he's a predator. he is preying on people in any way that he possibly can. it wouldn't shock me if he was in prison telling people he was a prince right now. right now on oa, catching you up after a tumultuous week the dow down nearly 400 points as first republic and other regionals continue their slide the nasdaq is up more than 4%. nasdaq number may be giving investors a false sense of security. plus, bank contagion aside we're still in the middle of earnings season. i'm melissa lee. this is "options action. we wanted to provide you

with an options p ssa of sort o risk management. there's a unique occurrence happening around options and svb that can leave you vulnerable. mike you did tweet out a warning earlier this week and it's worth repeating. as we look further out in time >> yeah, you know, one of the important things to remember is that, you know, you do occasionally get special circumstances. you might trade options on silicon valley bank, on signature bank of new york and suddenly you wake up one day and the stocks have been halted. your question probably is, what becomes of the options that i currently hold so it's interesting and it's available publicly if you're interested, you can go to theocc.com, they publish info memos and from there that i learned the following. first things first, the options clearing corporation was imposing and is imposing no restriction on exercising options in signature bank and in silicon valley bank shares

that means, if you hold puts expiring either today or the subsequent expirations you can still exercise those options that's not to say that there aren't some important changes, though number one, the options options clearing corp exercises options by a money or more and they suspend that in the event of trading halts as you have in this case both of these stocks are halted. you need to instruct your broker secondly, the ncc isn't going to be handling this settlement. that's broker to broker now. this isn't something that customers need to worry too much about. but one of the side effects of this is it's going to be more cumbersome, the shares aren't necessarily available to borrow. what's going on here the occ is going to make accommodations if it's necessary to do so if the shares aren't available. if there are settlement problems, they can push back the

settlement date, they can even change the deliverables. for example if you exercise puts there's a chance that rather needing to deliver the shares they're going to come up with some kind of cash settlement the important thing for you to think about is whether the value of these underlying stocks is below the strike of the puts that you own, i assume no one is going to be exercising their call options. you'll want to exercise those options. first republic just announced that they're going to be doing a private investment, known as a pipe transa, it's different than a secondary. trading lower after hours. the stock is down more than 75% since last thursday, the last time those other banks were trading. so if you're wondering, is silicon valley bank less than where it was trading same thing with signature. look at the bank that's still alive. the bank just received $30 billion. 75% lower than it was the value

of signature bank, to the extent that there's any value at all, the value of silicon valley bank shares. to the extent there's any value at all must be lower than it was when it was available to trade. investors grappled with the fallout from svb etfs, also stirring up action in the xle energy etf carter a quick recap of what you think of the s&p here? >> to put it in perspective, year to date is an arbitrary time frame we have an s&p that's down 1% versus the s&p up 2% it's in perfect order of the larger you are the better you are.

of course the qqqs are up 15%. the question is, what do we know about the move do you chase that with others? is it itself already getting overdone my hunch is the latter it's overdone >> i tend to agree we had this outperformance over the last couple of weeks if you chart the qqqs you'll see pretty much an inverse chart as carter mentioned earlier, who's your incremental buyer i have been leaning bearish. declining economic outlook. >> i'm going to go out on a limb and say mike agrees with these two gentlemens here in new york. >> that was a very good bet. very appreciative of you look, the situation here is that -- the biggest firms, the ones that have been doing the best most recently are also

among the most expensive these broad indices, whether you're looking at something the se sector, this is going to be propelled and largely dictated by its largest constituent stocks if we're going to borrow from dan's acronyms these have been outperforming as of late. you're dealing with slighter higher implied volatility. the out of the money puts are trading at a bigger premium than you historically would see look out to may, you can put a puts spread on in the triple qs as a mechanism to hedge. better opportunity the do so now as these things have gone up a little bit the put spread in may and you

can risk about 2% of the value of the underlying qqq shares and get some downside protection now this is different than an outright tail hedge. this is just basically looking for, you know, to weaker is what we're thinking, this is a trade that's very similar to what i have in spx. let's get to the banks carter, the charts, you know, look similar >> they do the regional banks are sort of a beta trade within financials insurance stocks are also getting hurt but the regional banks are the epicenter of the problem the issue is this, there's weakness to take advantage of it and weakness to stay away from discounts that are bad it's not a discount. it's value trap. you want to stay away from the

