right now on "options action," the titans of tech are doing a whole lot of belt tightening, this as their earnings are right around the corner we'll drill down on the moves of microsoft and the growth trade coming up. plus, boeing's big run the aerospace giant as jumpeds nearly 50% in the last three months what is the options play for home gamers? feeling bullish on beijing a credit card play you might want to decline. and a look back at a name we said could stream higher i'm melissa lee. this is "options action. let's check out some of the

names we've been seeing the most options action on this week. among them, tesla, coinbase, nike some etfs. software and home builders also topping the list let's drill down first into the igb software etf the etf itself staging a solid 5% come back over the last month. >> carter, what do you make of this >> one of the big names relative to a group of names, let's look. these are ratio charts it's simply relative performance to the igv microsoft, you can see it here, has been stalling for three, four, five months. it has all the elements of a bullish to bearish reversal. if we take away the moving average and draw tend lines, exact same chart, we've just now broken trend get our circles in and what we have is for the first time in a

long time, a break in trend. now, microsoft's chart itself, still in a down trend. big move today, but it doesn't really fix what i think is the problem, an underperformer my bias is to the downside, selling microsoft. >> and also selling igv? >> igv is better than qqq. you want to buy igv and short qvq. igv itself more a pair of twos. >> i think what's interesting here, microsoft is obviously one of the biggest constituents of igv. the single biggest is actually sale salesforce other names in the igv sort of top 20 list would include names like auto desk the quick point i would make about that is when i look at microsoft eps, i see real money. when i look at the eps that gets tossed about in names like salesforce and auto desk, once you deal with stock-based compensation, those things are trading at comparable multiples to microsoft they are actually much more expensive.

so i find this action pretty interesting. there's no question that microsoft has been struggling. take a look at the price action. they announced layoffs, and, you know, the stock really didn't respond anywhere near as positively to that right away when they first did it as, say, what you got out of google today -- alphabet, i should say. i think there's obviously some selling pressure going on here i mean fundamentally, i like the company. the valuation doesn't seem, you know, all that unreasonable. but it's just not getting out of its own way apparently. >> if you look at the opgszs market, it's implying about an $11 move in either direction between now and next friday. they're going to report tuesday after the close. that's about a 4.5% move in either direction on a $1.8 trillion market cap company. i think the way carter has laid out the technicals here, it really does act heavy relative to just its peers and the nbx. this thing is flat on the year they've already had that announcement about the job cuts. i got to think that's the first of maybe what is at least going to be another one in this first half of the year when you think about their employee base.

so me, i'd actually be positioning for this thing to retest those prior lows here and, again, i think the technicals are too strong. one last thing on the valuation, there was valuation compression last year. we haven't really seen a meaningful drop in demand. but we're seeing some other parts of the business decelerating i think you probably see that in their guidance when they report tuesday. >> another etf have a better monthly run. the home construction fund this one is likely on a different trajectory >> right so this is something we've been long as a group. i'm going to go another way now. it's a little bit too much of a good thing let's put our lines and arrows in we are back to a difficult level. i think you falter here when you go back down into the apex, the formation. take profits, hold builders. >> dan. >> we talked about this earlier on "fast money." even though the ten-year u.s. treasury is coming in, i'm not so sure that one comes in so quickly. to me, we saw that huge surge in

mortgage applications when you saw the rate come in i'm with carter here on the technicals here. i think it's kind of a crowded trade to the long side here. i expect a move back to that uptrend. >> mike? >> clearly when we did see that slight move down in the 30-year mortgage rates, there was clearly a lot of pent-up demand. quick point i would make, d.r. horton, the largest constituent of itb the thing does look incredibly cheap if you're taking a look at what the street is forecasting for next year's earnings i would just offer a little bit of caution on that consider that you're dealing with net income estimates for a full year next year that are double what the company earned in 2019. that seems pretty hard to achieve when we're in a very different environment. we're in a different environment just looking forward economically we're in a different rate environment. i have a feeling that some of those estimates in the home builders are going to come in. >> boeing. it's been on quite a run of late, up nearly 50% in the last three months

carter, how does this one look >> quite a run indeed. it's low of 115, it closed at 215, almost a double off the low. it's quite often the same circumstance we want to find levels, identify them in this case, we've blown out through the top of this well-defined down trend. what often happens is after blowing out, you check back before ultimately going again. so i want to fade boeing here, making the bet that its 100% advance is too far, too fast. >> mike, your take on ba >> this is a situation i think, you know, they actually just announced they're going to be developing some new single aisle aircraft, probably something they should have done before deciding they were going to use software and larger engines on the 737 to develop the max aircraft obviously they still have a little bit of trouble with that. this is a company that is in a space that ultimately is going to be growing. i think once they put some of these troubles behind them, this is one of the names you're going to want to own. >> let's talk nike here. since reporting results about a

