i've just never seen a worse business. cannabis remains a schedule one narcotic federally. maybe we should have award show and this is at the bottom of it. this is definitely not at the bottom of the barrel of businesses. i hate this business, let me count the ways. okay. all right, on "options action" the final frenzy for the last-minute christmas shopping and prepping for the flood of sales after santa says so long we'll break down two retail tr trades straight ahead. so beaten up that it could be time to make use -- make use of options to charge up an ev trade and later as the s&p has limped its way through december gold has been hanging in nicely. time to get bullish on bullion as we head into 2023 on this

frigid and frightful friday night. this is "options action" live from the nasdaq market site. carter weather mike khouw and brian, great to have you here. names like boeing, dollar tree, tesla, we've had big volume in etfs including those representing the s&p, nasdaq, government bonds, industrial sector and high-yield corporate bonds. as we head into the homestretch, best buy and dollar tree spending the better part of two years diverging but the option market thinks they're about to trade places you have much more on that big trade. >> yeah, so there was a lot of activity in both of these names, first let's take a look at dollar tree traded more than 50% above average and going into the holidays that comes as a surprise one of the big trades we saw was the purchase of 9,000 of the 145

puts some might think dollar tree is a name that is a good place to go but the opposite appears to be true. it's got pressured margins trading over the s&p valuation so seems like somebody scene's % plus to the downside over the course of the next couple of months also best buy. i know carter will compare and contrast the two the march 67 1/2 put traded in good size. 3,000 by 6,000 for $1.14 this is a different case because i think this might be a hedge against a long position. if you take a look at that middle strike, that's essentially representing the lows we've seen in best buy over the course of the last couple of years talking back to the fourth quarter of 2018 and the pandemic lows, this thing is trading at a much cheaper valuation and recently has been putting up pretty good numbers. >> all right, mike, sorry to jump in on you there carter, what do you think?

>> that's right. we have two diverging circumstances or let's say this now, converging and i think we have charts that would depict that quite clearly in terms of dollar trade this has been a great winner that is exhibiting all things one doesn't one. the relative performance is poor if you compare that to all of the retayers that are bottoming from urban outfitter and gaps and so on, now, look at that chart breaking trend and compare it to best buy it's literally the opposite trade so this is a loser, it's now emerging you can draw with a trend line you can look at the next iteration which is sort of a head and shoulders bottom but either way, one is reversing from bad to good this one and the preceding one, good to bad and put them together a final iteration, you can see how the arrows are drawn i mean, over the past three years one is up 50%. the other is down 20%.

i mean they're changing places and one bets accordingly >> all right, moving on to airbnb, the stock losing half its value during the last year, now out of the pandemic pan but possibly into the recession fire does the options activity suggest this is cooked, carter >> you know, that's great. out of -- you're in the pandemic pan and now in the -- perfect. that says it all the chart is terrible. it is hovering, i would say ominously, at its june low and the presumption it breaks and breaks hard. >> brian, what do you think? >> well, the options activity we saw was bearish, put buying and put buying right ahead of their earnings or right after their earnings date so some of that playing to the down side here and the reason being, you look at the last earnings on airbnb and moved 13% so a lot of nervousness, hesitating from playing the consumer best buy -- the quality name i like in terms of consumer discretionary play,

airbnb a little more riskier here so makes sense there are put buyers at 1600 puts we saw trade of the 185 puts again i mentioned right coming, that play expired right after earnings in february, so this is a play that the downside has to be careful that that continues to the downside especially we enter the recessionary or downturn in themarket. >> so to your point if we are headed into a recession, in fact, well, the high yield area, that might be somewhere we might see some growth, i'm going to come back over to you, carter. what do you think about the high yield market one of the first areas where the bottom would fall out but holding up nicely over the last three months >> right, after sort of getting decimated, if you will, it has held up but it has no torque no i -- there's no potential for a real bounce. all data chart so this is -- i mean since inception interestingly, of course, but basically going down plunges in recoveries are

moments in time that are quite clear, the '08/'09 plunge or industrial recession of 2016 and covid, but what you'll see, of course, it reverses fairly quickly in '16 and '20 but didn't in '08 and '09 and this is more analogous to that. down and staying down and i think that's the problem i would not want to be long hyg. >> mike? >> this is an interesting situation because, you know, you take a look at the high yield market why it's been pressured, we know not a particularly high duration basket of bonds but what we have seen is historically low levels of default and, you know, credit spreads although they have widened aren't that wide yet so if we do start to see as a result of some economic pressures, increases in default rate this, is an area of potential weakness what somebody is betting on. we saw big, big trades in the

hyg-etf, the put spread traded go 100,000 times over the course of the week. this is a bond fund and won't move the way you think high volatility stocks to do and costs very little and could be part of a tail hedge oftentimes it is the credit markets where the ice starts to crack first. if you're looking for potential downside and did see that. actually we saw some other signs of potential economic weakness in xli, the industrials' etf we saw them pay $1.49 in that one as well so both are areas tied to the economy. both are areas that saw a lot of put buying this week >> all right, we'll finish out with tesla seemingly in the headlines all week long and all year long and seemingly for all the wrong reasons, ceo elon musk late last night promising he won't sell any more stock till 2024 at the earliest he has made promises before. now would be the time to nibble at this name, carter

