i think he was an adrenaline junkie. i think he thrived on winning. he took it way too far. i think he definitely flew too close to the sun. ♪♪ good evening, everyone, right now on "options action," after a strong start to the year, the market is set to face its next big hurdle, earnings season, and first up the banks we will chart the course ahead on them. plus, is now the time to send your money abroad the eem trade, hasn't been great this year, but could it bloom as we spring into the second quarter? and later, a look back at

lulu, opening a corona ahead of constellations results, and big bets against the small caps. in for melissa lee, i'm tyler mathisen, this is "options action," live. mike khouw, carter worth, gentlemen, good to be with you we wrap up march trading with a look at some of the names seeing the most "options action" this quarter, among them, tesla, nvidia, apple, microsoft, and meta heavy interest in a number of etfs as well the qqqs, the russell 2000 as well, and corporate debt and gold and markets finishing the quarter strong today, the tech-heavy nasdaq leading the urge up nearly 17% for the quarter, the s&p jumping 7% and the dow attempting a turnaround, bouncing back from its october lows, i think it's nosed into -- there it has, positive territory by a third of a percent for the year so far. it was, as you probably know, a

rough march for banks, the spb collapse sent shock waves throughout entire sector, the kre regional bank etf notching its second worth month on record and the kbe locking in its fourth worth month ever. the volatility comes as we gear up for money banks to kick off earnings in a few weeks, the earnings season. mike, you're focusing on those money-centered banks what can you tell us >> we started adding exposure. banks have been knocked down, the regional northeast notably the regional banks by and large are sort of outside of our coverage universe, that's a good thing too as it's turned out but i think that there is some possibility, first of all, the money center banks are net beneficiaries of basically deposit flows, and we are seeing that i still think that they face some challenges. but if you think about potential balance sheet impairments, you know, c,re is the thing most

people are looking at, commercial real estate lending, that's the area covered by regionals. the other thing is that the money center banks have a very nice benefit in the sense that they don't really have to pay for their deposit the way smaller banks do we're looking at one of the few places where you can pick them up where they were pre-pandemic or even somewhat cheaper so we do own most of the money centers. we've got jp morgan, we've got wells fargo, actually, and these are all going to be announcing earnings, i think that if you're going to be in financials this is one of the places you could consider i mean, before now i think it was insurance. >> so mike likes the money center banks carter, you have some nice charts to show us. what do you think of the money center banks or others >> sure, i mean, for my part, i think it's -- it's risky, it's not good technique, let me say it that way, not to say that my technique is the technique to step in and buy this extreme weakness here is year to date index, it

really shows thee lines comparative, it's the msci, european banks on the top, then you've got world banks, and then coming at the bottom there you've got the bkx down 19%. two-year chart, it's the same story, just spread out over a long term. so i would do it this way. it's weakness in european banks that i would take advantage of, but it's weakness in u.s. banks that i would stay away from. >> tim >> banks are not going to re-rate, at least until they get through earnings friesing in credit dynamics, and banks have to prove it coming out of here. ups is in great total return play and got stronger out of this crisis. >> very interesting. let's turn to commodities, should we, crude trying for a comeback after a drop in march but oil still down 6% for the year the broader commodities based faring about the same. carter you say things might turn around from here, why? >> well, we've got a one-year anniversary of the peak, it was the ukraine invasion early march where commodities in general

surged to epic levels. and then we are now at the point where just as that was too far, too fast, this would be the reciprocal, so bad it's good you see on your screen there, that's the eye shares commodity etfs, the next iteration, 30% decline. now, 30% is not a magic number, but if you look at the final chart we are down to a level of support. and so it's down to a level that existed before covid, my thinking here is you play for a bounce. >> tim, your reaction? >> well, as good as the dollar, as good as commodities, i think the dollar peaked in october, the dollar is not your friend in the first quarter after rallying back, but it's giving back a lot. we know that the price of oil for every 1% move lower in the -- or higher in the dollar, it's tends to be a 3 to 4% move lower in oil prices. i would point to china, too, we've got pmis out of china this week, the manufacturing wasn't gang busters, but china is a

