that's a serious level of person to be that way, but she's definitely in that category. ♪♪ right now an "oa," consumer rolling over after a strong start to the year. are we finally starting to see some cracks in the strength of america's shoppers the names traders are charge up about, straight ahead. with a big slate of earnings on deck we're laying out the ways to play a soda giant, a streamer and a tech giant. looking back at a couple of trades we're hitting the financials and the transports. all aboard i'm melissa lee. on the desk tonigh carter worth, mike khouw, and a special appearance from the general himself, jeff mills. we start off with a deeper dive

on the consumer. so many names tied to travel, leisure and shopping, this week the trade rolling over, next week on valentine's day we get the cpi report and a number of earnings report from names tied to the wallets of the consumer carter, what are the charts telling you? >> take a look xrt, a great etf because it is equal weight, about 95 stocks. you could be foot locker, amazon, same weight essentially. and look how technical it is this is the august high. when it was declared the s&p was in a new bull market, up more than 20% this is the high just of a week ago. they're the exact same level to the penny $75.78, $75.79 that is known as a double top. what we have now, of course, is a break in trend a break in trend is imminent, hasn't happened yet but that's my conclusion. and i would just say what we're really looking at is something along the lines of this. that you're going to have a minor head and shoulders so xrt to the downside let's look at a couple other

sort of iterations within. this is the xly, which is dominated by amazon, home depot and others but similar sort of circumstances, a great run-up. and then here comes the trouble. so we've had our great run-up. and let's put in the red arrow here comes the trouble one area within consumer that's held up very well is ca see knows gaming stocks. now we have here is the russell 3000 casino and gambling index, 30, 40 stocks in it. what is sort of incontestable is, of course, downtrend to the penny, downtrend to the penny and stopping on its head, to the penny. at a manipulate mum we're in a check back to the 150 moving average. seller of this area which is held up, but i think it cracks the way the others have already cracked. >> all right, for astute viewers of "fast money" we know where the general stands on xrt.

that was your final trade, jeff. >> yes, it was i agree xrt to the downside from a technical perspective. to lean on the fundamentals, pricing power is ultimately waiting for companies and that's going to impact nominal revenues and their ability to keep people employed you see weakness in the labor market and that's going to transition into the behavior of the consumer pricing power relative to the higher income demographic. if you look at the highest income cor tile, they're seeing the biggest reduction in net worth. i don't know in it's part of the argument anymore i'd be playing xrt to the downside as carter said. >> mike, where do you stand? >> it's interesting of course because consumers can be pressured by the employment picture and also by their available resources. and what we are seeing is if you take a look at consumer revolving debt levels, which denied during the pandemic levels, people wer were spending less, and now back at all-time highs. the interest rates on those revolving balances is probably 200 basis points higher than it was a couple years ago as well so you put those two things

together, i see probably $24 billion in incremental interest expense, full year. this year alone, based on the current balances that is, of course, going to weigh on their ability to spend so you put all those things together and that's problematic. combined with the fact that we have seen valuations come back to reasonable levels but then when they rebounded not as much. you put those two things together and that probably explains the activity we saw in the options market the biggest trade i saw in xrt this week was a bearish one actually, it was a broken wing put butterfly going to the march expiration of buyer of 4,000 o the 67 puts sold, 8,000 of the 60s. in a butterfly you're targeting that short strike and that would basically take you right back, it's carter's dub to tell us whether that's appropriate target over the course of the next several weeks but it's 60, what the options market is targeting at this point. >> wow let's turn to a couple of hospitality and travel names first off, airbnb, the stock set to report earnings after the

bell on tuesday. carter, you're not expecting great things from this one. >> bad day today as is so often the case we can inform judgments by the chart or the chart will inform our judgments. that's a downtrend that's incontestable, a series of lower highs of course it fails at the trend line, at the trend line, got there, literally this week, hit its head, we're at arrow probably earnings are going to be unhappy i'm the seller >> mike, would you be a seller >> yeah, i am. and here, too, what's also incontestable the biggest trade in airbnb was also bearish we don't make this up, we take a look at what's actually trading. the biggest trade in the airbnb this week was a put trade. 600 contracts, it may not sound like a lot but this is a relatively high volatility name. that's $4.62 a contract. $462 a contract when you factor in the multiplier. this is a decent outlay of premium on a bearish bet going into earnings. >> jeff, what's your take?