month ago, nike has been on a tear, up more than 20% is this another too far, too fast, carter >> i think tear is a good word almost 50% off its low we can draw the lines, but it's always quite so precise, and that's the beauty of charts. the level is precise it breaks hard, and now it's recovered equally impressively back to where? a very difficult level i think that warrants a red arrow down i want to fade this move too much of a good thing. >> mike, how do you want to trade this >> this was a name that we certainly liked when it was 85 bucks because it was getting to be quite a good value. they're executing exceptionally well and they have a product -- my teenagers seem to like the shoes they sell. that said, at $125, it doesn't present quite the same value i think in general on discretionary spending, we've seen some of the results that we've heard indicating there's going to be a little bit of pressure there i think that if you're in the name, you could sell it, or you

could possibly look to hedge i was looking just very simply at a short term put spread, the 125/115. that would give you protection, down about 8%. look, you're only going to be spending about two and a quarter to put that thing on, so we're talking about 2% of the current stock price, slightly less than that actually. i think there's a very good chance it's going to make a move that magnitude or larger over the next six weeks or so. >> carter says it all the time gaps are meant to be filled. that gap is a fat one from december it's just been a runaway breakout i like the fact he's using a $10 wide i think the risk/reward is pretty reasonable. then if you line that up with a broader market theme, you think we get rejected here we've had that move to the down trend, to the 200-day moving average. i think at some point if you're an investor who actually bought this thing pretty well, maybe as a trade, you're probably looking to take some profits here.

i like mike's thesis, also tying it in to consumer discretionary, what we're going to see as we see more of these job cuts mount over the next few months. >> we've got a reopening in china which may actually help the stock. >> yeah. that's definitely true actually, i think we're going to be talking pretty soon about some potential net beneficiaries of that reopening. but the thing is they have moved increasingly to sort of online sales. i'm not 100% sure that's going to give them a boost at this point. we've seen pretty steady performance out of the company and a good migration to digital. i think all of that is really good the thing is that there's a lot of good news priced into it now at 30 times. >> for everything "options action," check out our website and our newsletter there's much more "options action" right after this >> announcer: as tech and banks cut more jobs, could that cut into luxury spending dan nathan is looking expressly at american express. find out how he's hedging the

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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." google announcing today it is laying off about 12,000 people this after amazon and microsoft cut a combined 28,000 jobs dan thinks high salary layoffs could dent luxury spending >> let's look at american

express. this is a company i like from a valuation standpoint, it makes sense. i know mike's going to say the same thing carter is probably going to say don't like the chart it looks like a lot of those charts banging up against this downtrend that's been in place for the last year. earnings are going to come next week the implied move in the options market is 4% in either direction. when you think about these layoffs, a lot of job cuts we're seeing right now are kind of executive-level jobs, right? so you might see that in higher-end consumer discretionary. that's where american express kind of lives. you also see them in corporate travel and a lot of stuff like that you might see some sort of headwinds to their 2023 guidance so when i think about it from a trading perspective, would i be buying this stock right here no, for a whole host of reasons. i want to look at a put spread i wanted to find my risk i want to look to february expiration today when the stock was trading about 151 1/2.

i break even down at 146, and i have gains of up to $16 between 146 and 130. i have a loss of up to $4 between 146 and 150 with a max loss above that on february expiration i just like the risk/reward here i'm risking a little less than 2.5% of the stock price, have a break even a little less than 3.5% if this stock is down in a little less than a month 10% or so, i could make about 10% of the stock price here again that 130, why am i selling that way downside put it's going to kind of mitigate some of that -- crush after earnings next week the likelihood of it being down at 130 is not great. >> mike, what do you think of this trade >> he was saying it basically. american express, unlike their competitors, is all about discretionary spending, number

one because of their demographic. it's less of a credit issue because we have probably the most credit diworthy people in their universe the fact is they don't get any tailwind when they get favorable interest rate hikes, for example, which you can't see for other lenders in the consumer finance space. it's all about discretionary spending if you're about discretionary spending, then you'd probably be a buyer at these valuations. i don't think the discretionary spending numbers we're going to be seeing in the near future are going to be going up i think they're going to weaken. >> while they're each a big different, capital one, discover, american express and others, this is an instance of poor relative strength if you look at the group relative to the xlf, but also am next and of itself, i think it's the kind of thing where you're stuck going sideways or something unhappy happens. but there's very little prospects of a big advance. >> what's one caveat you have about this trade >> valuation you just mentioned discover and

