owner of the bucks >> i'm always looking for an excuse to talk about bonds >> 100%. all of the infrastructure activity, you know, he does have this passenger railroad down in florida, which is expanding, and plans todo something similar o the west coast, as well. >> all right >> that does it for us here at "overtime. >> "fast money" starts now right now on "fast," tesla sharing dropping the ev maker posting than expected revenues, but margins coming in well below what the street was looking for instant analysis ahead. plus, snapping into ai the social network saying its artificial intelligence chat bot is attracting millions of users and now plans to expand the offering from its my ai. so, will this be a sticky revenue driver or just another flash in the pan for snap? and what's behind the headache in health care stocks the options action and the profit warning rippling through the commuter hardware sector i'm melissa lee, this is "fast

money," we're live at the nasdaq market site. welcome back we begin with an earnings alert on tesla eps in line, revenues beat estimates, but after cutting prices six times already, margins for the ev maker coming in well below expectations cnbc's phil lebeau is here to take us inside the numbers phil >> and melissa, remember, the latest round of price cuts initiated just this week, so, what we're looking at are q-1 results here this is just the impact of the price cuts that we're seeing in the first quarter. as you mentioned, eps coming in line with expectations, a profit of 85 cents a share. revenue slightly better than expected at 23.33 b$23.33 billin but the store y is all about the margins. street was looking for margins basically 20% or above this is the margin pressure they're feeling because of the price cuts compare year of year, that's a 900 basis point drop in total

gross margins. a little better, but still, a rough drop for the adjusted ebita margins, down to 138.3% this is from the beginning of the year for the model 3 and model y. the model 3 down to under $40,000. that's the base model price. and you've got the model y, which was at 65,000 for the entry level model back in january, now down to $46,990 as a result, when you take a look at these results from tesla, the big question for investors is going to be, where do the margins settle out? are they going to settle out at 18%? 19%? do they have any kind of idea when we listen to the conference call, in terms of what they're expecting from the next quarter or two when it comes to pricing pressure remember, they are expecting to deliver 1.8 million vehicles that's their guidance. they said during this report and we'll get more on the conference

call, they expect to hit their estimate of delivering 1.8 million vehicles so, that's not changing, but the pricing pressure and the margins, that's the story right now. >> i guess, phil, the question here is, is the pain worth it in order to gain the market share you know, in an environment where the others are feeling pain, as well, why not just put the screws on their competitors? >> well, and i think that's what they're doing. look, they're much -- it's much easier for them to put the screws on their competitors here in north america, where they don't have as much competition, especially at the lower end, than in china. china is a much different story. it's much more aggressive in terms of pricing on the lower end. and remember, that's the part of the ev market that's going to be growing over the next decade it's not above $50,000, it's a lower end of the market. that's really where you're going to see the competition >> yeah, especially when you have byd allowancing an $11,000 electric vehicle phil, thank you. keep us posted down. tesla down 3.6% on the back of

earnings tim, what do you make of this news >> i'm never going to die on the tesla defense hill, but no one should be surprised that the margins are going down no one should be surprised this is their strategy. they believe, when it's all said and done, they're going to have the best operating margins in the industry i echo piper and afjaffrey, whe wait times go down, they cut prices, because they know they can, and they think they can outlast everybody else this is offsetting ev corrects th screde going to lose down i don't need to chase the stock here of all the megacap tech stocks, it's the one that is selling its down trend it's not broken back above it. i doubt see that it will but today -- the margin number today, no one should be surprised by that, and tesla should be arguing, this is exactly what we want to happen >> yeah. karen? >> so, i think, i meanen, the stock acts pretty well given actually i'm sort of surprised it's not