weakness in banks. >> mike? >> i mean, first of all, this is deep end of the pool stuff now as we can see. all you need to do is take a look at how the regionals did this week, it's been exceptionally choppy i certainly fielded a lot of questions from people who wonder whether this was a good opportunity to get in. when you're dealing with financial stocks these are levered balance sheets it doesn't take much for things to go a little bit sideways. i really think you want to see things settle out a little bit more before you start doing your foot in the water. moving on to tlt, what do you think of this trade at this point. >> this move -- we're talking about rates. volatility within the rates sector you know, i'd be more incline to play here, because you know what, you can really drill down into the fed and rally get a

better understand of monetary policy and which way they're going to go versus of trying to ups what's going to happen what happens when those assets get market to market there's quite a bit of trading opportunity in the fixed income portion of your etfs and indices. i'd be looking here for opportunities while the fed and policy remains front and center. let's talk about gold now. a big fed decision coming yup, right, mike, what's the trade here >> yeah, i mean, here's the thing. if we start to see -- look at what tlt today when bonds are going up, rates are going down gold is a safe haven in times of trouble. i think we're seeing that. we've had some good size moves within it this week. you want to own it here.

a good hedge in the rate picture. so i was actually trying to take advantage of the dynamic that we have, so i was talking before about sku when you're dealing with commodities such as gold the exact opposite dynamic exist, lot of people think of gold as a safety trade you'll see a premium you can take advantage of when trading an options structure on it by buying a call spread the math works for you in this case i was looking out to may 185 very close to at the money you could buy that $15 call spread for a little over 3 bucks. once again risking just over 2% of the current value to make a bullish bet here the gold is going to trade off

the news we get next week. we can expect that if the rates stay where they are in the very unlikely case they'd go lower, if they did, it would be off to the races for sure if you have a little bit of a barbell on that's when you could see it pay off on both sides. >> we know that at the beginning of the year you really like the gold trade >> i do. if you think from the perspective if the market was peak before january 2022 the s&p is down about 19%. gold itself is up 8, 9 since then it's doing its job right, it's a hedge that's always been a hedge and it's serving that purpose in a perfect way. >> is this a hedge for you >> it is it's not the only one. a worthwhile hedge particularly considering there's a worry about contagion and credit

quality. >> what are the other hedges you have >> listen, i think the evangelist of bitcoin these are the times that we look for those type of securities for i think being that there's a concern about the viability of our underlining banking system, bitcoin is actually -- is actually if place for these types of events. >> what do you say to young -- >> the chart looks okay. i'm not sure anyone knows what bitcoin is. >> the chart hooking okay is a lot. mike, in terms of other hedges i'm guessing not bitcoin for you but -- >> what's interesting about the bitcoin conversation it used to be a really good barometer of the risk on, risk off trade. today, in in this environment,

correlation between bitcoin and equities an anti-correlation hedge you'd expect it to rise when equities fall i can understand why one might the other hedges i would advocate are the ones we already discuss. you can put on put spreads in index or index proxies, you can own gold options premium tend to be relatively low there and it's moving around more than it historically does. that also i think is mechanism you can use to hedge directionally using tlt. still to come, restaurant on deck to report results for everything options action, check out our website. there's much more "options action" after this

tweet us your question at options action if it's nice we'll answer it on air. when "options action" returns.

