orr that if they have evidence about crimes committed by the order, that the numbered men, the leaders of the order are not untouchable, that they can be investigated, prosecuted, right now, a monster week on tap for earnings for the four horsemen of tech and a few staples. we'll go inside the numbers, get you ready for the action plus, a big mack food fight. mcd's, chipotle in and all out with results should you bet on a burrito blowout or prepare to get flattened to the pizza trade later we'll take a look back at a terrible week for tesla. also look at the trade we put in ahead of this week's results i'm melissa lee. this is "options action" live in the nasdaq market site on the desk tonight, mike khouw, carter worth, and brian

stutland we start with a deep dive of the monster week of earnings on deck more than a third of the s&p reporting results as well as a quarter of the russell 3000. everything from big tech to industrials to energy, pharma, and much more. we'll start off with the big tech names alphabet, amazon, microsoft, and meta all up next week. more than $5 trillion worth of market cap between them. this could set the tone for where the market goes next the chart master is here to take a look at the group's next moves. carter, what do you think? >> so much hangs in the balance. the reason you keep seeing the market this week, another unsure week every day just a little bit up, a little bit down. because the news will inform the direction. this is elemental. everyone knows it. for every person planning for a big move or continuation of strength in apple and microsoft and google, all the big ones, there's someone else position you fade this thing individually, the charts are a little bit different we can go through them but microsoft in many ways has a well defined bottom, but it's ahead of itself.

in my case i think you fade it here at least sell calls, do something. but each one is different. if you were to look at -- and this is important, actually. look at this chart this is -- this is the relative performance of the qs to the s&p. so it took covid -- because everything else was so bad -- to make the qs finally recoup all their losses since the dot com peak now we're sitting here churning and stuck. my hunch is that these stocks are not what leads us into the next cycle >> all right let's drill down on the four biggies next week. amazon, apple, microsoft, meta we'll start off with microsoft reporting tuesday. shares up nearly 20% this year you heard the technical take from carter, mike. what do you think about this report >> yeah, so it's interesting amazon and microsoft both have some similar dynamics going on because they both have significant exposure to the cloud, and amazon was talking about those aws layoffs. presumably some of the same impact is going to hit azure

the flow that we saw this week on the options side, and right now the options market is not implying a big move for this one, about 3.5% the day after they report earnings relatively light was really bi-directional. we did see some may 260 put purchases, but we also saw a big june 290/330 call spread trade people are taking advantage of the low options premiums probably to hedge gains or make hedged bets to the upside. i think a lot of people feel pressure to own this space, but they're being cautious when they're doing it. >> volatility has remained tame to put it nicely, basically depressed. brian, that really allows you to do these kinds of trades what did you think of that action >> it's interesting, i agree we've seen volatility come down. the price of options have gotten cheaper to the point where maybe it's time to look to own those volatility with the vix under 20, spikes under 20, so those

volatility index is showing that premium makes it reasonable to own trades and protect yourself by being long options. to microsoft's point and carter's point, microsoft highly correlated with the nasdaq 100, almost a one to one correlation with it. if there is this rotation where microsoft isn't the leader, probably want to own a call or protect my long stock by owning a put in case there's a leader that comes from some other sector although microsoft, big balance sheet, low interest rate environment with the ten-year getting closer to 3.5% if it sits there, that's favorable for microsoft usually in a macro environment we'll see how this shakes out, but obviously earnings next week going to make a big impact. >> there's a little bit of everything, mike, with amazon results. you're going to look at business enterprise spending when it comes to cloud. and you're also going to look at consumer when it comes to its discretionary business

>> that contributes i think to the fact that the options market is expecting a bigger move for amazon, about 6.5% after they report, so double what they're expecting from microsoft, even though they do have some businesses in parallel i think amazon is struggling on the grocery side i think that's something that -- i don't thin that's that big of a portion of their business they didn't really make as much profits on the retail side when it was gangbusters for everybody, and now retail, i think, is under increasing pressure as consumers come under pressure that creates some head winds, yet still we did see some bullish flow overall for the week i think this is one of those situations where, you know, these four companies we're talking about, it's important to remember, it's about 13.5% of all the s&p earnings, we believe it's going to make 217, 220 bucks for the year these four companies represent about 13.5% of that. i'm fascinated by the fact that the s&p volatility has been low this week.