down more. i wonder about this continually cutting prices at some point, do you train the customer to wait right? if you are a customer who bought a y not that long ago -- >> right >> you're not going to be happy. >> five cuts ago >> exactly you're not going to be happy about this i'm sure a lot of thought goes into the price cuts, no doubt, but it's kind of a -- should be a worrying trend, as we see margins go down, obviously >> yeah, i would argue, you know, along with tim, you shouldn't be surprised you are seeing margins thinner, but there was debate on whether or not they were going to be able to maintain that 20% margin level and they're coming in below that keeping in mind these peaked out around 29% last year, right? so almost a 10% decline in terms of margin. and when you couple in the cap x spin they're wrapping up, the further and further that you push this off and it becomes more of a volume story than a profitability story, the creativeness of that cap x spin gets pushed out. and that to me is why you're

seeing pressure on this stock immediately, when a lot of retail investors have the tendency to wbuy onn iweakness >> all of this to say, what is the right multiple is it in the mid 40s >> for an auto company in the next technology of automobiles, right? the technology, the others are trying to catch up on, it's got the edge i'm just playing devil's advocate here. nobody's dying on the tesla here certainly not dan. >> before dan jumps in, because -- >> on the edge of battery technology, i mean, maybe for these reasons, it deserves that multiple, because catching up on that technology aspect is going to be so difficult for the legacy automakers. >> i'm not dying on this hill, but you know, they're talking about, you know, growing 50% in terms of deliveries. the more they grow, and they said this, they said, q-1 profitability was positively impacted by growth and vehicle

deliveries they're going to argue economie of scale and we're going to crush people and again, you know -- are they doing it so far, they're kind of doing it it's -- that's the argument against it all right, dan >> all right, dan. what do you think? >> if this was anything other than a cult, this stock would be down 20% i'm just going to tell you that right now. this is an investing cult, and so, when you look at -- if you guys are saying that people were not surprised by the margin degradation, why was the street consensus at 20% >> they cult thit this week. i think a lot of the street -- >> any other consumer product, if you had an estimate at $3.2 billion in free cash flow and you printed 441 and you had $500 million in regulatory corrects in a quarter i mean, are you kidding me this is a joke so, any other growth story, when you have this sort of, like, just turnaround in the fundamentals of the company and

you can argue away whatever you want, they've cut their price -- how many times in the last ten years -- >> six >> have guys seenal company cut their prices in a market-leading prices six times in ten years, let alone six months okay so, listen have at it, people go buy it, i'm sure it will be up on the opening tomorrow this stock is very likely to go back and retest those lows where it was >> but they are growing. and again, it feels so awful to be going on the opposite, but this is what we do on this show. they are growing they're growing dramatically they're growing in terms of their profitability, they are growing in terms of deliveries so, if you think it's a growth story, if they're going to grow at 50% for the year -- >> you should buy it right here. >> you know i'm not saying that, though i mean, come on. i'm not going to go buy the stock. >> you can see why people might. >> they will >> you can't see why people might. >> well, i don't know why this is such a special story. i think that article in "the wall street journal" talking about the shanghai auto event,

there are dozens of local manufacturers of evs there, they didn't show up, because they got nothing new to show. and they have tons of competition, so, i think china is really -- we've been saying this on the desk, china is a huge problem for them. so much of their growth is expected to come from there at a time when we've been talking about competition in detroit, that's not even the story. the germans, that's not even the story. it really is about china and future growth. i you this it's interesting, last week, before they decided not to go to this event, i don't know when they decided not to, but they announced another gigafactory in shanghai, but they're going to start paying much higher taxes and have much less favorable treatment in china than they have over the last two years in the next two, so, i mean, listen if your antennas are not up about this story, i think you're doing this wrong >> i think the chart is also really important, again, we've seen this inflection where at least somewhere in march, before we started to see triple qs, we saw the biggest names outperform

the s&p, and actually break out of a down trend that was very defined either from november or '21 or january of '22. tesla has not done that. it's had a few moments where -- but it goes smacked down at 200, 260. and it tells me it's going to continue to get smacked down no, i don't want to chase it and i -- it's just interesting to me for a company that nobody cared about fundamentals for a long time. and i argued that side of it, too. i found the company to be -- i don't trust anything they say. i think corporate governance dynamics really make it trust tr frustrating to follow this stuck. >> no one cared about valuation. they cared about the fund fundmentals. and you were right let's be fair, okay, they are not in the situation where many of their competitors where, are they're burning billions of dollars -- >> $22 billion of cash and cash equivalence on their balance sheet. >> but my point is, all of this happening would a recession,