cof. those stocks gapped down and did pretty good by the end of the day. it seems like investors want to look past that narrative that maybe has become consensus this is a trade on defining my risk i like the risk/reward. >> the china reopening causing a big rally. generating unusually large options volumes. a major part of that rally, jd.com set to report quarterly results in two weeks' time what's your trade here to take advantage of everything? >> yeah, so this is an interesting situation, of course so here we have obviously a company that's going to benefit from their reopening this is not an expensive stock it's trading about 22 times. you were talking about the tailwind of a reopening for a company, let's say, like nike, for example, which gets 16% of their revenues from china. this obviously has significantly greater exposure and is trading at a big discount. this company has a very strong balance sheet, big net cash position of course we have seen a big run-up in these companies

already, and of course that volatility means that the options are expensive although somewhat justifiably so. i wouldn't encourage someone necessarily to run in and purchase the stock after the kinds of moves that we've seen we do own the stock. but if you are interested in trying to make a bullish bet, i think the right way to play it, look out to march. you're going to capture these upcoming earnings by the 65 strike calls those cost about three bucks the idea here is that if you start to get a little bit of a move to the upside, you can look to roll this into a spread you might even get an opportunity to roll it into a diagonal spread if you like after the earnings come out. generally, though, i don't like bringing short options into something like earnings, especially where we have news-driven stuff going on i think an outright call is a way to basically mitigate the amount of capital you're going to risk on this and make an upside bet. >> what do you think of this trade, dan >> i like it we have that saying don't fight the fed in the u.s i guess you don't fight the ccp

either they were fighting all their big tech giants and we saw what happened to those companies over the last couple years. it seems like they've come back to a level again when you pair that with the chinese reopening and the chinese consumer out there, this trade makes sense. again, we are in a kind of low vol environment despite the fact we've seen a lot of movement we had a vix that was trading at 18 the other day if this thing continues to go sideways, it seems to be basing a little bit, you're going to want to define your losses on this your defining your risks by buying that call you also want to say, where is my mental stop where would i cut this trade if i don't have that movement to the upside that's going to justify owning that premium? i usually like to use a mental stop about 50% of the premium that i paid. that would be a guide whether this trade is working out for me in a few weeks or not. >> the recovery in chinese stocks, a "v." >> in this case, jd dipped in fact, i think we have a chart. you know i brought a chart with me can you imagine? why would i do that?

take a look at those annotations. that's what my eye sees as opposed to the kwb which has gone sideways after they all advanced on the 4th of january i like the dip i think you can go over it. >> is your view on jd the same as fk web? >> i kind of like jd a little bit better than k web. i will say that we've seen a lot of bullish activity in fxi, in the a shares, in k web in prior weeks, but those latter two, we saw a lot of activity this week. we don't buy foreign etfs for our fund we do buy single stocks in the form of adrs and so on, and jd is one of the ones we own. up next, a look back triple threat. updates on three past trades and how to manage thosnas ine megog forward. "options action" back in two >> announcer: "options action" is sponsored by think or swim by td ameritrade.

welcome back to "options action." time for some updates on past trades first up, mike's p & g trade from last week since then, p & g has dropped about 5%, putting that trade in the green. what are you doing now >> this is the kind of move we were targeting precisely we had the catalyst. it's come and went actually there's not that much profit left potentially in the trade now. so we just take profits happily. >> let's get to the airlines here dan over here laying out a trade on the jets etf just a few days back on "fast money. so, dan? >> this is what was interesting. we had scott kirby, the ceo of united on the night before, and that stock gapped up the next day on big earnings guidance there and then reversed and closed down 8% from its high i took a look at the jets. united is obviously a big component of that. i wanted to put a put spread now the etf is up just a little bit in the last few days that value of that put spread has lost a few cents here. so i'm okay here this is one i put on right here,

and i also saw a big trade in the options market the next day in february. it was a $2 wide difference strikes 19, 17 somebody else who watches "options action" liked the trade. >> what do you think >> it's the market ahead of the facts. this etf is up 25% the earnings come out, and since the earnings have come out, it handle moved, which is to say it was already done it was already priced in. >> let's move on mike laid out a trade on netflix last week. that stock is up about 3% since then, putting that trade in the green. mike, what do you do now >> we had a diagonal on. we were short of 370s, which expired today. we collected the premium them, up about 4 bucks on a $15 out lay. net-net, you're going to be in the trade, in that calendar spread effectively for a little bit less than three bucks. we're really going to be playing with house money that's basically sort of expecting the stock to drift a little bit higher, but maybe not have the kind of move that we saw today, for example.

>> all right nacas d e , your tweetanth fil ll 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.

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