was receiving threats for scamming his fellow inmates and not paying gambling debts. perhaps troy stratos is a con who can't stop conning. welcome, everybody, an etf options battle royal from financials, to energy, to taking your money arnold the world, and the long and short story of the year. and the action in this beaten up once mighty titan of telecom, the stock ringing high as we start 2023 and later, starbucks has been a full moneymaker, up nearly 35% in the last six months one of our traders is getting the jitters on where the coffee giant is going next.

welcome, everybody, i'm tyler mathisen in for melissa lee and this is "options action," mike khouw, carter worth, and bonn win ie son a faceoff in the financials, a te texas-sized tussle in energy, a consumer clash and a throwdown with emerging markets, with broad market sectors, not all created equal. a fight within four sectors to declare the biggest industry etf winners and losers let's start with financials. regionals versus money centers banks, let's bring in carter worth. set us up. >> at any given time while a whole sector might act a certain way, there are always parts and sub industry groups that act differently. one way to draw the line is you can see it here, let's do it together it has all the elements of a turn you also can put in a well-defined down trend line,

which we are toying with moving above or no lines and just use the moving average, the 150 day moving average is flattening and turning, the definition of a bearish bullish reversal look at kre, regional banks, it's the exact opposite. still in a down trend. a bad week compared to the overall financial sector it's not just banks, you've got berkshire, you've got private equity you've got broker dealers and so forth. loser versus winner. >> xlf the bigger banks, the national ones the winner there mike, what are the moves we're seeing between these two >> yeah, so first of all, obviously xlf, we've got a lot of biggest names in financials these things are going to be reporting in the next two weeks, a lot of that action starts next week we saw big bullish bets being made in xlf ahead of that looking to capture that earnings, basically looking to also capture some of that insurance and trading exposure, big purchases, buy 15,000 of the

35 calls and xlf, the buyer paid $0.49 for those, obviously going to capture those earnings. on kre, the regional bank side fundamentally we do have a lot of pressures if recession fears are legitimate and also seeing potentially peaking interest margins, you're going to see some deposit attrition going on in the regional banks and slowing c & i loan growth. a big punisrchase of 13,500, bu paying $0.87 >> i think xlf probably outperforms, we talk about this, we had mike mayo on talking about credit quality and stickiness of deposits, and i think you really want to climb up the etch lon in terms of the quality of the names you're in xlf gives you more of that really you don't want to be exposed so much to just loan origination. let's move on to the energy sector a gate crasher makes it a

three-way. oil services versus production, versus integrated. carter what's the twist here >> so three lines, just the ones you said we have oih, services on top, xle dominated by exxon and chevron and bringing up the rear here is xop. the e and p names. what do we know? over the past three months one's up 27, one's up 10, one's down 6. another way to look at the chart is to hold the xle as the constant, and what do you get? you get the real divergence. what we've got is bifurcation within a space we want to be long ioh and as a pair short xop. >> mike, what do you think the melee in this market, do you agree there? >> yeah, they have caught up somewhat, but they haven't caught up all the way. taking a look at oih, we did see big bullish bets there purchase of 2,500 of the january 3 calls. we also saw bearish bets on xop.

not surprising given the pressure we've seen on oil lately 125 puts paid 7 buckins. leaning on the short side for xop. >> xop the winner, the oih or the oia. >> you want one that's got leverage to the actual underlying commodity versus the capital discipline and operational leverage from the oih. >> let's move on to fighting for the consumer's wallet. staples versus health care, carter, which one the stronger hold >> we're looking at relative charts for these two very sort of safe haven, the markets staples and health care. one line, it's a ratio, one versus the other it's health care divided by consumer staples if the line is rising, it means that health care is outperforming. if the line is declining, it's underperforming staples. this setup is quite good look at long-term, this is fascinating. this is going back to the dot com peak what you're looking at is health care outperforming until 2000,