>> i wouldn't do it based on that imagine if you have the company, any company saying i won't sell any stock. what you're never supposed to sell stock. the thing is, there is no valuation here the street is all over the place. at some point you do have in any security an overbought or oversold condition we reversed long-standing short on tuesday it's not working, it's down further but we're seeing a crescendo here, as far below the 150 moving average as ever recorded in the stock's history. the other two times when it was 40% below you got a pretty decent bounce. >> all right, real quick before we go, brian, any take on this >> the options activity suggested maybe we do get a downs because what we saw were february upside call buying about 20%, 25% to the up side out of the money a trade like that when you go to february or so to me or 25% up to the upside is maybe somebody protecting a big short position here and still continuing

playing to the down side there is oversold conditions like carter mentioned. to me that trade kind of makes sense. if there was someone bullish i'd see someone at the money type call again, for clients who want a little more cautionary about the markets we sort of all year long shied away from a consumer discretionary type stock do own tesla for some but on a lower allocation but, yes, due for a bounce that suggests maybe the stock gets a bounce but i'm a little cautious about the stock in general. >> mike, final thought from you? >> yeah, i think you could go out to february, buy some 30 delta calls if you try to play for a bounce, i wouldn't reach for the stock. a commodities corner, which could return more in 2023, shiniy gold or dull iron ore for everything "options action" check out our website and newsletter much, much more option os after this stay with us

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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. all right, welcome back to "options action" and the commodities corner looking at two different types of mined

earth, can they bring the same value to your portfolio? gold, brian, you're up first >> yeah, gold has been an interesting story the last couple of months with basically the ten-year interest rate trading lower with basically all of the interest rate curve that trading lower relative to where the fed funds would want us to go or where our fed governors are telling us them to go. gold has been in play. if you look back historically if we are headed towards the recession or people feel like that might happen gold has been the one that bucked the trend first and started to rally how do we get out of a recession, we put more money or keep rates lower than where they need to be gld has been a play to the upside and i think it's broken out here i'd be looking to use option, long on the stock gld itself but i have to rotate and play options because they're pretty cheap. jan 1, 66 call, the jan, 1.75 call that will only cost 3 bucks.

where gold is moving that seems pretty cheap because my mass play is all the way up to 175 see i'm risking $3 to make $6. that 2-1 payout seems fantastic to the up side and gld and gold and interest rates remain somewhat subdued the ten-year interest rates, gold will be the first thing to move, one item i'm looking to play to the upside and rotate out of different asset classes and into one like gld. >> carter, any thoughts on this trade or gold in general >> well, we know this, look, gold has done its job. we know, what, the s&p is down 20% for the year, gold miners are down 10 and gold down 2. that says it all opportunities within gold, whether it's an individual miner or whether it's the gdx or gld but in principle one wants to be exposed i think very exposed to precious metals.

>> any thoughts on gold or this trade in particular? >> yeah, i mean i am long gold i amany long slv as well these are both ways to make the same play if the increase in rates slows, then we would expect there to be some support for the precious metals and this is essentially the way you'll play that and also as carter pointed out it's been a position that's held up on a relative basis effectively. >> commodity quarter, mike, looking at iron ore. >> now, this is an interesting situation because we have a lot of cross currents going on here so china is re-opening, the biggest consumer but as they do that we're seeing a big increase in covid cases, big surge and of course there's a lot of leverage in their system but that, of course, is supportive for ore and seen that in ore prices well up over 30% recently

another thing that's kind of interesting is that this is relatively cheap you know, we're talking about a company that's trading in the m midsingle digits in terms of multiples. the way to play this given the bounce is kind of hard to make it out on this chart but the stock is up quite significantly over the course of the last couple of months it's to use a trade that's not unlike the one that brian was taking a look at. february, 1719 call spread, 65 cents it would cost, similar risk/reward dynamic used because the options are not all that inexpensive as you can see, about a dollar at the money call that's simply because these things tend to move around a bit and collecting about a third of that premium by selling that upper 19 strike call this is the way to play for more upside if ore continues to go higher and if we do see china re-opening effectively and industrial production doing

