right now on "o.a." aam?'2qxe óbaho j954 three-c areasc flashing,wá÷ warning signs.zc th any incoming storm. plus, dreams ahead. investors seem to be flooding to avoid market turbulence. we'll chart the next move from here coming um. later, lulu lemon on deck.

the stock's been a bit of a downward dog. what are the options markets should expect results? on the desk tonight, mike khouw, carter worth, and brian stutland. we begin with our weekly check on some of the names we're seeing in "options action" this week. among them, nvidia, bank of america, coin basal heavy interest in banks showing up in the etf. traders flood into the qqqs, small caps, the kre regional banks and the gld. and that's where we start, with three -- areas of the market flashing warning signs. the ten-year hitting its lowest level since september at one point today. meantime capitoling to slide lower, crude down 10% over the last month. then the big move in metals. fourth straight week of gains. and copper best week since

january. carter, take us through why these moves are cause for concern. >> sure. so, one thing we know of course is that stock prices themselves are part of the government's leading indicator index. they are aware we peaked january 2022 quite some time ago, and while we might have been stabilizing and not getting worse, we are not improving. -- on the street are exactly not happening. 5% higher in the ten-year yield. we're at 3.4%. financials were a good area to be in in banks and brokerage they're collapsing. energy stocks, we're getting cheap -- they've gotten cheaper. i think these are all signs, of course, and the flight to safety

in apple, that kind of thing. these are all signs that basically a recession, in my thinking, is inevitable. when you hear that, how hubris, no landing. when you start hearing no landing, it really means, landing landing landing. >> mike, do you agree? do you come away with the same conclusion? >> yeah, i mean, a couple things. first of all, when we just listened to fed speak here a little bit, i think they're trying to thread the needle, and this is going to be a difficult one for them to do. the inflation problem remains a real one. a quarter basis point hike doesn't solve that. the whole story that you can somehow manage to control inflation and then not hurt the economy, this is obviously complete nonsense. you know, the other important thing that i think we should pay attention to with respect to banks, of course the news over

the last couple weeks has been the duration risks. they hold all these assets. the assets declining in value as rates rise. but of course we have another situation that is deeply recessionary, and that is going to be a huge contraction in credit, as the cost to borrow has risen evens the ten-year rate notes -- you're going to have basically two pressures on basically credit creation, which is you're going to have supply constraints and you're going to have demand constraints, and the two of these, that means there's going to be less credit available that decreases the money supply. that is clearly recessionary. with respect to gold i'm unsurprised. i'm long gold and gld via options. i think if you can't completely control inflation, if you are trying to thread the needle you are going to see higher gold prices. does make sense to see people

running into the tech knowledge technology names that are immune. >> brian, is that the right takeaway? we have seen that flight to tech, the outperformance of tech. since the banking crisis began just a couple weeks ago we've seen the nasdaq outperform the s&p. >> yeah, we have, and a lot of that has been rotation away from the value play we saw all of last year and interest rates fellower. now people feel comfortable moving money in other place. it's almost as if the nasdaq is part growth, part long treasuries on the long end of the curve. when those perform well, the nasdaq does, too. that's why you see the rotation. but the carter's point, that volatility level trading in the 20 handle is usually a depiction of recession or extreme -- we

don't see the vix elevated. deeper here, look how the vix looks on this chart. the vix versus credit spread. when you take a look at high yield, those are rated ten-year compared to treasury rates. that credit spread tends to be a pretty good indication of volatility and market risk, and when you look at that, those are really more like 2019, not 2020 levels where we had total chaos in the market. so i don't know that we're quite there in this sort of do or die recessionary situation where the market's just going to crap out and move lower. i think we're sort of in the range where we're going to, yes, have volatility, banks going under. liquidity, that's going to be an issue. you're going to get wood saw action, but not at level where is i'm worried about a vix going to 35 or tanking. >> mike, is it the right

takeaway, though? if you believe something bad is brewing for the economy for various reasons, whether it's banking or inflation that will continue to be runaway, do you want to be in the so-called growthier areas? i mean, apple and microsoft for instance? >> i think what you want to be in are those names that consistently deliver strong free cash flow. i think microsoft is an example of this, where you think their business is, while not completely immune or maybe less sensitive to near term recessionary pressures. i think that's certainly an issue. the other thing is i think it is a mistake to make a really bearish bet that everything is going to go sharply, sharply lower. i think what we can see is more of the kind of pain we saw last year, rather than some kind of a crash, and i think that's what brian is talk about when he says the vix isn't elevated.