health care underperforming staples all the way to '09 and now outperforming again. to my eye we're setting up for an important breakout to all-time relative highs. that would be xlv versus xlp we like health care. >> mike, what do you think there? do you agree with that >> yeah, i mean, the multiples for xlp and the broad market are within spitting distance of each other. which one's going to be more stable the answer is always going to be health care. buyer paid $0.29 there looking at staples, they have a lot of margin pressure issues, so they have higher costs but they haven't necessarily been able to pass all of that on to consumers. it doesn't matter if you're talking about package goods. we had that disappointing news out of constellation on the beverage side. xlp paid $1.19 >> bonn win, could things change at any point in this scenario. >> i think this a relative value

trade. i think you get on both here. >> get on both here. >> get on both. >> and feel good about it? >> absolutely. >> finally, the main event, the defending developing economies versus the up and coming emerging markets carter which side are you weighing in on. >> we're going to go with e and m over s&p what do we know, it's a very clear up trend and a very clear down trend unless and until that changes, it's not a desirable asset check this out, here's eem, it's a disaster, but what is it doing? it's starting to bottom. whether you draw the lines the way i've drawn them or not doesn't matter it's a wipeout that is just now threatening or potentially going to move above trend. what do we do? the way to finish it off, look at a ratio chart so this is now simply one divided by the other it's what relative strength is you're looking at eem's relative performance to spy, it has all the elements of a bearish to bullish reversal, eem over spy.

>> you know, mike, carter made it look easy to me even i could understand what was going on there do you agree with him, or do you have some shade for the underdog >> no, i agree with him, ask over the last 30 years there's only been four other times where the evaluation for the emerging names have been cheaper relative to the s&p we did see a buy of the 4,200 fed calls in eem buyer paid $0.90 and on the bearish side, we saw a purchase of 15,000 of the april 365 puttings, big outlay of premiums spending $12.54 a contract for those. >> thoughts on that one? >> i'm in agreement, i think a lot of the negative news has been priced into eem you're seeing a massive outperformance there i think spies still have a lot of earnings to come down i don't think that's priced in yet. still to come, we're going to dial up the original telecom titan taking off with one red hot airline and seeing if a

coffee giant can keep bucking the trend. plus, everything "option action," check out our website and news letter. there's more "options action" coming back right after this

business can happen anytime, anywhere. so help yours thrive and stay connected with the comcast business complete connectivity solution. it's the largest, fastest, reliable network. advanced gig speed wifi. and cyberthreat protection. starting at just $49.99 a month. plus, you can save up to 60% a year when you add comcast business mobile. or, ask how to get up to a $750 prepaid card. complete connectivity. one solution, for wherever business takes you. comcast business. powering possibilities.

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 before the new earnings season officially begins with financials on friday, one of last season's stragglers is still coming in then too and that would be delta airlines mike, delta is the airline that everyone seems to love to love what are you seeing? >> yeah, i mean, the one that everyone loves to hate is love i guess, southwest right now after all of their travel snafus, but delta's going to be announcing earnings this week this is a name that we hold in our event fund typically this is a stock that moves about 4% on earnings there are options markets implying a move of about 5.5%. they've obviously added a lot of debt as they would need to during the pandemic. this was a company that made 7.5 bucks a share, full-year 2019. think about that, if it could get back there, the company would be trading at less than five times earnings. that's not necessarily what i am forecasting.

they do seem to be climbing out of trouble, and they have been paying off some of their debt. we do have slightly declining fuel costs now, and of course they have a little bit of hedge going on there because they also own a refinery on the counter point side you've got rising wages when you take look at this situation, you could of course go out and buy a stock, but with that higher than average implied move, one of the things we saw this week is someone going out and buying slightly in the money 35 strike calls and they paid about $1.40 for those. as an alternative, you can see you're going to be risking less than 4% of the current stock price to make a bullish bet going into earnings. of course as the news comes out it's more disappointing than we expect, that's all you're going to risk. you could go out and buy the stock if you like the story long-term, we do, but if you want to risk less you could go out and buy slightly in the money call >> carter, what do the numbers tell you >> it's a recovery story in terms of the fundamentals.