okay so, think about what happens to this company that has a very high price point they told you, we know they have a high price point they keep cutting prices on their cars to be more competitive with some of the other providers. the last point, the conference call is going to start at 5:30 and you just said it you don't trust anything that they say they are going to be overly optimistic about their ability to then have some pricing power once they recapture share, once they get some of these factories going, that's going to be the story, and that's probably why you'll see in 40 minutes, we're going to be talking about how the stock -- >> mention new products.ve a coa couple of sweeteners >> we're talking about the past and you talk about tesla coming down from whatever it was, 400, 300, 260 we're in an environment where it was growth and it was growth at any coast and we have drastically shifted. to your point, i think now, like you said, it is all about scale. they are admitting that we can no longer continue this narrative of growth at any cost and expect to protect margins or

to protect valuation so, they are going all-in on cap x spin they are going all-in on being able to scale. and to me, that really is the transition story now i don't know what else you would expect them to do when we're seeing margin compression across the board. they have no alternative but to go and compete at the lower end of the market and try to blow competitors out of the water, because that really is the only story that leads to continued growth and investors willing to pay for it >> ford was down 4% today. not like the auto sector is on fire if we call this a car company, i'd call it a car company, it's not been a great time for ford or gm or, you know, look across the pond >> yeah. for more, let's bring in our "fast money" friend gene munster, managing partner at deepwater asset management we've been having a robust debate here on the desk about tesla. where do you think we are in the tesla story right here, right now? >> so, right here, right now, we are challenged the company's margins are going down a little bit more than what investors had hoped.

that critical metric was ev, gross margins x ev tax credits. we'll have to wait for the call, but that's an important distinction of how people are going to view this quarter could be a 20% number, investors will feel good, if it's 19%, they don't feel good so, to answer your question, near term, they're feeling the pressure here. and it is impacting their business and i want to jump back to an important point that dan made about the cult piece of this story. and i think that is the reason why cult followings happen on a growth company, is because a group of investors believe in where a company is going so, it's beyond the current quarter, to your point, melissa. and i think that's really the hinge factor and going to be the x factor here in terms of how this plays out if, in fact, they can proceed on their growth, we can talk about what that growth strategy is, i think that the stock moves

higher and i think that's ultimately -- it's going to drive, i think, some of the tesla bears mad here over the next couple years, because there will always be this carrot out here, because they are getting into some massive markets, always this carrot out there that tesla's going to be able to turn the corner and hit new growth vectors. >> so gene, again, $570 billion market cap company that's down from 1$1.2 trillion at the end o 2021 here, and again, you just heard us talking about this. there is clearly a change in the fundamentals in what's going on with the company >> absolutely. >> even when the stock was careening lower in 2022, they weren't cutting prices there and they sounded confident about their ability to manage supply chains coming out of this uncertain period they're still calling it an uncertain period we haven't even had the recession that we're all expeexpect i ing, so, i guess my question to you, you've covered high growth, high valuation, you know, tech companies in the past here what's different about this one, because as long as i've been in

the business, every single time there's been a special story like this, with a special guy like elon, it's always come undone and i'm just not certain down 55% really means that that's it, that it's come undone and that's it, we can get back to, just, not caring about valuation and let it start working again. >> well, i'm not certain how this ultimately plays out, but one of the reasons why i think what's most important here is just the trajectory of margins and growth and you are absolutely right, the fundamentals have not looked good this has been a downward trajectory, but to answer your question, what could reverse this ultimately, i still believe, and this is going to be a point that's going to be hard to shake me from, i want to be level-headed in all of this, but i think traditional auto is in a tough spot ford, their e-division is losing $35,000 on a car, they are just rumping up tesla is making $10,000 per vehicle. so, to answer your question is, if they can continue to do what they're doing, being profitable

