somebody should have been morally sound enough to say, "this isn't right, and we need to make it stop." and there wasn't. -- captions by vitac -- 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. next up the banks. we will chart the course ahead on them. plus, is now the time to send your money aboard the eem trade? it 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 ahead of constellation results and big bets against the small caps. in for melissa lee, i'm tyler mathisen this is "options action" live from the nasdaq market site. on the desk mike khouw, carter worth, tim seymour gentlemen, welcome good to be with you. we wrap up march trading with a look at the names seeing the most options action this quarter. among them tesla, nvidia, apple, microsoft and meta heavy interest in the number of etfs as well the qqqs, the russell 2,000 as well as corporate debt and gold. and markets finishing the quarter strong leading the surge 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 positive -- 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 svb collapse sent shock waves through the entire sector. account re etf notching its second worst on record the v volatility comes as we kik off the earnings season. mike, you're sfocused on those money centered banks >> banks have been knocked down. the regional most notably by and large are sort of outside of our coverage universe, and that's a good thing, too, as it turned out. but i think 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 they face some challenges but if you think about potential balance sheet impairment, cre, i think, is the thing most people are looking

at, commercial real estate lending. that is the area that's covered by the regionals the money centers don't have that much exposure to that the other thing the money center banks have a very nice benefit in the sense they don't have to pay for their deposits the way smaller banks do right now we're looking at one of the few places you can pick them up, in many cases, where they were prepandemic or even cheaper. we do own most of the money centers, we have jpmorgan, wells fargo and citi will be announcing earnings. if you're going to be in financials, this is one of the places you could consider. before now i think it was insurance. >> carter, you have some nice charts to show us. what do you think of the money center banks or others >> sure. it's risky it's not good technique. not to say my technique is to buy weakness the index really shows three

lines that are compared. the european banks on the top then world banks and then coming on the bottom the bkx. the two-year chart is the same story just spread out over a longer term. so i would do it this way. it's weakness in european banks i would take advantage of but weakness in u.s. banks i would stay away from >> tim >> banks are not going to rerate until they get through earnings and some sense we're pricing in credit dynamics and banks have to prove it coming out of here european banks, ubs is a great total return play and got stronger out of this crisis. >> very interesting. let's turn to commodities, crude trying for a comeback after a drop in march, but oil still down 6% for the year the broader commodity space faring about the same. carter, you say things might turn around from here. why? >> we have a one-year anniversary of the ukraine invasion where commodities in

general led by nat gas surged to epic levels. we are at the point just as i was too far too fast this would be the reciprocal so bad it's good you see the ishares commodity etf and the arrows, the next iteration, a 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? >> as goes the dollar, as goes commodity, the dollar peaked in october. the dollar will be your friend it is not your friend in the first quarter after rallying back, but it's given back a lot. the price of oil for every 1% move lower -- higher in the dollar it tends to be a 3% to 4% move lower i would point to china, too. pmi out of china, the manufacturing wasn't gangbusters. china is a second half story and i think in terms of the

industrial production dynamics and the demand on commodities, china will be a very important player here. the dollar in china will drive it i'm long it rallies back to those old highs. >> mike, how would you play commodities here >> i like ftx, own ftx, too. with respect to crude, the dollar dynamics there were others on the options side that we're playing in crude essentially one of the things interesting about options in the crude market you have two big players, the financial players and then the industry players. and what ends up happening is you can get some complexity on the financial player side and that can exacerbate moves and that's some of what we were seeing dollar strength hurting crude, we had a lot on the dollar side causing financial players to sell crude futures to hedge their downside exposure. i think that has been alleviated and i would be a buyer