>> yeah, so one quick thing that i think is important relative to consumer, where are people losing jobs, it's technology and higher end jobs. they have severance packages probably going to roll off the next six months. when i think about services, travel, that could end up being a weight on those areas over the next couple of quarters. i look at airbnb rallying to 50%. so many stocks failed at the august high and for a stock like this trading at 40 times if we see an increase in interest rates sticks it gets dragged rower with a risk-off mentality in the market. >> marriott is reporting on tuesday. carter, what do you see there? >> a calmer name, if you will, lower beta but what we know is this, that you have well-defined tops at a common level and the stock, of course, broke out. but as so often the case, sometimes breakouts fail i think that's what's happening here we're going to pivot back to the breakout level i'm a seller if we were to clear all that, watch this you have a break in trend.

>> mike? >> the options market's implying about a 4.4% move. this thing is trading at 22 times. i don't know why you want to pay a premium in an area like this they have held up reasonable well, but based on some of the bookings i've made lately, i'm not sure the number is going to continue to go up and surpass pre-pandemic levels as they have been recently marriott's a higher end name as well as the biggest operator a way you could play this without outlaying too much premium if you're inclined to make a bearish bet 171 put spread, over $5, or a little over 25% of the distance between the strike, typically what we like to spend on put spreads like this one, you're risking to make a bearish bet. if you're inclined t follow carters's technical view, this is a way to consider doing it. >> a lot of what you said about airbnb might apply to marriott marriott has mor

international exposure, with china opening up, that could boost marriott as well. >> you do better with a stock like that again because of where its revenue is exposed at the same time i look at a stock like this, it's been stuck in neutral for a number of quarters, trading between 140 and 180. it's at the top end of that range. i'd be looking for closer to 140 before would i get involved. >> everything "options action", check out our website and our news letter. much more ""options action"" after this. coming up, movies, soda and network analytics? okay, maybe it's not popcorn but paramount, coke and cisco are all on deck to report earnings next week we have an options triple feature on how to play them all, sit back, relax, and enjoy the show 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.

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welcome back to "options action," earnings season rolls on with a ton of big names to report tech, travel, staples, restaurant streamers and more all gearing up to deliver results. let's lay out some trades. first up, paramount. carter, what does this chart look like to you >> well, this is what you'd call unmitigated disaster. >> oh. >> that looks to be turning.

>> what's the silver lining here >> it was associated with that hedge fund that went under check back to support. >> wow, i really thought it was going a different direction when you started. >> because, down 80, 90% from its high, it's going to make it or not, i think it's going to make it. >> what do you think >> carter knows more than i do about the charts i'm seeing a 70% rally, now back down below its falling 200 day that gives me pause. fundamentals, this is a streaming story in a lot of cases, we've talked about this a number of times. people looking to consolidate the number of subscriptions they have, instead of four, they want two. whatever the case may be i think paramount ends up being a casualty here. thinking about the profitability, paramount is ramping up the content spend because i think they have to disney netflix, looking for profitability. i think the market's going to be more friendly to a disney, to a netflix who's managing the streaming service in that way.

i would be more partial to those names versus paramount. >> do the other streamers, do their charts look any better >> they're all struggling. >> let's say it that way >> okay. >> but this one, again, i think it's so bad, it's good at this point. >> terms of the environment. we were talking on "fast money about rising rates, jeff, and this risk on, off, off rally at this point so doesn't this all fall into that >> yeah, it makes me nervous about a netflix, and i pick my net nicks as my super bowl a trade but at the same time i think you have to think about these things as multi-year stories here because if you do get a risk off -- or excuse me, a risk-off trade it's going to end up failing at resistance at 400 for example. i do worry about these names near term. but the profitability story does make me feel better. i think a netflix, for example, is ramping up the key free cash flow it's cheap if you have a four or five-year time horizon. >> mike is on the phone, we've had tech issues. what is the trade here on paramount?