and going after what i see is some large addressable markets around energy and transportation, storage, i think that the story can turn around and so, the elon factor, agree he's a wild card but i think the markets that they're going after are so big that this company can continue to move higher >> gene, going back to something that you said earlier, basically in the next hour or so when we get clarity on this margin, if that margin moves to 20% because of advanced credit, then -- then we can say that it actually met expectations, could be completely different story for the stock? >> yeah, it's -- i mean, we are splitting hairs around that, another factor on the call is related to elon's comments about the call their guidance was 1.8 million vehicles and on the quarter, he said, i think it's going to be closer to 2 million. they had 1.8 on the just reported numbers is he going to reiterate his 2 million number that, along with the margin,

that margin detail about advance credits, that's going to make or break the stock tomorrow but longer term, can they successfully scale into the large markets? >> okay, gene, thank you gene munster, deepwater. dan mentioned cult stocks that always come undone do they always >> yeah. >> how about apple >> listen, mel >> wasn't apple -- >> 20 years ago, every -- >> i remember getting hate mail constantly when you said anything bad about apple >> and it's gotten caught in half numerous times over the last ten years but it's kind of a different business here's a company that's been able to maintain 40% gross margins for that entire time, okay and they have 90% of the gross margin in the smartphone business >> production of, like, no vehicles, right? they were -- that's the argument i also think that the -- getting credit for being a more efficient, higher production producer is part of what goes on at any company but you know, look, netflix was a cult stock that got knocked off. i think amazon is a cult stock

>> and then recovered, obviously. >> but i mean, the -- i'll buy the stock at any multiple no longer works on amazon and it doesn't work on netflix, so, at some point, valuation doesn't matter and what i find interesting is even the biggest, most ardent bulls are referring this to an auto company it's not about batteries, it's an auto company. and i think it's too expensive >> listen, it took 14 years for the nasdaq to get back to its high it took -- look at a microsoft chart for the entire 2000s it went sideways in the tightest range possible google, there were times the stock went sideways. so, to me, just because this thing shot up 10,000% and then lost 75% and now it's up, you know, 70% or something like that, it's still down 55% from its highs and the fundamentals are as bad as they've been in the last, i want to say, easily in the last five years, other

than the period of the pandemic where every company had very little visibility and their business models were, you know, up in the air. after the break, we have afterhours action coming your way. shares of ibm and las vegas sands jumping. and a major snap score the company pulling nm subscribers for its ai service more on that when "fast money" return us. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪ asking the right question ♪ can greatly impact your future. - are, are you qualified to do this? - what?

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well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. welcome back to "fast money. las vegas sands jumping after hours after earnings citing a big recovery let's get to contessa brewer with all the details >> the call just wrapped up while we were in commercial break. the ceo must get so much joy saying this, a powerful recovery in ma coe, business is back, his quote. macao is in its infancy of a return environment he said if this is golf, this is the driving range and you haven't gotten to the tee yet. hotels haven't been able to open to capacity, but by summer, lvs

says the labor challenges will smooth out, likely won't be a challenge, they predict, for anyone in the market and goldstein says he was surprised by the amount of business that macao is getting from high end customers without taking away from what singapore is doing and to singapore, which has had a year's head start on reopening. adjusted property ebita at 93% over the same period of 2019 it set property records in some categories for gaming and profit margins here of 47%. they seem very optimistic that there's a lot of room to run here, melissa. >> wow, contessa, thank you. contessa brewer. tom, lvs >> karen and i were talking, how much of the revenues come from macao, it's 91%. you think about where we come from, the renewals of the licenses has been such a big

driver on top of what has been going on why you don't expect ma cao to open up, i realize their reopening from covid was the most clumsy event that played out many times, but if you look at the chart on this, where it was running up against 60s the, i think this is your breakout. the valuation is not crazy cheap anymore. at its low, it lost two-thirds and you've taken a lot of that back but to me, this is a really important time, and china gdp the other night, better than what we expected and brokers are talking about where macao jgr will be where it was pre-pandemic, you stay in the stock. >> all right another earnings alert ibm shares higher after posting a beat revenues came in below expectations frank holland is listening in on the call frank? >> melissa, artificial intelligence and ibm's experience using it in