second-half story. in industrial demand, china is a very important player here the dollar in china we're going to drive it. fcx, i'm long. old heights. >> mike, how would you play commodities here >> yeah, you know, i like fcx, own fcx too. with respect to crude, the dollar dynamic tim was just talking about there was some other dynamic on the options side playing in crude. essentially, one of the things that's interesting about options in the crude market is that it really has two big players you have sort of the financial players, and then you have the industry players and what ends up happening is you can get some convexity on the financial player side. that can exacerbate moves. in addition to dollar strength hurting crude we also had a lot of convexity on the financial side and that was basically causing financial players to sell crude futures, i think, to hedge their downside exposure. i think that has been alleviated and i would be a buy buyer.

>> looking at emerging markets, the global group underperforming the s&p 500 so far this year, up about 4% compared with the s&p 7% gain, the real diversions apparent when you look at the last two years, eem down a whopping 26%, while the s&p 500, well it stays positive tim, what do you think >> as a guy that ran eem hedge fund money for 13 years, those moments where you cannot invest in a bad neighborhood. at times eem has been that for the dollar, for sure, it makes sense. a couple other things change the direction, the eem, the biggest weights are ali baba, the 10 cent mega cap -- >> is it going to help the breaking up of -- >> seemingly investor friendly, it's about putting more value into that. look at fund flows back into eem last couple weeks, 3 billion

into eem equity funds. it was a painful head fake you've had so many of these in eem. interesting time, watch out for may but for now the trade in april is eem. >> how would you play emerging markets, mike, or would you? >> we actually got into this trade a little bit too early, i have to say, it was probably the most punishing area for us in baba, bidu and jd, which we were -- basically earned a couple weeks i'm with tim on this one i think we got in a little bit early but i think it's now an opportunity for others who haven't yet. >> carter, any thoughts on emerging markets >> they're sort of chronic underperformers, the relative performance of the s&p peaked in 2010 that's been underperforming since. my part, i like the kweb, that's the crane share csi china internet, etf, that's the place to be if you're going to do it. >> guys, thanks. for everything "options action," check out our website and newsletter, there is more "options action" after this. >> look at that, look at that.

>> newsletter, and everything. still to come, the current earnings season isn't over just yet. con agra, and constellation brands set to report results next week. we've got strategies for both. plus, calling all "options action" fans, reach into your pocket grab your phone. and tweet us your question @"options action. if it's nice we'll answer it on air when "options action" returns. "options action" is sponsored by thinkorswim by td a ameritrade

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welcome back to "options action," everybody, a few snack and drink names on deck to deliver earnings con agra bands, constellation, set to report or later next week mike has been laying out trades on those names kick it off with constellation. >> this is a name we own as you mentioned. they're reporting earnings quite soon this is an interesting situation. the company is trading at a slight discount to its own historical valuation, much more material discount to the group the bad news, the company has stumbled a little bit. we've actually seen earnings disappointment the last three reported quarters. another thing, this has kind of been fairly dead money, i think carter can probably speak to this you haven't seen a whole lot of progress other than the dividends you've seen over the course of the last six years that said, i am inclined to play

it to the upside we own the equity. if you want to play it with the options, i think a simple way to do that, at relatively low cost would be of buy a relatively tight call spread. may 235 and 245, you could spend less than a quarter of the $10 difference between those two strikes, spending $2.35 to make a bullish bet. risking -- in case this quarter turns out better than the last three did. >> carter, six years is a lot of coronas. >> for somebody. >> mike characterized it so well basically this is one of the great winners of all time. it's made no progress. like it was in 2017. what you see in the chart is that basically the covid plunge, but it's recovered to its former high but the former high means you're unchanged for six plus years. relative chart, this is a ratio chart, it shows the performance peaked again as far back as