we saw single digit in spx, too. >> carter, your quick take on amazon's chart >> a laggard that's catching up. has not kept one apple, microsoft. play this one long >> meta out with results wednesday. the social media joined up more than 75% this year. brian, what do you think of this one? >> yeah, i think when you look at meta, really going to play almost an anti-tiktok play that's one thing telecom, if you look at the whole sector in general -- meta is a value stock in the s&p 500 value in communication services. that's played strongly to the upside it's had a big run it's probably about time to maybe look to take some profit it's gotten a little too far, a little too fast and you mentioned some of these other big huge names the maga stocks. microsoft, apple, google, amazon, i'd rather be in those than probably a meta at this point. >> charts support this take your profits? >> i think so. you're talking about something more than doubling why not, take some off.

>> let's round this out with alphabet mike, you've got a strategy on this one. >> this is one where i think options are reasonably priced. so is the stock, actually. 18 times earnings. cheaper than the market. this is a place you want to be long we did see some pretty good sized call buying. it was just going out to may, and i think that makes a lot of sense here given the premiums. those options were not that expensive. i think you want to buy calls outright the may 115s, they were paying about $1.12 for those, and i'm inclined to go along with that this is one of the names i do like better, i heard karen mentioning it in the last half hour this is a cheap way to play for additional upside and give yourself time to expiration, not just playing the earnings week. >> brian >> yeah, google's been one of those names it's lagged behind apple and amazon and microsoft, so it might have some catchup to do like i mentioned earlier at the head of the show, buying calls or puts with volatility suppressed makes a lot of sense and i like the trade mike laid

out. >> how does the chart look >> same circumstance as amazon, a laggard that's bottoming i like it better than apple and microsoft. >> we want to touch on other groups reporting next week coca-cola out with results monday shares are virtually flat. mike, you have a trade on this one, too. >> much like the other names we're talking about, this is one those names where the options premiums are exceptionally low this is not a cheap stock, really, when you think about it. i think this thing is trading around 27 times earnings not really a grower. if you consider the environment we're in, these staple-y type stocks this is the kind of thing people like to be in we did see some short-dated 66 calls trading. i don't think that's the best way to play it given where premium is i looked further out i was looking at the june 65 calls. you could spend just over a buck to buy those oftentimes in dividend paying stocks people say, i would rather own the stock but we are finally at a point

where you actually can see some interest on your deposit, so it isn't necessary. if you just were putting money into cash and weren't getting anything on it, then it would make some more sense to take bullish bets in these stocks by owning them and collecting the dividend that's less important now. buying calls, keeping cash in reserves on your treasury is the way to play this long. >> that's an interesting point i hadn't thought about that, not having to own the stock because you don't need the dividend, that 4% or 3% when you can get 4.5% on a cd o whatever bank account you have. >> that's another reason you have volatility suppressed allocate money to other places in short dated kind of stuff and get a decent amount of return and play this with basically just risking that buck in something like this. we heard on "fast money" the "barbell" approach to things it's really been about big balance sheet, free cash flow. names like coca-cola, consumer staples.

that's why big tech has big runs this year. will it continue or will there be a rotation? i think the overall theme, we head into a recession the second half of the year, or the fed continues to raise rates and we feel a crunch. i still think big balance sheet and free cash flow wins, and coca-cola is one of the names that falls in that category, continue to play to the upside. >> what do you think, carter >> here is the thing, a couple of things. coke's relative performance to its sector, so to pepsi, clorox, colgate, procter & gamble, it peaked in 2011 it's never quite been the one to be in. and then you see here on the screen, this is a fairly well defined series of lower highs. i think it's full. i just don't see the keys for being long i would take profits if i were long. >> let's get to boeing they have results out wednesday. shares up more than 7% this year, and with the boeing story, mike, it feels like two steps forward, one step back, and this time it's with this fuselage part from spirit that had some