>> let's wrap up the first quarter trading with a look at emerging markets, the global group underperforming the s&p 500 so far this year up 4% compared with the s&p 7% gain. the real diversion is apparent, the eem down a whopping 26% while the s&p 500 stays positive tim, what do you think >> as a guy that ran eem for years, it's in a neighborhood now it makes a lot of sense. for the dollar for sure. you've had a couple other things that change the direction. that eem, the biggest weightings a alibaba and china mega cap techs -- >> will it help? >> seemingly it's an investor friendly -- it's about putting more value in. fund flows back into eem you've had about $3 billion into equity

funds and i think a painful head fake you've had so many of these, this is an interesting time. watch out for may. 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 after probably the most punishing area for us in baba, baidu and jd i'm with tim on this one i think we got in a little bit early, but i think it is now an opportunity for others who haven't yet. >> carter, any thoughts? >> relative to the s&p in 2010, underperforming since. for my part i like the crane shares etf i think that's the place to be if you're going to do it >> all right, guys, thanks for frgs "options action," there is more "options action" after this >> look at that. >> newsletter and everything

>> announcer: still to come, the current earnings season isn't over just yet. conagra 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 @optionactions. if it's nice we'll answer it on air when "options action" returns.

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welcome back to "options action." a few snack and drink names on deck to deliver earnings conagra set to deliver next week and mike has been laying out trades on those names. mike, let's kick it off with constellation. how do i make money here >> constellation, this is a name we own, as you mentioned they will be reporting earnings quite soon now this is an interesting situation. the company is trading at a slight discount to its own historical valuation and a much more material discount to the group. the bad news here is i think the company has stumbled a little bit. we've seen earnings disappointment the last three reported quarters. this has been fairly dead money. carter can probably speak to this you haven't seen a whole lot of progress other than the dividends over the course of the last six years that said, i think i am inclined after the recent declines to

play it to the upside. we own the equity. if you want to play it with the option, a simple way to do that at relatively low cost would be to buy a relatively tight call spread i was looking at the may 2.35 and 2.45 risking about 1% of the current stock price to make a bullish bet in case this quarter turns out better than the last three did. >> carter, your take on this one? six years is a lot of coronas. >> for somebody. >> i think mike characterize it had so well this is one of the great winners of all time and it's made no progress. so what you see there on the chart is basically the covid plunge, but it's recovered to its former high. its former high means you're unchanged for six plus years a relative chart, the ratio chart for the second one says the performance peaked as far

back as 2017 i don't like it. we can do better, find something more interesting >> tim >> the constellation acquisition of modell was one of the greatest of all time, 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 it in the 240s. been 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 best in class. conconagra, mike, how are y trading that one >> this isn't a group that's in favor that much. it's trading cheap to itself, cheap to its pierceers and chea the market one of the challenges of company saw, they saw significant

compression in the pandemic. gross margins prepandemic falling to about 24% it does appear those are starting to normalize and another thing that creates some support for the stock is the fact right now it's paying quite a high dividend yielding over 3.5% right now one of the things interesting about names like this the options premiums tend to be quite low. one of the things you could look to do is buy an out of the money call looking at the june, they only cost 60 krenlts. that valuation and dividend lends some measure or support so if you didn't want to lay out the premium and saw some measure of support at the strike price, you could collect 80 cents net-net you will yield about 17 cents maturity the next couple of months. worst case the stock falls and you own it right around the recent lows around 35.85 >> carter, what do you think of

that trade >> this is a low end stock, look at this comparative chart from the absolute low of the financial crisis the s&p doubled the performance of conagra an opportunity here or a problem. i think you play for a breakout and you'll see that here next. we've been basically working, probing, trying to get through the highs and i think we will. so in ways similar to constellation where i don't think constellation will do it, this one will. >> tim >> these are companies that will be defensive whenever the market decides to pull back, they underperform in the first quarter. it's a great story i'm not sure i need to chase it here >> mike, you laid out a trade on lululemon. the trade is firmly in the green. what are you doing now, mike >> we actually targeted exactly the level the stock shot up to 3.60 follow us on twitter

we update this had trade actually taking some progress because it has run right up to our target there >> tim, thought here >> that's a tease if i ever heard one. we have to follow mike on twitter. lulu is a company that, again, coming out of the quarter it's not a surprise with sentiment being so much growth, high multiple, could it do it going into that print they outperformed i am not chasing it here i do think you're going to see the market pay attention to higher multiple stocks and lulu and discretionary i think the first place they will push back on that chart, carter can speak to what do you do with a stock that gaps that high, needs to back fill, something. >> carter? >> that's exactly right. this is the equal action it beat and went up 14%. where it was the last time trouble came, i think it's full and it hasn't moved since the

