. >> mike khouw. >> call spreads in penn. >> all right, that does it for us here on "options action." we will not see you next friday because we are off for thanksgiving, so please enjoy your holiday with family and friends. be sure to catch us the following my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica my job is to not just make you money but put it into context. you know why this market keeps hanging in there, dow gaining an