>> i mean, paramount, i hear all the things that jeff's talking about. i mean, it is trading relatively cheap and of course that makes sense. their earnings are declining, ebidta is declining, expenses have tripled over the course of the last five years. there's a little bit of a backstop there i berkshire's large earnings some speculate it might be an m&a play if you want to make a bullish bet in paramount, betting there is a little bit of a backstop with berkshire, they had a good story with the "top gun: maverick" movie. wins beget more wins, look out to may, the 22 1/2 calls, 1.90, a percentage of the stock price, i they realize those seem relatively expensive. bear in mind this is a company that has, you know, a less than $15 billion market cap, but more than $17 billion in debt so there's a little bit of leverage vetted in the equity that's why you're going to see higher options premiums. they're justified.

i am long the stock though, may 22 1/2 calls are a way to make a bullish bet without risking the money. cisco reporting wednesday after the bell, wild moves the name is virtually flat so far this year. mike, what's your trade? >> cisco, like paramount, a name that actually isn't really all that expensive there is some enterprise spend numbers that look relatively decent here, too, i think you can keep it very, very simple i was just looking out t april, the 50 strike calls, those cost a buck, so looking at about 2% of the strike to give you a bullish bet, decent time to expiration. there's not everything is as cheap as it was, this looks pretty inexpensive to me. >> do you like cisco, jeff >> i like boring tech. i went back and looked and you would think it underperforms during recessions, it doesn't. it's outperformed the s&p during every recession back to 1990 that was a surprise to me. as its revenue mix has evolved

it's 43% or so subscription. at the same time i think their revenues are more insulated than it was in the past so i think you could play this to the upside. as mike said the valuation is fair and it has a decent dividend so maybe some downside protection there. >> do you concur with these guys >> i concur, how about that. it is boring low beta relative to more exciting things but it has all the elements of a bottom, bearish to bullish reversal buy. >> finally, coca-cola, the soda stock down more than 6% so far this year and the traders think the name may not be bubbling up anytime soon khouw on co, what are you seeing >> it bears my name, in a sense, i guess, i'm not really on board with this one. i haven't been on board with a lot of staples we've talked about this, the valuation for a lot of these hasn't been that compelling. that's part of the problem,

we're also seeing significant, you know, secular shifts within the space, you know, once upon a time i think this is being the soft drink business in particular was a good place to be and they have tried to acquire some of the things that are attracting more business now, but i still think this isn't the place you want to be, really, in this environment, i think, you know, you could look out, good news is, because it's a low volatility name, many of the staples type stocks are, you could go out on the april 57.5, put a buck and a quarter for those, small percentages of stock price. not risking a lot to make a bearish bet in case we see a pullback. >> carter? >> coke has a structural issue if you look at its relative performance to the consumer staple sector it peaked, you're talking about almost 20 years ago. the stock here now is all the elements of a rollover, or a bullish to bearish reversal, sell. >> would you sell? >> i would if you're looking for exposure here, pepsi is far more interesting. >> would you rather? >> i've been saying a couple weeks now the valuation is expensive but investors are

going to start to look for that kind of exposure again pepsi is clinging to up-trend, whereas carter said coke is rolled over. picking one or the other pepsi looks more attractive to me. >> would you rather, carter, pepsi or coke? >> i don't like pepsi either but it did, to be fair, have a nice pop on its earnings. that will be short-lived we shall see. >> mike, what would get you to change your thesis on coke >> boy -- >> nothing, i guess. >> a couple of things, right, i mean, it's going to take a much cheaper valuation to begin with, i think. i would like to see rates come in a little bit to better justify the multiple where we're at and i would sort of like to see some stabilization in their core businesses you need all three of those to justify it >> all right, up next, we're taking a look back on a couple of past trades, what to do and how to do it "options action," back in two. >> announcer: "options action" is sponsored by thinkorswim by td ameritrade.

