♪ ♪♪ -- captions by vitac -- ♪ right now, a brutal week for banks even with today's regional rebound. are options traders still running away from the sector, or have bank bulls started to nibble on these names again? disney, the entertainment giant stuck in neutral the last couple of months. what will it take for the stock to get the magic back? later, inside apple's monster rally. silver shining returns in 2023, and carvana's questionable comeback in the last 24 hours. on the desk tonight, mike khouw, carter worth, and brian

stutland we begin with a wild week for the regional banks the kre rebounding more than 6% today, but the group from is still down 10% this week some of the biggest losers, pacwest, first horizon, western alliance and more. mike is starting to see traders nibble at these names, mike, what are we watching >> best thing to take a look at if you're trying to get a sense of where investors' sentiment, try to take a proxy for the entire space, and that is kre, the etf that tracks regional banks. one of the biggest options we saw yesterday, traded over a million contracts. of course in a lot of the single names, the constituents, some of the stocks you just mentioned, during the course of the week we saw bearish bets especially early in the week, and some of those turned out to be quite precient. calls did outtrade puts but actually we measure positive sentiment two ways one is with call buying and the

other is with put selling. what we are seeing is some folks believe the damage in this space may be done. one of the bullish bets we saw was a big purchase of the july 40/43 call spread. we saw close to 16,000 of those go up as a single print. i think there are some institutional players in there that are starting to think the damage may be coming to closer to the bottom anyway look, there's a couple things you need if you're going to try to catch the falling knife one we would really like to sea is policymaker support is that suggests there is going to be some end in sight. but the other is just for some buyers to start stepping in, buyers in the options, buyers in the stock. and we're beginning to see both. >> carter, the charts. >> the technique that works here is continue to sell premium. we discussed this last week as a group below the market let's look at the charts and figure it out together two simple charts. is this selloff any different? it turns out, than the 2019-2020

selloff associated with covid. in fact, they're quite analogous. that selloff we know why a pandemic was 58%, you see it there. this selloff is 56 it's also just the sheer steepness of the drop, meaning it's not out of nowhere. it was weakness proceeding, but then gives way to capitulation second iteration, second chart, we're down to a well-defined trend line again, my hunch here is to sort of be bold where there's fear to sell premium so put credit spreads. >> carter, quickly on that chart does it matter what the context of the move was in, you know, the first drawdown that you're pointing to, that the broader markets also drew down a similar amount you know, and this time it's a little bit different because it's this group that's seeing the decline. >> well, i suppose one could say that obviously the correlations were very high during covid, right, whereas that's not the

case here. but remember, there are plenty of stocks that are down, energy stocks and certain consumer stocks at 52-week lows, ford motor, down as much as regional banks, just taking a little bit longer. >> brian, quickly, this seems like the perfect kind of sector or stocks to play with options i mean, if you want to sort of take a flier on a huge bounce. >> yeah, and we did see that i mean, to touch on mike's point the put to call ratio in kre basically went from around two to one to about one to one or calls outpacing puts a little bit. there was a shift in sentiment, you know, i would probably play to the call side if i was going to play to the upside. we saw the extreme volatility stuff. basically volatility, implied comes down, premium declines hard today in a lot of the regional banks, not just the etf itself but we saw that in individual names, vix and spike

down hard during the day if you're playing to the upside i'd rather use a call option we may have to retest and bounce the lows before all is said and done and i'm never one to catch the falling knife and be the first guy in that's just my nature. so that's why i would probably use a call option in a lot of cases if i'm going to play to the upside. >> metals, silver tearing away from the broader market over the last few month, up more than 20% since march. a trade for those, who think there could be room to run, mike. >> this is a really interesting setup we're seeing in precious metals, we're going to hear more from carter with more intelligence things to talk about with a technical point of view there are of course in many areas, i was looking at gold for example coming close to testing these all-time highs and it definitely feels like we're in a situation where i think there is the potential for that breakout that i think a lot of people have been waiting for. i think the fundamental backdrop that could potentially help make