enterprise and business, that was the focus of the ceo's remarks. he just wrapped up and he wasn't shy about dropping the names of headline customers like the boston red sox and the cleveland clinic that was really the story of this quarter consulting was in line i'm expecting some commentary about the global demand for consulting this after some layoffs. so, during this so-called year of efficiency in tech, ibm raised free cash flow guidance, that's a sign of real confidence, especially with the $300 million charge they took for job cuts announced last quarter. the guidance is 3% to 5% growth constant currency. that is not comparable, but you can see what they are expecting, 3.6% growth for the whole time melissa? >> all right, frank, thank you what do you think of ibm >> revenue light, margins were better than expected but margins in the first quarter

are seasonally low so, for me, it's a relatively low bar here if you look at the performance of the stock in five years, it's been a great range trade and i'm likely inclined to do something similar here the last thing i'll say, in terms of revenue growth and free cash flow growth over that same time period, it's been a struggle why i can see the argument for parking cash and a low beta, relatively safe type of name, it's hard for me to get excited here i don't see the growth necessary. >> five and as quarter percent -- >> the dividend yield is five and a quarter percent. >> right >> but if this is a tech company, just looking at some of the comments, they're saying, we're going to be enhancing shareholder value by increasing dividends -- you are absolutely right. that's been a reason to own this stock. is that the reason to own the stock? it's a tech company, i don't know. there's a lot more "fast money" to come here's what's coming up next

snap to it millions of users flocking to the app's new ai-powered service. and this one comes with a price tag. what it says about the future of artificial intelligence, next. plus, front and center in this latest round of bank earnings what the ceos are saying about the strength of the consumer just how strong do they see spending we'll get some answers you're watching "fast money," live from the nasdaq market site in times square. we're back right after this. (♪ ♪) how do we demonstrate our unmovable strength? (eagle call) nope. how do we show that we'll stand tall through the storms? nah. (thunder) how do we make our clients feel secure and- ugh... not lions. (lion rumbles) we do it with our people. people who've been looking after people for over 170 years.

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provides early access to certain features like the my ai chat bot, which debuted in february snap announcing at this partner summit today that my ai will soon be rolled out to all users at no cost snap chairs were down slightly today, but up more than 20% this year earlier in the day, it was higher on this news. but this is $3.99 per month that's coming in for free. >> if you think about this, what they are expected to do, $4.7 billion in sales this year, we know how much twitter sales have been down, it was down 40% in december alone, and i think the last numbers that we saw, some internal documents leaked, numbers leaked about twitter blue that they had maybe 180,000, up to maybe 290,000 people paying, so, the fact that snap and the demographic that they serve already have 3 million paying subscribers for this, that's nothing to shake a stick about. and i think that if you are talking about advertisers, i think they feel a lot more comfortable right now, and this is not just my opinion, this is,

you know, what is very prevalent in the ad press right now, that people are not comfortable with twitter. so, it looks pretty good on a relative basis >> you would think, why make it free if you have so many people willing to pay $3.99 a month >> right i guess if everybody else is going to have something similar soon, it's all going to be free, right. but that's good. sentiment, i think, has changed a lot, as dan is saying, about this space i guess we'll see next week, start to hear from meta and facebook -- google >> sorry >> go ahead. >> they were bullish on their investor day, two months ago, on ar and what they're doing in seeing in terms of the engagement, what dan is talking about. the ad revenue headwinds from macro are not really abating and the competitive landscape getting worse. so, that's the crux here i think there are places where they can be picking up against twitter and other folks, and i'm

actually long the stock, so, i've been long for, i don't know, three, four months >> you think ad is not getting better >> that's what i'm hearing the ad revenue macro is at least for them and again, they're slightly different in terms of where they sit, on the funnel, than facebook and other people, so -- look, i have said, i think the media companies were the first to be sold off with the recessionary whiff and that's why some of them are trading better here. i hope the same is for snap, but -- >> we were talking about rebound stocks and i see a similar situation here with snap i will also add, we just finished slamming a few stocks in the tech space for being -- for trading at 45, 50, price to earnings multiples and i think that fits squarely right in there. i don't see the catalyst that's going to break this to the upside you have everyone from google to meta, snap offering ai chat bot, i don't understand what the difference factor is here.