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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fast bad week for transports, down more than 3% i suspect there's more downside to go. >> all right and way back, way back in december, mike laid out a way to fade the financials that expire next friday. mike, the xlf is about 5% higher since that trade how are you managing this one? >> yeah, i mean, one of the reasons we use options trade of course is to limit our risk. this is a perfect example of that the interesting thing here, of course, that relative to some other sectors, it actually has been holding up okay we just highlighted areas of the consumer we don't want to own. we're highlighting some areas of industrials that we don't want to own but i don't really mind owning the thinks that are outperforming. i'm going to own something i'm inclined to let this one roll off, and i'm not going to re-engage. >> what do you think of financials at this point, jeff >> i feel like they got caught up in the soft landing narrative. that's why they've done a lot better than i expected but i don't want to own financials when you have an inverted yield curve, when

leading economic indicators are falling. they continue to fall and we've got bank lending data, they continue to tighten standards. i don't think it's a place where you want to be for outperformance this year. >> how does that chart look, and are there any financials in particular that look worse or better than others >> there are things that are god-like, like progressive >> god-like? >> yes, it's literally up to the right its entire life. there are certain asset managers that look better but morgan stanley, for instance but the bkx, the big heavy, it's too sensitive. jpmorgan itself is way overdone. i would expect a big giveback there. >> are there other financials that are god-like? >> progressive might be the most -- i mean -- >> the most god-like >> you can attest to that. this is one of the steadiest, most orderly charts. but also businesses. i don't think there's any insurance stock that's close to that. >> mike? >> yeah. i mean, the critical thing, one of the things about xlf is this is a composite of financials that includes all of those insurers as carter was just talking about. other big financial companies we

don't necessarily think of them that way include berkshire the insurers have been doing exceptionally well, and that's one of the reasons why if you're looking at xlf, you're carrying some of those winners, or i should say those winners are carrying many of the losers around i wouldn't express bearish bet particularly but if you are looking at the banks, then that could be regionals or the money sensors all of the points jeff was making hold valid, and i would target that area specifically. if i was going to lean on the short side up next, your tweets and the final call >> announcer: "options action" is sponsored by thinkorswim by td ameritrade. 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.

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welcome back to "options action." time to take some tweets our first fan asks, what do you think about macy's how would you play this? well, jeff, you're the man who said short xrt how would you play macy's? >> i think macy's was a sell for one of my final trades a couple of weeks ago too i do not like the stock here at all. if you look at a two-year chart,

for example, that $25 level is clearly key. it failed almost exactly at that level, heading lower i probably think it continues in that direction again, the fundamentals relative to the consumer, the labor market okay now. i'm not sure it's going to be okay later. >> do you approve of jeff's analysis >> he said almost exactly at that level otherwise known as it fell to the penny. >> exactly >> you approve, i guess. our next tweet asks, the vix settles above 21 what's the trade on volatility what's your take on what the vix is doing, carter >> the vix is due for a bounce, a little bit of a bounce this week but i think more to come. vxx would be the etf to use to play on the long side. >> yeah, all of the -- that's deep end of the pool kind of stuff for most people. >> it is. >> mike, what's your take on volatility and how to trade it >> i mean another way to play volatility, of course, is to say that it's anti-correlated to the market so puts on spy, puts on q's,

pits on iwm as a way to hedge or place bearish bets is another proxy to that. >> time for one more tweet this one asks, google looks good at these prices. what play would you suggest? calls about three months out or sell some puts around $90? mike, what do you say? >> i do like google, and i would prefer buying calls to selling puts and actually for the reason we were just talking about, which is if you think volatility is going to go up or you're going to see downward pressure on equity, calls are a hitched way to be long and they are very reasonably priced at the current level. as a stock. >> buddy, you got your answer. time for the final call. carter braxton worth, what do you say? >> you want to be oil long and nat gas long both. >> jeff. >> i'd just reiterate my caution around the consumer, whether it's xrt, whether it's macy's. there are so many names failing at those august highs. i think that probably continues. >> by the way, general, nice to

have you on "oa. >> nice to be here. >> mike khouw. >> it sounds very negative but i kind of like cisco going into earnings and i think calls is a way to make that bullish bet. >> ending on a bright note that does it for us here on "options action. have a great weekend back here next friday. 5:30 p.m. eastern time have a great super bowl weekend. "mad money" starts right now is a paid program - tg 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