that happen is just what we were hearing from the fed this week you know, if rates continue to rise, that obviously is going to be a negative for, you know, inflation fighting animals, like precious metals, but what we're hearing is that there's a chance for a potential pause. this, while inflation still remains at relatively high levels and so i think if we do get that pause, that really is, i think, the reason, and that's probably what we're seeing people bet on for that upside move now, i will point out that there is an interesting dynamic that exists in the options prices for the precious metals for a lot of commodities, actually, and that is that we're in equities, and equity proxies like the indexes and etfs, we see puts trade at a big premium to calls sometimes in commodities, that's not the case we'll see out of the money big trade-ins. implied volatility remains relatively -- playing upside is a trade we don't talk about that

often is actually an in the money call spread. i was looking out to the june 30th weeklies. why the june 30th weeklies well, they happen to have half dollar strikes out there and so with slv trading around 23 1/2 i was looking at the in the money june 30th 22 1/2 calls, those cost about $1.70, and selling the 26 1/2 strike out of the money calls at 33 cents. bear in mind those are about a dollar in the money. what's really going on here is the extrinsic premium, that's how much decay on a stand still basis you have to pay if you own a call spread between now and expiration is significantly less a lot of the premium in that call is actually intrinsic value, already in the money by that amount and that reduces that's a way to play this for the upside. >> carter, what do the charts look like? >> we know that of course silver, gold are doing very, very well relative to equities on a trailing 12-month basis but let's look at a few charts this is a comparative chart, and it's not the market, the stocks

versus the metal, this is the metal, silver, versus silver miners, the sil is the ticker. and if you really want to be aggressive you want to play the minors, get beta operating leverage out of these companies but either way they're both good siv and slv. the etf that mirrors the metal has made an important turn, again outperforming equities as an asset class and then sil, which is the etf or silver miners, keep in mind three stocks, wheaten, hekla, about 50% of the weight, but sil textbook bearish to bullish reversal buy. >> let's get to one of the biggest movers from the last 24 hours, talking about apple, shares jumping after better than expected results yesterday, bringing the tech titan's nearly gains to 34%, but can the climb tonight? brian, what's your take? >> with last week, it's risk

reversal trade, a wait and see, see how earnings go. but if it moves to the upside i want to get long that paid off, but, i think where you're at right now is that market, that basically felt a little bit of a bear trap kind of run today off the numbers i would have expected given the low unemployment rate that people would be worried about interest rates moving higher and that would be a doldrumon the market, and apple is highly correlated the earnings pushed it higher. this might be an opportunity to take some profits, whether i'm selling an upside call against that or buying a downside put where i continue to maintain ownership of the stock i would rather probably look to protect it for some degree, owning a put or selling a call. >> carter, what do you think >> yeah, i mean, i think we're getting back to where we were almost a year ago, where it's sell it all. this is euphoric it's funny, i had a conversation with a page 1 holder, that means an institution that's top 15, 20 holders of the stock and they characterize it as a punk

quarter. interesting phrase but technically, steep, uncorrected, not until the direction that i myself have been playing for but overdone by all measures. >> so you're saying to sell it all, or almost there >> we are. what's the upside? i mean, it's going to gap again. it's got everything and everyone loving it. >> okay. carter says to sell apple. we want to tackle one more name before we head to break. that would be carvana, a battleground stock for a while shares surging 25% today, but still down more than 80% in the past year. the "options action" has been off the charts mike, you follow this one. for fun, really. what do you make of it >> yeah, and i think that's what you should be doing is, you know, watching this much like you might watch an exciting, you know, boxing match or something. this is a company that still has significant operating problems one of the reasons why you're seeing so much volatility, and while you're seeing so much options activity in it is