it's a recovery story in terms of the charts. big week for airlines. the new york stock exchange airline index up 9.6%. the dow jones transports up 3.5. here's the chart with no lines, no drawings. let's put some in. take a look at your screen what do we have? we have something that is about to pop back to trend we like this. >> bonawyn, thoughts on d delta >> yeah, it's a turn around story. i'm not thrilled about the debt balance. i think if they can kind of get the operational leverage under control it works, and they don't pay a dividend there's really no opportunity cost by not paying the stock. >> we have a lot of vigorous agreement on the desk. >> right is right, right is right. >> let's go on to at&t, the technic technicals causing you to dial into this name what do you say carter >> this is a dog's the dow situation. it's my favorite dollar the dow for the year, and a big week for

verizon, at&t, and i think there's more to come. >> all right, mike, what's your trade here >> so at&t is also a stock that i own and have actually held for a little while here. this is an interesting story relative to verizon. they had meaningful divestitures earlier this year. if you take a look at how warner brothers has done since they spun it off, that spinoff was probably a very good move. to own the stock you're going to collect a very handsome dividend, so high, in fact, that i think some people might think that it's actually implying it's going to be cut. it does look like it's well covered. i don't think there's too much concern there. what's interesting about that though is if you have a high dividend and i think bonawyn was kind of implying this, that actually doesn't get paid to people who own calls, which makes one of the big trades we saw this week all the more interesting. we saw a big purchase of the january 2024, 20 strike calls.

that's essentially an at the money call notice how much the buyers of these things pay, $1.40 a contract you buy the calls, you don't get the dividend, but that also reduces the cost of the calls, if you're thinking, as i think many people do, that actually you could see some stock price appreciation they're giving themselves a lot of time for that to play out risking, you know, less than 6% of the current stock price for a trade that lasts over a year. >> bonawyn, thoughts here. >> you asked for a disagreement, you're going to get it i'm not really that thrilled about this one i understand carter's point in terms of the dow, and i think a lot of that is plremised on the total return, which is inclusive of the dividend. i'm not really playing in this one. i can understand it's been a dog and probably has likely some upside. >> carter, we skipped over your charts why don't we go back to them. >> sure, let's take a look for at&t there's a down trend that's well-defined, and i think we're going to return to it. you can see the before and after.

here's the before. we have an after if we put in some lines, it projects to around 22, 21.50, close at 19.50, so a nice 10% move, and again, you get that very handsome yield. >> all righty. there's the chart on at&t. up next, could a fresh buzz be about to wear off on starbucks our featured trader brian stutland has a way to insulate your portfolio from getting scolded. thinkorswim® by td ameritrade is more than a trading platform. >> announcer: "options action" is sponsored by think or swim by td ameritrade. to your style . 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.

realtor.com (in a whisper) can we even afford this house? maybe jacob can finally get a job. the house whisperer! this house says use realtor.com to see homes in your budget. you're staying in school, jacob! realtor.com. to each their home.

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," everybody starbucks serving up some grande games today, the coffee giant already up nearly 8% to kick off 2023, but today's featured trader says there could be some big problems brewing for this high flyer equity armor investment ci o'brien stutland joins us now. what's your trade? spell it out for us, brian. >> tyler, you're right, the stock was up big today, it's been up huge venti style up over 50% in a handful of months this is not a stock, this is coffee, right. this is not something that's innovative growth type story here the stock's been up big.

barclays recommended it as their pick of 2023 this move is pretty huge i'm just looking at a trade where maybe i take some profits. make i take a hedge on a slight bet to the downside. we saw the unemployment report there was growth wage but not to the degree that people expected. that's why the market rallied. i think that's a negative for any kind of consumer discretionary type stock especially something like a starbucks consumer discretionary. when i look at it, ialso took look at the options, right and we saw a huge amount of open interest on the $100 strike, especially in january. and so i'm playing the january options for starbucks, playing that to the downside i'd be a biuyer of a put spread the stock's made such a big move a short-term decline or a pullback back to that $100 magnet that might happen because of the open interest if i bike the 105 strike at the same time selling the 100 strike, i can pay only $1 right.