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welcome back to "fast money. a check on how markets ended the day. the dow recovering some late-day losses to recover 80 points higher shares of enterprise tech company cdw dropping 13% after a warn that i.t. spending is falling sharply in the u.s cisco dropping 5%, as well sl green getting a nice boost, while shares of discover financial, alcoa and zions were all down and the tesla conference call just kicking off, and guess what elon musk is, in fact, on the call we'll bring back gene munster. he's said that the current macro environment remains uncertain. more to come meantime, the kre regional bank etf ripping higher today, but only at its highest close since the end of last month. western alliance, first

republic, also getting a boost for more on these moves, let's bring in gerard cassidy. ger gerard, thank you for being with us >> thank you >> hasn't been so bad, gerard. can we say that we're all clear, we're in the clear now >> melissa, you are absolutely right. the numbers coming in for the first quarter have been pretty good better than expectations, in some cases but more importantly, and you said it about the deposits, we saw that last week with the h-8 data, that deposit inflows to the small banks have started, and i think that's a real all-clear, is the worst is behind us on the deposit flight. >> unless the banks have to raise capital. and there was an analyst that we had on cnbc earlier today who said in the next six months, banks should raise capital, even if they don't need to have the capital, to prove that they can. do you fall in that camp, too? is there something to that if that is the case, there could be some delusion to

shareholders >> right you're. there would be some delusion, but i'm not in that camp the banking industry is overcapitalized. when you have capital levels that are well above the regulatory environments and there's no need to raise capital. now, some people are assuming they're going to take the health and maturity unrealized security costs, which may -- people say they should raise capital, we're not in that camp and we don't expect any banks to have to be forced to raise capital. not amongst the big banks, let's put it that way. >> gerard, it's karen. thank you for being on we have one big question mark left, maybe more than one, but first republic, so, we'll find out monday what do you expect to happen there? are they the most likely for being capital raise? >> karen, they are the trouble child in the banking space right now. we all know that they've been very clear with the announcements they've had they really felt this deposit flight and some of the numbers are going to be very important for all of us to look at

it will be interesting to see what they put up i don't think they're in immediate need for capital, because they currently, obviously, are very profitable generally people run into capital problems when there's credit problems, and that's not the case here. and the real question is, are they forced to sell securities portfolios that are under water? we don't think so, but high cost of funding is going to be a real challenge for them that's what everybody is going to focus on when those numbers are released >> gerard, thank you for being on us with would you mind speaking to credit quality that you're seeing at the regional banks versus the larger money center banks? do you think that will continue to hold up or are they starting to see kind of cmarks in the armor? >> well, you really asked the big question for the rest of the year, which is all about credit. and right now, it's so interesting, and credit is really strong for the banks. now, you might remember, they have a new accounting rule called cecil, current expected credit losses. they have to build up reserves

in anticipation of losses down the road and banks are doing that but there's really no evidence of credit deterioration. now, there is some in the subprime lending areas, credit starting to detierdeteriorate, jimmy reported in his credit card portfolio, the losses are still below normal and will normalize. we don't see it happening in the next quarter or two. >> gerard, great to speak with you. thank you for your time. >> you're welcome, melissa thank you. >> gerard cassidy. what did you make of bank of america, karen >> well, i thought it was -- it was good, and it was good on the heels of already expectations being up a little, post-jpmorgan, some others i thought that maturity would be worse than it was. and i also thought, moynihan sounded to me pretty confidence about the consumer, though hi said, you know, our believe is mild recession, but he said consumers, i believe, consumers