issues. >> yeah, you know, and actually sort of on pace with that this week, for the first several days this week we saw a lot of bullish flow, and then basically investors turned and it went bearish today. a lot of activity we were seeing in boeing today was actually the may 190s that's excluding any of the option that expired today. which isn't really all that relevant it was the may 190 puts we saw big buyers paying a little over 2 bucks contract for that. this is again one of those situations where i think it's kind of difficult to be long this one or at least to do so without some kind of a hedge i think that's what institutions are looking at they've obviously had quite a recovery since they had the early lows on all that bad news. but as more bad news emerges you might want to think about taking some profits on this one >> yeah. brian, what do you think of boeing >> i think investors are still feeling the pain from when all the dream liner issues came out. when we get news about boeing has a construction build or

whatever technical engineering issue, it usually lags on the stock, and then look at the chart. i'm sure carter can speak to it. the stock has almost doubled in just a few months. makes sense to take profits, buy puts against this thing this might even be a position in a portfolio where that's my short position versus other long in other places. >> carter? >> it's messy. so, the first thing is yes, it's doubled, but what we know, think about the epic plunge. on the covid low, this stock dropped from 450 to 80 dropping 80% is serious business now we're midway back. i think it's a pair of 2s. >> meaning it's not good. >> not a good hand to bet big on. >> for everything "options action" check out our website and our newsletter much more "options action" right after this >> announcer: power earnings extravaganza continues, burgers or pizza, which will satisfy your portfolio better, we'll do a taste test with options.

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welcome back to "options action." investors loving mcdonald's stock lately shares continuing to hit

all-time highs day after day, and with the fast food giant gearing up to report on tuesday, brian's laying out a way to bite into the name with options brian? >> mcdonald's is an interesting name that free cash flow, big balance sheet are names i want to own if it's really consumer staples and big tech if the market is going to continue higher here and mcdonald's obviously has a big run. its forward p/e is getting a little bit stretched i am getting concerned that stock like this can continue to run up through 300 we have earnings coming up i'm using options to play a call spread to play to the upside to continue that. looking at the 292.5/300 call spread, i can spend just a little bit under $3 for that max profit, about 5 bucks. so playing to the upside, i'm not buying a call outright i think options are about fairly priced we'll see a 2.5% move after earnings that's the implied move for options right now. this limits some of my risk to just basically the cost of the

call spread, and i'm not so certain the stock moves through 300 by earnings given how well it's run to the upside but i still want to play they hiked prices about 10% in 2022 that's been good so analysts estimating a big boost in operating margin. that should be good for the stock. i expect the earnings picture to be bright, somewhat to the upside those mcflurries i get for my kids, starting to feel it here it's about 5 bucks for one in the chicagoland area still expensive. but i think the stock can move higher i want to use a call spread and risk less to sort of make more >> i would venture this is not in the holly index, but what are your thoughts on the trade >> it most certainly is not. i was talking to carter earlier, if i go to mcdonald's it's something i probably need to hide from her. that's not the kind of thing that she appreciates in my diet one bit. the interesting thing here is, compare this company to microsoft. two companies reporting next week, both are going to earn about 10.5, 11 bucks for the

full year, both trading similar multiple one has grown four times, one has grown two times. the valuation on mcdonald's is towards the upper end of the range. they are doing some very good things with their app and their franchising efforts. they really have been executing, i have to say, but it does seem rich valuation-wise. >> yeah. what does the chart look like? >> we talked earlier about hiding wrappers from sausage mcmuffin and eggs and things like this. but anyway, to mcdonald's itself, the chart, the temptation i think -- and to some extent we heard why, maybe it's a little overdone the valuation a bit stretched. but it's one thing when an individual stock is overdone, but the group is so strong yum is making new 52-week highs, darden, chipotle this is an important circumstance on the screen here, switching subjects, mcdonald's has lagged something like domino's.

since domino's ipo, it's up triple what mcdonald's is. mcdonald's, since its ipo, this is one of the steadiest performers in the business only real drawdown was in the financial crisis my hunch is to actually stay long mcdonald's. >> do you guys have like a drawer where you put these wrappers or take this stuff in your briefcase out of the house and dump it at the corner? how do you hide these wrappers >> this conversation was like, if you just happened to do a drive-in and then your wife just happened to get into the car, there might be a wrapper, in which case you'd be like, i don't know how that got in here. >> must have been one of the kids >> yeah, must have been one of the kids. >> let's switch before anybody gets in trouble. on the other side of the spectrum, you're looking at pizza instead of burgers you're looking at domino's. relative chart. >> sure, right domino's obviously greater, but pizza, pzza has been under pressure, papa john's, domino's.