well. >> big if there. carter, coming to you, what are the charts on vale say >> they're excellent obviously vale is dominant in the iron ore but it does it all, copper, aluminum, gold it has all the elements of a bearish to bullish reversal, bottoms before the market and exhibits relative strength ever since. i like it a lot and think the formation is clear and the way is higher. >> all right, brian, you have a take on this one >> well, to carter's point not only is the fornation clear but vale, 2008, it got so lacked before the recession and after vale turned the corner and made higher lows, so to speak so the upside seems to be clear if china does a stimulus on top of what they're doing with the covid re-opening which some rumors are that would happen, you know, vale, 55% of the revenue comes from china so that's going to be positive. i love the call spread, outlay a

little premium, play to the upside, already made a move. bullishness in the stock and i love the play on vale. >> people spend centuries turning iron into ore and we turn it into cash. heading into the new year without risking anything, a live look at bismarck, north dakota w. it is currently minus 8 degrees. they usually say below, real feel of 30 below, stay warm in front of that tv "options action" will be right back >> announcer: "options action" is sponsored by think or swim by td ameritrade.

welcome back this week's call sleet for that we bring in scott nations bringing us a hopeful trade and the kicker is it doesn't risk much at all scott, happy holidays. what could possibly be a trade in this environment that doesn't risk very much >> well, yeah, we like to use options to get directional exposure and love to use options to get leverage but the real value, the best way to use options is to create absolutely unique risk return profile, the

sort of thing we can only create using options, but let's do that let's do that in the most important option underline in the market, spy, the s&p etf and we're going to create a unique profile that will generate some value if spirallies into the new year like i think it's going to once we get the year past us we can buy calls, we can do a better job, the better way to do that is to against a long position in spy is use a one by two call spread and with spy earlier at $382.25 i bought one of the 390 calls and did it at 1375 but i don't want to just pay for a call, i want to actually generate this without any premium so i did that by selling two of the march 405 calls, collected $7.20 for each of those so i'm actually collecting a net of 65 cents the important thing here is the

unique payoff profile above $3.90 we get leverage that slows at 405 cap on appreciation at 420 the important thing here though that is we never lever the downside never get leverage to the downside so the best relative outcome 405 is usually the case at the short strike so we're not just creating leverage, not just getting directional exposure but we're actually creating a better risk return profile. >> all right, thanks a lot, scott. carter, what's your take >> well, i think this is just a testament to using alternative approaches i myself don't like the market and i think we have a better chance than even money that we're going lower in the new year and immediately, but this is a way where you take in money and you sort of play it smart rather than just betting long or short.

>> brian >> yeah, when you look at spy and the spikes volatility index it is an impressive fact a lot of the market is down. historically that's been a positive sign of making a bottoming process, however, probably a little more on carter's camp of being a little bearish about the market we are short some options for clients, as well, in march, april options, you know, going out and future options so certainly selling options that far out i do like. we'll just see if we can hang on with volatility down around 20, the vix down, see if there's an opportunity for a big move almost like people have gotten too complacent once we turn the page this market is ripping significantly higher or the beginning of the end and start of a recession which can happen things go sour at the top of the hour and that was some bearish activity if that goes south, if credit goes south so does the rest of the market >> mike, what are you thinking >> yeah, if you're selling the 405 calls you're not that

optimistic spy was above 405 going out three months i think if you're bullish on the market you could go out and buy the 400 strike calls don't be long the spy underlying shares or anything like that i'm kind of in carter's camp as well >> scott, you need a final word on this one. >> i'm going to be long spy because i'm an investor. and this is the way to create a better risk/return profile as an investor this is the way to be using option, not to just get leverage or directional exposure. >> there we go, scott nation, thank you for that. up next your sweets and the final call stay with "options action. >> announcer: "options action" is sponsored by think or swim by td ameritrade.

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℠. all right, welcome back to "options action. time for the tweets. our first, how would you trade the msos, advisers share pure u.s. cannabis. attractive put and call options

one month out for 10% return on premium. brian. >> 10% premiums is too good to be true and stay far away from that and seems like an enron situation whatever is going on. >> our next one, i notice when the dollar index drops companies like boeing does well. can you please share your thoughts, mike >> it is interesting that pattern you've identified has proven to be true. i would look out to february cow buy some perhaps 30 delta calls there to make this play and i think that's a way to do it with limited risk >> all right, time now for the final call carter, you're up first. >> if you're defensive, bold, if you're feeling aggressive, tesla for a bounce >> brian >> yeah, gld call spread to the up side. >> vale, same thesis >> we're back next friday at

5:30 p.m. next friday. "mad money" with jim cramer starts right now is a paid programllowing for joint food with tamasteen, brought to you by nordic healthy living, a proud sponsor of the arthritis national research foundation. these statements have not been evaluated by the food and drug administration. this product is not intended to diagnose, treat, cure, or prevent any disease. (gentle bright music) - hello, i'm christine bullock. welcome viewers from across the country to "house call." today we're talking about your joints, what to do about those aching knees, shoulders, hips, and fingers. people often ask me what i think about the latest miracle pill cream or device