checking accounts have more money now than going into the pandemic now, is that a -- is that indicative of the consumer is in great shape or the consumer is scared and doesn't want to spend? that i don't know, but i thought -- i thought it was good i'm surprised, actually, that the stock wasn't up more it was up that day with jpmorgan, but i think it should have been up more more >> so, to the stocks, if you look at the kre, without the performance of new york community bank corp, which obviously got that big boost, you are actually down. it's the largest position in the kre, up 50% from that point. you can kind of do the math on that at 4% so, that's meant, you know, a 2% move or so just out by itself. and where as the money center banks versus the regionals look kind of interesting here and we've had supportive and peripheral, when you are getting better numbers out of travelers and the insurance companies, this is the whole segment that got thrown out the one doe and they are very different businesses

i'm just saying, i look at jpmorgan, pushing up around that 140, 141, you look at the most recent peak of this cycle range around 145, you get there and i think you have a chance to actually take it higher. i don't think these things get away from you, but some of the money centers still look good. >> elon musk is on the tesla call he said that tesla is pushing for higher volumes in a larger fleet is the right choice here versus a lower volume and highe which number six so far this year they are saying they expect to have a cyber truck delivery event in the third quarter. coming up, a look into volatility our traders are fired up about the move how the options pits are playing that move straight ahead. plus, as we mentioned, tesla's conference call under way. more headlines as we have them for "fast money" in two.

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welcome back to "fast money. the cboe volatility index dropping to its lowest level since november 2021. one options trader is making a monster bet that not everyone is calm under the surface we have a closer look at what vics options are saying about

the market what is your take on what's going on >> what's funny, the last time i was on here, right before the vices spiked to 30 you guys seem to be good luck for the vices buyers we saw a buyer that paid $1.71 on 100,000 contracts, right? that's about $17 million in premium that this person laid out. and kind of what we saw was this more so outright position. this didn't seem to be the buyer from the last few months ago, but the way they executed the trade, it made it seem like there was a new buyer that stepped in so, interesting that people are looking to pile onto this one. >> so, what exactly is -- the bet is effectively that volatility will spike higher in june and the markets will probably decline >> right, correct. so, when you think about the vix, it's important for viewers to understand you cannot buy the vix. you can buy the futures, you can buy the options futures

so, for one call option that you would purchase, for every one point move, it would be about $100 so, let's say now vix spike to $35, this person would make about $70 million on this bet. because what would end up happening is, you have the price at 26 and it settles at 35, minus the premium paid, $70 million. >> so, chris, one of the things that's really kind of weird is that there's this relationship in the vix, it can go to infinity, but it can only go to zero and it's not spent too much time in the low teens in my lifetime, if you think about that so, you know, here's a trade, i want to get -- grade my trade. remember max used to have all the things back in the day here. so, today, before i knew you were coming on, i bought the may expiration 2030 call spread, paid $1 for that think about that, think about if we could put a vix chart up here, over the last year, year and a half, we've had, probably five or six moves. when it gets above 20, it often goes to 30 in a straight line

and usually for reasons we can't foresee. so, how do you think about trading, like, call spreads for people who, you know -- you can't buy the vix, but you can buy options on the vix and defining your risk is a pretty decent way to do it. >> absolutely. the important thing to realize is that the vix is variants, right? it's going to move when volatility moves, which is something that's really important for the call option buyers it is important to note that historically, vix is around 16 one month realized s&p is trading around 12. so, even though vix seems cheap right now, it's still at some sort of a premium in relation to what the broad market is doing >> kris, great to have you with us >> thank you. for more options action, tune into the full show, that is friday, 5:30 p.m. eastern time. coming up, keeping an eye on tesla. bring you updates from the company's conference call next. plus insurance stocks showing some weakness today. is this a sign of more pain to come or can the group bounce back we'll debate that when "fast