this is its reciprocal this is a restaurant stock to be short. >> oh to be short. it's hard to hide a pizza box, brian. what do you think, though, of the trade? >> yeah, i think, you know, for two reasons. obviously domino's looks like it has some, you know, decline, topping out process in the charts that carter laid out, and so this is why i think if you're playing sort of -- we talked about a long short trade here. i think long on mcdonald's call spread, right, against sort of a domino's, maybe you want to put on a put spread against that, would be sort of an interesting trade. net-net, you really have a neutral position on it, but i'm sort of playing two areas where maybe one is overextended, the other is not, and i'm only risking the value of those spreads, so that's a great way to play options when i'm making long/short bets in the marketplace. >> quick, mike >> pizza is topping? is that what we're talking about here

i'll say one quick thing about domino's they have grown their earnings four times over the last ten years, so double the growth rate of mcdonald's, and it's trading at 24 times. which is a more reasonable valuation. but that chart does look troublesome. >> up next, the name that's dominated this week's conversation -- tesla. the big drop in shares and what is next for the stocks falling margins and falling profits. "options action" back in two >> announcer: "options action" is sponsored by thinkorswim by td ameritrade. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

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that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back. welcome back to "options action." shares of tesla dropping hard after the ev maker reported results wednesday. last week, mike laid out a trade anticipating just that, just maybe not that quickly with all the news about tesla, what are you doing now, mike >> this is a situation where i think you could take some profits we shorted a call spread for 40% of the distance between the strikes. there's not a lot of premium left in that thing the risk/reward relationship is no longer that much to get excited about. i think tesla continues to operate well despite the pressures the whole industry is facing it's a superstorm especially with the increase in rates, and they are continuing

to grow, but they still trade -- even at this level, at a high multiple, and i think that's really the thing that's going to be the biggest head wind for them. >> yeah, for those of you out there who didn't see "fast," carter, you did go through the charts, and the next level you see is still lower from here. >> right so, we know that you get big movement typically in response to the news. fda approval, not the case here. earnings miss, earnings beat tesla gapped up on the 25th, 26th of january in response to a good earnings report and gapped down now in response to a good bad one. i suspect gap from late january is filled and it's coming to play around 146. >> yeah. brian, would you put on a trade to that effect, a bet in the 140s >> i think first in mike's trade covering some of that short position made sense. i think it's got to move big here it's going to refill and go back up and break back above 170 or it's got more downside to go we own this for clients but i'm definitely getting a little nervous. if i'm going to put on a trade

like you asked, i'm buying a put to protect some of my long positions. so many people that ow tesla, obviously it's a big holding in the nasdaq 100, so if i'm going to protect that stock, i'm going look at a 160, 155 put maybe throughout the summer time to stay protected. the auto industry in general is starting to get volatile and shaky. >> yep up next, final call. >> announcer: "options action" is sponsored by thinkorswim by td ameritrade. s telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! 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." time now for the final call. carter braxton worth. >> amazon a laggard but showing interesting day-to-day relative strength i'm a buyer. >> brian stutland? >> hide those wrappers but buy the call spread in mcdonald's. >> now the cat's out of the bag. assuming the spouses watch the show mike >> hopefully she's taking sam to lacrosse practice right now, so she's not paying any attention to this. i do hide the wrappers but i will tell you, implied volatility for s&p options is exceptionally cheap going into

next week. you can hedge some of the earnings >> your hips don't lie, though that does it for us on "options action." back next friday, 5:30 p.m. eastern time "mad money" with jim cramer start right now. - [announcer] the following is a paid presentation for the ninja wood fire outdoor grill and smoker. (intense music) (meat sizzling) - [fey] grilling, the ultimate test of culinary arts, only reserved for masters who've spent years perfecting it. using smoke, and fire, machine, and nature. - it's not actually that complicated. watch. you do that. (machine beeps) - that was easy. - [mark] hi, i'm mark - [fey] and i'm fey - [mark] and we're the grill dads