one good thing, what we saw in mid 2020 is not an example we can use in any other context, because basically the risk rates went to zero essentially or even below in many cases, and of course there was going to be some concern on the credit side. so you saw a huge explosion in that spread during that time when people didn't know what was going to happen. of course we did see a short-term spike in the vix as well. longer term from an industrial perspective there are things i still like. i think copper would be an example of this. you know, we have very low inventories for copper, and i see the demand side of this picking up over time. and there are a couple reasons for this. you know, obviously we're making a move from ice vehicles to ev vehicles. ev vehicles use for copper in their construction. we're also making a push towards renewable energy, and one of the things about renewable energy is

it tends to be not as stable. you have to overbuild. you have to have more wind turbine capacity to replace steady state power generation, so of course that is also going to mean there's higher copper demand. then of course we have china re-opening. and i think you put all of those things together, and in the long-term, there's a positive for copper and the companies who produce it. >> i wonder if the tightening of credit is going to influence the financing of those products, which seem to get a lot of help from banks. carter, what do you think of copper? >> copper is, i would say, turning, but again there's a great industrial metals index which has copper, aluminum, nickel and zinc. if you were to look at that, it's struggling, trying to not guess worse. i like gold better, but i think people know that. if one's going to traffic in any

particular metal. >> all right. still to come, has netflix's stream higher come too far, too fast? how you can trim the surge. and for everything pac pac check out the website. much more after this. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed.

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welcome back to "options action." here's netflix rebounding after the company started cracking down on password sharing. the stock is up more than 11% in

the last two days. if you think the streaming surge has come too far too fast, brian has a way to hedge it. brian? >> yeah, definitely moved up very quickly, and there are ways to hedge it. options are posing a nice way where you can buy a put and protect some of the downside being low to the stock. i still like the stock. outperformance versus the rest of the market. nasdaq, outperformed there. big rotation in terms of telecom sector moving to more of the streaming video type plays in there, and netflix has a very strong cash flow, moved to the upside, gapped up. what i look to do is maybe buy a put on the downside to protect my long stock position. right around the 310 level is where it gapped out and broke higher. maybe resistance around 350, but

it could come all the way down to 300. i'm looking to buy an april 305 put, may a little under 12 buck thams puts my break even down below 295 for this put to pay off. +e,a' way to th downside, but this april option includes netflix's next earning, which comes out on april 18th. earnings we've seen netflix average 8%. that alone an earnings event could put the stock below 295 and that break even pointle i'm using a put to protect the downside, protect against earnings not being as bright as like microsoft netflix is starting to become one of those, and so maybe there's still some upside if the nasdaq technology, that's a move in the market -- >> carter, brian's throwing around a lot of levels. what do you think of them? >> yeah, i mean, for my part,

this stock has such desirable characteristics that one can stay long. brian mentioned, they like the stock, but concerned it's going far too fast. netflix bottomed earlier than the market. bottomed in april, may, 2022, went on to make new lows in october. you can see of course that it's just had this 25% sell-off, and that sell-off stocks -- 150-day average, and that's why where that bounce has staken place. for me it's a stay long. >> mike, what's your take on the trade? >> netflix is one of those names where i think you are getting growth as a reasonable price. trading around 26 times full year earnings and that's with 28% year on year growth. that gives you a peg rash of less than 1, probably 23% between '23 and '24. one other thing that's

interesting looking at the options is option ceilings are el varietied in the name, which you usually see dropping os stroks rise, and i think what that tells you is investors are anxious and that might lend support to it. if you're going to try to hedge your long exposure, buy the split brian is talking about but split brian is talking about but possibly split it. - hiring is step one when it comes to our growth.