money" returns

welcome back to "fast money. let's check on shares of tesla down by 3.7%

this after the company said margins were under pressure, deepwater's gene munster has been listening to the conference call has the latest some very interesting commentar on pricing, for one, gene. >> yeah, exactly they say they review that on a weekly basis i didn't realize it was that often. globally they would not comment, of course, where pricing was going, but given the macro, my sense is probably prices are going to be going down and also, that view is aided by elon's comment that they are really focusing on driving delivery growth over margins and so, this idea they want to really grab market share, land and expand, get those cars on the road, sell them at high margin, fsd, one, two, five years down the road, and that's the basic model. >> and right now, it seems, gene, that orders are in excess of production, so, it's sort of working, the price cuts. >> exactly right

orders are, elon just said that, orders are in excess of production this is related to the price cuts now, that is going to be a surprise for some investors to hear that, because inventories did build at the end of the quarter, but that inventory does not capture this surge in deliveries that they have in the first week, two weeks of this new quarter, and so, the bottom line is that the price cut is driving, is having its effect, which is driving volumes, the cfo did get asked the question about, what does this mean for the gross margin for automotive for the year, and he basically gave some puts and takes, but didn't give a definitive guidance on it i suspect it's going to be in the 19% to 21% range, inching higher, because they're getting the benefit of lower costs of materials. it's been pretty significant especially around lithium. >> yeah, lithium is -- how much do you think is the cost of the vehicle, gene? >> well, the battery, consider the battery a third of the cost

of the vehicle, and i think lithium, if you take it the total cost of the vehicle, it's proeh probably about 3%. if you can see kind of a meaningful 30% drop in lithium, that can add a percent to overall automotive growth margins. that's a significant lever and so, they're basically -- the big takeaway from the call, these are the questions that were submitted before they reported they haven't gotten to the live q&a yet, but the bottom line is that tesla really wants to stick it to the ompetition, and investors are going to have to sweat out the margins for the next couple quarters, but who is really sweating is traditional auto, because tesla is not going to be backing off on this drive to get more cars on the road >> all right, gene, thank you. keep us posted we're seeing the stock hit after hour session lows, down by 4.2%. meantime, elements health drags down health insurers today. this is the stock formerly known as anthem. the company raising its 2023

adjusted eps forecast, but lowered its profit outlook on a net basis. united health, humana, centene, all dropping three-plus percent today. karen, what do you make of this? >> talking about the medical loss ration was better. big discussion about wegovy, ozempic, how much are they going to have to pay for these drugs, and i don't think it's going to be the sticker price or whatever near that's what it is now, i don't know, $1,200 a month or so but i do wonder, so, you can see it's a huge expense, but i wonder if over time, will it be ben initial if they could have much less gigantic spend in diabetes because of these drugs? >> right and there are studies under way right now to link that, you know, weight loss to reduced diabetes, and when that happens, if that pans out, then they might have to cover all of that. maybe in the end --

>> obesity and diabetes for them is just an enormous trade. >> i'm taking wegovy i love it. i'll tell you this >> you can tell. >> you can't even see dan when he turns sideways. >> you can hear him. >> here's what i would say about a lot of my other health conditions, they've gotten a lot better in the last three months. so, there's actually -- there's this catch-22, where you might see other drugs actually lose, you know what i mean, scripts, because of that, and so, i'm seeing that in some of the things i had and i'm on it for pre-diabetes, and it's helping a lot of other things, too. up next, final trades.

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time for the final trade tim? >> airline trade again, gradest trading sector, i think, of the groups anyway, delta to 42, 43. >> karen >> yeah, another just sort of trading one. the kre. i think actually bouncing along the bottom, but i think we'll see a spike up >> dan >> yeah, tesla was a seller last night, probably a seller in any rally tomorrow or in the near future >> congratulations, buddy. good to have you back. >> very nice

>> thank you i'm a buyer of my son. >> that's good >> you have no idea. >> very long very >> yeah, but i'm having a hard time buying into ibm i get the quarter and i get the div yield, but i'm not a buyer >> thank you for watching "fast money. see you back here tomorrow at 5:00 "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 other people mak