>> they're selling a toxin that could potentially hurt people, kill people, paralyze people. they set all that aside. "we're going to sell this. we're going to make money. that's all we care about." it was pure selfish greed. -- captions by vitac -- 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 an opportunity that 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. as demand and recession fears rise we'll outline a safer way to get

your profits pumping back to the up 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 we get to tonight' 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 idiosyncrati 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 coolio 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 and sort of look more broadly, 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 here and despite we had a fallback from the highs earlier this year, i have a hard time believing we're going to be 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 trend line from last night, and again it's so often the same setup or circumstance regardless of what the instrument is. and what do we do today? 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. it has all the elements of

something that's topping 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 the line is rising, energy is outperforming. if it's declining, it's underperforming. 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 just kind of how it works for those who accept or don't accept technical analysis. 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 finally take a look at occi. it's been a great winner it blew out through the top. what i think 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

haliburton and did see big put buying in occidental. 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 options are quite expensive. and secondly, you would need the stock to fall well below that 60 strike price in order to see profits. this would see profits at a much 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 on it, but what it really does is reduce the 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. so they tend to drive the price

of put significantly higher than the equidistant price of call. if you have an as set trading 9 hundred 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 lows in october we're up 15% some this is a huge -- if you turn that chart upside-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. we put a trade together looking at the spdrs, which are trading $395 you can go out and buy the 10% out of the money put, which

would be the 355 put out in june, and then the money you take in from that basically -- i'm sorry, the money you spend on that could be financed almost entirely by selling a $435 call. so these are both up and down 10%. 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 rallied up to $395 that put has decayed significantly. that up side call really has not gone up very much in value it's just another opportunity to restrike a hedge on your portfolio. if you're worried about 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 money. >> 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 a little bit. you think about it right now, do you think we're going to break out to all-time highs in the s&p sometime soon, or doyou think there's potential risk to the down side? here i think 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

>> stack the odds in your favor with options we'll show you how best to make a go at a particular gaming stock. plus calling all options action fans reach into your pocket, grab your phone and tweet us your question at options action if it's nice we'll answer it on-air, when options action returns. we're carvana the company who invented car vending machines and buying a car 100 percent online now we've created a brand new way for you to sell your car

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i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. 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℠. 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 crapped 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 that's what i think it might be. we have to remember just how far several of these names have fallen if you take a look at where these things were, they were substantially higher than they were 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 is 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 is that the options o 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 some of that expense, and i was looking at using a vertical spread in this case a call spread is what i was looking 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 when i was looking at that earlier today, cost you a little 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. another important poin when you see the elevated options premiums, that's because the stock has potential to move quite a lot, so $6 an a $37

stock may seem like a lot, but this is one of the names that has the 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 point i that bottom line is important. june low october, s&p made a new low. this group held. let's put in a trend 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 circumstance. so now here's penn on the cusp of flattening. but again it's the same thing. we can put in the double bottom. i think we might have one more which is penn with the actual trend line

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 primarily 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 on the trade because it really limits your risk if you're completely wrong on the trade. >> 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, right 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 both? 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 on nvidia, tesla and more we'll be right back.

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℠. 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 still 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 have equities globally bouncing dramatically for the past four

weeks and the top five or six stock in 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 bust way to do that would be to use a put spread you will collect something for that 10% out of the money put because implied volatility is high in tesla. >> all right, our next tweet asks northru 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 stocks out there where 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 down side event, you should go out and 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 puts is very 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 steep, and up to thepenny where it bounced >> next, nvidia stockholders on how to augment their position in the current environment. mike, what do you say? >> nvidia sets up for what a call a stock recovery play when you have stocks that

declined sharply, you still own the stock whereby you don't want to hold 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 for this because it has a very high implied volatility, about 60%. you probably want to go out somewhere 30 and 60 days when you're looking at trades 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 on apple from march 2023 dennis >> very specific tweet you're talking about down 17% in apple in one of the largest stocks in the world. what i'm looking at cataclysmi

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 would rather just buy the qqq puts. >> all right, up next, final call atform. 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

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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. 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. higher rates could slowing down economy on entry >> 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 friday, 5:30 p.m. eastern time don't go anywhere. mad money with jim cramer starts right now. - [announcer] the following for the total flex l gym, proudly sponsored by thane direct. by thane direct. - [announcer] too busy to lose weight and stay fit? struggling to find time to exercise? tried other products and still can't get into shape? introducing total flex l, the total transformation body machine that fits today's busy lifestyle. with total flex l, you can reprogram your body. get the tight toned abs of your dreams, the strong, ripped chest, the long, lean legs, all in just minutes a day from the comfort of your home.