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welcome back to "options action." small caps having a rough couple of months. the russell 2000 underperforming the broader market and on pace for its second negative month in a row. our next guest has a way to play the group if you think the small cap carnage will continue. kevin kelly joins us now to lay out a trade. what's your trade? >> hi, tyler yeah, if you look at the russell 2000 this year all of its gains have been roughly today. the index is up 2.23%this year and today up 1.85% investors need to ask themselves why is it underperforming technology and the reason why it has a weaker composition the russell 2000 index comprised 15% of financials and 15% into health care and these aren't necessarily the health care and financial companies you want to be in. they're in the smaller cap names and so the issue that you have

here is that your exposure not great. when you look at the russell 2000, its p/e is 31. and if you look at the nasdaq 100, that p/e is 29 and it's considerably more quality names that could fair weather in a lot of economic scenarios. it has weaker technicals so 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 and so it's considerably higher than the overall market. i think the best way to play this is going out into june, and what you want to do is you want to purchase a june 16, 2023, put

spread, a $12 spread it's going to cost you about $3.40. you can make two and a half times your money it protect you through earnings season and this great april everyone talks about historically and given the performance of the year. it protects you into may and june which could be choppier times ahead for the russell 2000 >> interesting strategy there. a put spread on the russell. >> i own put spreads on ftx so i must have some alignment there is a myth that goes on people think you're rewarded getting into small caps over large caps look at the performance of iwm over the last five years something like 40% on the total return basis you aren't really rewarded for the risk in iwm, and i think put spreads mitigate the cost of buying down side if you're inclined to bet that way >> carter? >> you heard it.

kevin made the critical point of how poorly it acts relative to the overall market we're almost back to the covid lows the total market cap of the 1,920 stocks in the russell 2000 is 2.77 trillion apple is 2.6 does it matter it matters if you own them >> tim, final thoughts >> iwm has spoken, it's underperformed by 22%. it is the ultimate barometer for growth this would be my hedge to a long eem position in a world where if you want growth eem will outperform. >> kevin, final quick thought from you >> the short duration protects you into the summertime where you see most of the volatility in the iwm anyway. >> kevin, thank you for your time tonight up next, your tweets and a final call

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welcome back to "options action." time to take some of your tweets our first fan asks what do you think of united health 4.80 call options? do you think there's a probability of it hitting $500 carter, what do you think? >> i like that bet unh closed out 472 ratings went out at $8.75. a 2% move plus and you're in the money. you have a good bet. >> our next tweet asks how do you feel about gilead calls for june 16 at the 82.50 strike. calls outpacing puts by a pretty significant margin tim, what say you? >> gilead, first of all, their last quarter was solid the diversification into oncology and other bases is part of the story that makes this

exciting the stock whipped straight up, rerated up to around 85, 86 which makes that call level out to june something 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. i would probably be waiting on that i like the company >> what are your thoughts on halliburton, 33 may 29 calls, earnings announced in late april and there could be upside. mike, quick thoughts >> pullback to an attractive level. you heard us say we like oil so i like those >> time for our final calls. carter, you get to lead the way, sir. >> you bet gold, you ain't seen nothing yet. >> all right tim, you're next >> as long as the qqqs are outperforming it will creep higher and watch that dollar >> mike, you get the final call tonight.

>> upside call options 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 14. - [announcer] the following is a paid presentation sponsored by rex md. - guys, we're going to talk about your performance in the bedroom, because it is important. you deserve to be the best you can be, and your partner deserves it too. so what do you do when you need help? well, first know that it's actually very common. in fact, performance issues happen to about 50% of the men over the age of 40, not just old guys either. but here's the great news. there are pharmaceutical solutions that can help. these are medically proven, fda-approved solutions, the kind your doctor or pharmacist prescribes and recommends.