welcome back it's been a busy week of market action to say the least. next week isn't looking any different. with all that's going on we still have big names slated to report quarterly results

mike, what are you looking at? >> we're taking a look at darden restaurants. now, this is an interesting situation, because we have a lot of economic turmoil on -- that we're confronting ourselves with, and this is maybe a discretionary area what's interesting about darden, from an operational standpoint they're doing quite well, they have seen sales and margin outperformance we did see an uptick in seated diners over the most recent reports we've seen for this. this company has a decently strong balance sheet they have a good size, and that puts them at a competitive advantage. the downside here we're in a tough economic environment, we could see people pulling back and darden trades at a bit of premium to the group as i was taking a look at this, a couple of things to think about, over the past 10, 12 reported earnings what we really have seen is generally positive stock performance coming out of earnings, but the moves tends

over the course of the next month or so to be generally pretty muted this upcoming earnings report is going to represent the final and last three years -- we haven't really seen moves more than 10% except going back a little bit longer than that i think what you can do is look at putting on a call diagonal, buying the longer dated essentially at the money, 150 call and selling the near-dated 155s in april, doesn't have weekly options. net to net you're going to be spending about $3.60 per contract to put this trade on a little over 2% of the current stock price. this is the kind of a trade you want to use if you have a modestly bullish view. if you see a situation like we saw if fedex this week, where they just blow the doors off and the stock is up 12% on the day

i'm includin the intraday move. this is the kind of trade that's not going to work as effectively. that's for that modest 5% upside over the course of following earnings that you're looking for. >> carter, what do you think >> i think that's exactly right. that's not a bad thing in this environment, upside is upside. we know that the stocks relative performance to mcdonald's, to chipotle, to yum, it's very good, and you can see here on the screen the chart is what i call up and to the right is a benign way it looks headed higher and i would want to be long going into the print. >> if one wants to play into the discretionary area, i think services have outperformed goods. they have outperformed goods this company has been delevering pretty consistently. you're taking advantage of the earnings premium on the short-dated options. it gives you flexibility to put

on another spread going out to may. >> mike, are you concerned at all this earnings season companies are going to take down guidance given all the uncertainty. >> first of all, i they have a free pass you'd expect that this is going to be baked in a little bit. we did see some weaknesses one of the reasons why you want to use options in a situation like this. you know, we are in a fairly volatile market condition. if you could own the stock or you could own an options trade that risks a little over 2% to make a modestly bullish bet i think that's the way to play it. that's a good way to think about options trade in an environment like this. these are a substitute for long or short equity positions. coming up, after huge week of action we're answering your questions. got a lot of them. that's next.

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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what's your thoughts on $31 june 16, 2023. >> you're using time as your advantage as you continue to build wealth using something that's short-dated in the your roth ira the risk of burning up that option premium i'd prefer you buy the stock if you want the long exposure. in 2021 and 2022 the treasury yield and u.s. dollar index were quite tightly correlated do you anticipate a similar -- >> rates go lower and equity goes lower the dollar here, they're not correlated right now i think the dollar is going to sit tight as rates go lower. >> that's your favorite phrase

recently our next fan asks with the volatility coming from banks affecting the broader market how would you feel selling puts at the $7 strike for june 16th? >> first of all, i like the way you're thinking here, when volatility is elevated and you have a stock that you like maybe you can take advantage of it by selling cash-covered puts, the worst thing that happens the stock falls and you own it at a discount those june puts would yield you just shy of 8% over the course of the next 90 days. i'm not supercrazy about the stock itself something else to think about, one is potential risk. if it declines you'll see those short covering rallies of course, that also provides some upside potentially. i like where your head is.

if you like it go forth and prosper. >> quite a compliment when mike says he likes where your head it >> final one is selling nivida april 21. >> it doesn't offer much value if you're intent on selling something, maybe the 275 or 300 might make for a better trade. >> how does that chart look? >> steep, uncorrected, crowded things like that. >> bad >> well, sell or not sell. i would. up next, final call. 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!

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time for the final call. carter >> gold, want to be long, and oil too. >> i tend to agree i like mike's trade. >> mike. >> that makes all of us on the exact same page, but i think you want to use call spreads to make

that bullish bet, in gold. >> that does it for us see you back here next friday at 5:30 for "options action." don't go anywhere, taking stock starts right now. >> announcer: this is a paid advertisement for csn. >> you know, usually by this time in the silver eagle cycle, which is just right at the very end here of our pre-sale, if you will, i have a pretty good idea what is going on, what was going on. but what i can tell you is, is 2023 has surprised us unlike anything i've seen in years and years and years. we assume this would, of course,