2017 i don't like it. we can do better, find something more interesting. >> tim >> the constellation acquisition of -- the greatest purchases of all time investor from anheuser-busch getting bigger that was years ago right now, mike said it's underperformed staples have underperformed. i love this company. i was long in the 240s i did sell it at a decent time waiting for my chance to get back in. i probably missed that chance, 19 times very attractive. the beer segment continues to grow quietly, slowly, but this is secular growth that i think is best in class. >> move on to con agra, delivering results on wednesday, mike, how are you trading that one? >> yeah, so this isn't really a group that's in favor that much. this is also a name that's trading cheap to itself, cheap to its peers, and very cheap to the market i mean, we are talking about something that's probably about ten times more at this point one of the challenges the company saw is they saw market

compression in the pandemic. gross margins just under 30%, pre-pandemic falling to about 24%. but it does appear that those are starting to normalize. another thing that creates some support for the stock is the fact that right now it's paying quite a high dividend, yielding over 3.5% right now. one of the things that's interesting about names like this is that the options premiums tend to be quite low. i think one of the things you could look to do is simply to buy an out of the money call june 39, those only cost a little over 60 cents but what's also interesting is that that valuation, and that dividend lends some measure of support to the stock so if you didn't want to just lay out that premium, and saw some measure of support at that $36 strike price you could sell the downside put, collect 80 cents. net, you're going to yield 17 cents to maturity over the course of the next cou couple of months 35 spot 83. >> carter, what do you think of that trade

>> first thing, this is very low stock, a beta of about .5. comparative chart from the absolute low of the financial crisis basically, the s&p is double the performance of con agra. it's an opportunity or it's a problem. the absolute chart is decent you play for a breakout and you'll see that here next. we've been basically working, probing, trying to get through those highs, and i think we will so in ways similar to constellation, whereas i don't think constellation is going to do it, i think this one will. >> tim >> free cash flow story, these are companies very defensive whenever the market decides to pull back, tend to underperform during moments like we've had first quarter. you know, it's a great story i'm not sure i need to chase it here. >> mike, you laid out a trade last week on lulu lemon, the shares surged after a strong beat on the top and bottom line. the trade is firmly in the green. what are you doing now, mike >> we actually targeted exactly the level that the stock shot up to 360 was the top end of the call spread we were in follow us on twitter, we updated

this trade yesterday actually, taking some profits because it actually has run essentially right up to our target there. >> tim, thought? >> that's a tease if i ever heard one. we've got to follow mike. >> follow mike on twitter. >> lulu is one of these companies again coming out of the quarter it's not a surprise with sentiment being so much growth, high multiple, could it do it? and, in fact, going into that print they really outperformed i am not chasing it here i do think that you're going to see the market pay attention to higher multiple stocks when we get into this earnings season and lulu and discretionary, they're going to push back on that chart, carter can speak to just what do you do with a chart that gaps that high? does it need to back fill? do something. >> carter? >> that's exactly right. this is the equal and opposite action of the prior quarter. prior quarter was a big mess, wall street darling and high multiple, dropped 12, 13%, it beat and went up 14% leaving it basically -- from where it was last time trouble came you'll know if it hasn't moved,

it's been pinned here, big profits. up next, small cap concerns, why our next guest trader sees some trouble brewing in the group, "options action" is back in two "options action" is sponsored by thinkorswim by td ameritrade 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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welcome back to "options action," small caps having a rough couple of months, underperforming the broader market, and on pace for second month in a row our next guest has a way to play the group. kelly intelligence ceo kevin kelly joins us now to lay out a trade. kevin, what's your trade >> hi, tyler well, yeah, if you look at the rus rus 2000, this year, the index is up 2.3, 2% this year, and today up 1.85% investors need to ask themselves why is it underperforming technology and the reason why is it's got a weaker composition, if you look at the russell 2000 index, it's comprised 15% financials and 15% health care. these aren't necessarily the health care and financial companies you want to be in. they're in the smaller cap names.