i'm risking a dollar if it gets below 100 i get $4 here i think the risk/reward is really strong here to play to the downside maybe we get a pullback here, especially if the market can't get out of this sort of back and forth trend we've been seeing over the last few trading days if it starts to return back to the downside, this was just a bear market rally in the stock market, i think starbucks goes down with it, gets back to that $100 level that's why i'm buying a put spread short-term just to play to the downside there. >> let's get carter's reaction both to that and a chart you brought along. >> sure. the reaction, i'm with you 100%. let's just say this, let's look at the chart first and then discuss the circumstance this stock, starbucks drops on its low 46%, the exact same amount it dropped on the covid low. it's now up 56% off that low, and consider this, 25 analysts cover this stock their collective price target 12 months is $100

where is the stock trading 106. 25 very talented, insightful, educated people believe it's worth less 12 months hence than it is trading now. or you just look at the chart, it's over bought. >> mike, your thoughts take the trade apart for us. >> the only thing i would say about the trade is that you've got earnings coming out on february 2nd i wouldn't mind capturing those as a potential event because it might actually just manage to hang in there for the short period between now and january expiration but otherwise i'm with both carter and brian on this one. >> i'm going to put my hat in the race along side these guys i think it's a strong trade by brian. this thing trades at a premium multiple, 31, 32 times, not really where i want to be. i don't want to be exposed to consumer discretionary and as carter mentioned, it's over bought. >> brian, how do you feel? everybody agrees with you here you must feel proud. >> i'm feeling pretty good well caffeinated, ready for starbucks to drop on a bet here. mike makes a great point here. the earnings are february 2nd.

if you want to go a little farther dated, certainly that's a play i use that january strike as $100 strike, a huge amount of open interest. i tend to find that that tends to act as a magnet towards the stock. that might happen in january by the time the regular january expiration, but may be waiting for earnings where you sort of get this run up and then you get the news up and it pulls back after that news event happens. i'm okay with pushing the option trade out longer a push spread seems like the right player here. >> thanks so much. we appreciate it have a great weekend, my friend. >> thank you. up next, your tweets and final call >> announcer: "options action" is sponsored by think or swim by td ameritrade.

welcome back to "options action," everybody, triem to take some tweets our first asking with baba breaking with its down trend line from 2020, a huge 20% gain this week, and earnings coming up in the next cycle, how do we play the upcoming earnings while minimizing risk?

or do you wait for the backtest or a pullback? carter what do you think? >> let's make one point. i think when you hear superlatives on wall street, usually run the other way. a big bank said chinese stocks were uninvestable in october 17th five days later they all bottomed yes, baba's up huge, i would sell a put spread. i would sell the 100s of february, buy the 95s for a credit and play it that way. >> bonawyn, how does that strike you? >> i think that's one way to play it certainly. in either case you're defining your risk. i think i'd like maybe a call spread here, that way you're just playing it the opposite direction but similar tape of theory behind it. >> mike, quick thought >> yeah, i mean those two trades are synthetic equivalents of each other i'm sort of with bonawyn. >> our next fan says please comment on my bullish trades for

q 1 w2023, buy tesla march 17, n buy meta. >> boy, 150, that's a tough one for march in tesla i'm not sure this one's completely out of the woods yet. i favor calls over purchasing the stock, though. i have to say i'd probably be looking at a 30, 35 delta call not so far out of the money. meta you're a little closer i would say. you're much closer to the money, that's a better bet as far as i'm concerned. but has had quite a run. calls are probably the way to make the bullish bet if that's the way you're going. >> i'm in the bounce camp for tesla but 150's a stretch. >> let's go to our final calls and carter you still have the floor. >> thank you so for me it's gold. or gdx, minors or the metal. >> bonawyn. >> i like the oah versus xlp relative. >> and mike how about you? >> yeah, when you're trying to do these pairs trades options are a really good way to play it you can manage your risk on the oih buying calls longer term, maybe 60, 90 days out and

the same thing xop you can buy some puts on the shoide. >> gentlemen, it's been great being with you, all of you appreciate it. that does it for us here on "options action," we'll be here next friday 5:30 a.m. eastern time do not, i repeat, go anywhere, you know what's coming next. "mad money" with jim cramer right now. >> announcer: this is a paid advertisement for csn. >> you know, i want to start the introduction to this coin by actually going back in time just a little bit. just -- just back to 2021. 2021 -- massive numismatic year, probably the most significant numismatic year by the united states mint certainly in my lifetime. change in the american of the morgan and peace dollar. they released the 6-coin set, which was, of course, s