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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." a few earnings on tap next week. the stock has had a rough fee months down 14%. mike's got a way to trade this one. mike? >> walgreens,s this a little bit of a contrarian play. this is a stock we own.

if you take a look at the chart, it doesn't look pretty. a couple of reasons we like the stock, number one, it's dirt cheap. if you take out the boost they got from covid. we saw a 10% revenue gain on covid related spending. you can pull that back out and still this thing is exceptionally cheap, trading at less than ten full-times. the bad news is of course they are facing along with the some soft other pharmaceutical companies opioid litigation risks and of course more recently if you have been following it, there's going to be a little political controversy is, well, with respect to if and when they're going to be distributing abortion drugs. but i think here right now, there's a lot of bad news baked into the stock. that said, it is toying right now with a five-year low of about 30 bucks. it came very close very recently, and so my thinking here is that to buy this stock, you might want to hedge it. i was looking at the may 30,

27 1/2 put spread. that would cost about -- the idea is if you own the stock and it holds that five-year low, that's really limited downside. this put spread is intended to essentially offer some protection if it should violate it. like i said, this is a stock that we own, and that's how i intend to hedge it. >> carter, how does the chart look? >> the five-year low mike refers to is the october low where all stocks made lows. you have to go back ten years before that low. so essentially walgreens is first timing with ten-year lows. how many stocks have made no progress in ten years? that's when you do get things that are cheap, exceedingly cheap. but cheap is a dangerous word, sometimes considered a dirty word. there's an expression known as a value trap. that's my hunch. >> brian, are you with them, value trap for wall greens? >> might be, but i like the idea of a put spread. limit and get protection to the

downside, and it stops -- lower in this channel range. i like using put spread to lower the cost of protection while still owning the stock. >> let's get to the other name reporting tuesday. shares going downward dog over the last few months. could it be a way to limber up? this one was the one in the holly index. it's been there for years. >> it has indeed. also a stock that we own. "options action" implying good moves after they report they're going to report tuesday the 20th. now a move over 28% on the day. the good news for lulu is that although it's a more expensive stock than walgreens when we start thinking about it on a growth to price basis, it seems more reasonable. here we're looking at 26 times earning and 25, 26 times annual growth rate. that's a good thing.

of course with china re-opening, this is the market a lot of people are hoping lulu is going to be able to expand into. that also bridges up the fact that some of the expectation there is are fairly ambitious, and we did see on the last earnings report a little bit of margin ?saucompression. there's risk we're going to see that coming into this earnings as well. if you don't own the stock already, another way you could play this is with a cal spread. i was looking at the may 330/360 call spreads. that was going to cost just over 8 bucks. that's a way to get exposure to lulu. this is a pretty expensive stock at $300 a share. this is also a way you could commit a relatively smaller amount of capital if you're inclined to make a bullish bet going into the earnings. >> carter? >> interestly i was in lulu today for the second time in my life here in park city, and i

was of course accompanying one. another time, there's one in a building i live in and i was waiting for one, i was cold. i don't know. it had a tough go, and it's an expensive stock. >> i feel like you can say that about a lot of retailers, though, that you'd only be forced in a store if you were waiting for somebody. >> yes, that's true. that's why they have those chairs for certain people in the stores. >> yeah, they're carter chairs. brian, what do you think of lulu? what do you think of mike's trade? >> interesting on "fast money" earlier you brought up a certain accommodation between nike and lulu. where we saw bearish option activity in nike we didn't see that in lulu, so maybe lulu's got more to the upside. on carter's side, it seems like an expensive stock, but you look at walgreens, there has been a

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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." time to take some sweets. our first fan asks, given that u.b.s. stated the credit spread would continue i've taken the opportunity to load up on 300. is this a good or a pipe dream of wasted money? >> i think if they're lying options to leap options i think it's a pipe dream of possibly wasted money. what i'd rather do is almost sell leap type options in a place like u.b.s., buzz we know

they're not taking over credit swiss because they want to go down with the ship. profitability given all the issues lead them to the upside? probably not. but that's a good opportunity, wait for them to get there. because i don't know that it get there is. >> next tweet says given a general uncertainty about the economy, what do you think of selling -- on the pharmaceutical etf? mike. >> this is a very low volatility name much like most of its constituents. we're talking about mercks and lillys and johnson & johnsons. i might rather than entering a call spread. the reason is those calls you're thinking of selling are just too cheap. >> time now for the final call. carter braxton worth.

>> [ inaudible ]. >> brian stutland. >> i still like netflix, but i want to own a put, so buy that april downside split. >> mike khouw. >> i like5ú0g■ netflix, too, bu think a put spread is a less expensive way think there's thi(l much need to flankly. and in lulu'sjf case i like cal spreads going into earnings. >> that dom&mo=7ç it for us. "mad money" with jim cramer starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. >> hey, i'm cramer. welcome to "mad money." welcome to cramerica. ♪ haz,clujah ♪ other people want to makesn■ friends. my job not to entertainçó but educate, teach, put in perspective. call me. 1-800-743-cnbc. tweet