the issue that you have here is that your exposure is not great. when you take a step back and you look at the russell 20u00, its pe is 31, if you look at the nasdaq 100, that pe is 29 and it's considerably more quality names that could fair weather in different economic scenarios another thing to look at when you're looking at the russell 2000, it's got weaker technicals if you look at the weekly chart and technicals in the iwm, the russell 2000 etf, it's very weak, and so the vix alone in the russell 2000 is 31 so it's considerably higher than the overall market and so i think the best way to play this is going out into june what you want to do is you want to purchase a june 16, 2023,

177, 175 put spread, a $12 spread it's going to cost you about $3.40. you can make 2 1/2 times your money, it protects you through earnings season, and through this great april that everyone talks about historically and given the performance of the year so it protects you through that into may and june, which could be choppier times ahead for the russell 2000. >> interesting strategy there. kevin, mike, your take on this trade, a put spread on the russell? >> well, i own put spreads on fpx. i must have at least some alignment. there is i think a myth that goes on. people that you're rewarded for getting into small caps over large caps take a look at the performance of iwm, versus something like spy, for example, over the course of the last five years. it's lagging like 40% on a total return basis you aren't rewarded for the risk you're taking on iwm put spreads are a way to mitigate the cost of buying downside if you're inclined to bet that way. >> carter? >> you heard it, i mean kevin

made the critical point, just how poorly it acts relative to the overall market we're almost back to the covid lows on a relative basis here's the thing, and also there's no way around this, the total market cap of the 1920 stocks or there about in the russell 2000 is 2.77 trillion. apple is 2.6 the whole thing, does it matter? does it matter for the market? matters if you own them. again, the entire russell 2000 adds up to apple. >> tim, final thought on this one? >> last couple years, it's underperformed, the ultimate barometer for growth my hedge to a long eem position, they correlate highly, in a world where if you want growth eems will perform. >> final quick thought to you, kevin? >> the final thought is, this is the short duration protects you into the summertime where you see most of the volatility in the iwm, anyways. >> all right, kevin, thanks very much for your time tonight, we appreciate it. and up next, your tweets, and a final call we'll be right back.

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welcome back to "options action." time to take some of your tweets, our first man asks what do you think of united health 480 call options expiring april 21, do you think there's a probability of it hitting $500 earnings due april 14th. carter, what do you think? >> i like that bet unh closed out today at 472, spot 59. april 480s went out $8.75. so 2% move plus and you're in the money. good bet. >> all right, next tweet asks how do you feel about gilead calls for june 16th at the 82.50 strikes? putting this week by a significant margin tim, what say you? >> well, gilead, first of all, their last quarter was really solid. oncology and other businesses is

part of the story that makes this exciting. they announced that immunogen deal a couple months ago 85, 86, makes that call level out to june something that the question is, do you want to pay a premium to actually own the stock here i think the stock looks like it could correct a bit and we've got earnings coming up april 26th i'd probably be waiting on that. but i like the company. >> one more, what are your thoughts on haliburton, 33, may 29th calls, premise is they'll be announcing earnings in late april and upside, mike, quick thought. >> yeah, pull back to an attractive level you heard us at the top of the show saying we like oil. i like those. >> time for our final calls. carter, lead the way here, sir. >> you bet the expression goes, gold, you ain't seen nothing yet. >> tim, you're next. >> 2s and qs as they say, as long as the qqqs are outperforming this market will continue to creep higher watch the dollar that's your barometer.

>> mike, final call tonight. >> yeah, upside call options in the s&p are a cheap way if you're going to try to chase here. >> thank you guys very much for having me and thank you for watching "options action." it's been a heck of a first quarter. the next one starts on monday. we're off next friday. back april 14th. see you. "mad money." - [narrator] this is a paid advertisement for csn. (inspiring music) - you know, one of the great things about being here is knowing that, you know, we have, a lot of you join us every single week, and i thank each and every one of you, and for those of you that do join us every week, as you watch the show, you would assume that the number one best-selling thing that we have is, of course, american silver eagles. and that's to some degree, true. but, in all honesty, by sheer volume of coins,