because the company also carries substantial amounts of debt. the company is over 80 #% debt so you can think about it this way, that if, you know, the value of the whole business changes by 20%, this way or that, that basically takes out all the equity, or doubles it, overnight. and so that's one of the reasons why i think people are using options because they recognize the significant risk that the company faces. this company, and there are others that we know about that have been flirting with bankruptcy, companies like bed bath & beyond. this is a binary situation, will they live or die i can see why people are playing options with it, with the stock above the penny stock level above $5 close to 9 i think now. >> carter, live or die >> at one point the stock was down 99% now here we are. listen, it's a rally to a difficult level. interestingly, not only is that chart on the screen fairly straightforward, that's a downtrend and a countertrend to

that downtrend line, the stock closed on an absolute low today. there was opening euphoria, the stock gapped up and then all day long it slipped, slipped, closed on the low, still up a lot but that's not very, i don't think, interday bullish action. >> all right, for everything "options action" check out our website and our newsletter, there's much more "options action" right after this >> earning season is rolling on. so are we. we're designing options plays to hedge disney's role in the streaming wars and the place in slowing retail environment. plus, calling all "options action" fans, reach into your pocket, grab your phone and tweet us your question at "options action. if it's nice we'll answer it on air when "options action" returns.

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welcome back another big week of earning on deck, and that means a options set up for some of the big names reporting. first up, disney reporting wednesday after the bell shares up more than 15% this year, doubling the broader market's performance, but can the magic continue mike has got a way to play it, mike >> yeah, i think options are definitely the way we're going to want to play it if we think about disney, think about basically the sector which it is a constituent, thinking about the communications sector, everybody familiar with the

communication select sector will realize it's highly bifurcated names like meta, obviously knocked the cover off the ball, up 100%. and then you've got names that reported this week, like paramount, which i was unfortunately a holder of, and experienced one of its worst post earnings drawdowns ever i think it may have actually been its worst, even going wac to when they called themselves viacom, suspending a portion of dividend and a very ugly picture. it's interesting because, of course, walt disney is playing in some of the same places these other companies are, and some they are not streaming side, that's what hurt paramount. walt disney has been adding a tremendous amount of subscribers, and investing heavily. yielding subscribers is one thing but we'd like to see some money. paramount fell flat there. parks have been doing reasonably well and they have the crown jewel for entertainment, that would be espn, but there's some uncertainty how they're going to proceed with that. are they going to spin it off from the business? all of these things are very

important. right now the options market is implying a move of about 6%, which is actually in line with what is experienced over the course of the last eight reporting quarters or so what that tells us is that assuming we're going to get a move similar to the ones we haven't been seeing that options are fairly priced. i think the way to play this one, going into earnings, is with an upside call spread i was looking at a relatively tight call spread, the 105-110s in june, that was costing me $1.30 contract a buck and a quarter is what we usually like to spend. relatively tight to the stock, gives us a little bit of time to expiration it's iffy. if you're focusing on what they're doing this water and see where people might be trading the stock coming out of that i think it's going to be the parks numbers that are going to matter and then of course trying to take a look at what the investment is going to be on basically for the streaming business when they're going to start seeing profits. >> carter, what does the chart look like? >> i'm in the pair of twos camp

here this is a stock that is just sort of -- well, it's quiescent, still down trend, i'd rather see life above the down trend line charter is a cower, you go first, i'll be behind you, your money, not mine. >> paypal, the fintech stock underperforming, up 5% brian, what are you doing? >> the stock is pretty strong today, up over 4% itself, and look, there's earnings on monday, it comes out after the close and the stocks have a nice move here. but, it's lagged some of its counterparts in terms of payment services, visa, mastercard have outperformed it, american express has outperformed it the last six months or so. i think there's some catching up to do if it can sort of break out of this doll drum here, this trend that's been in this range bound area it can move to the upside. it's looking more and more like a value play itself. i fully expect the earnings growth to be come in at 23, 25%

guidance going forward, which is when a stock is trading in the teens on a multiple p/e, relatively cheap on a valuation basis. a stock that's already moved, maybe i don't want to jump it and chase the stock, i'll use options to play this to the upside, and when i do that, i'm looking at a call spread it's a vertical, in terms of using two separate months to do that, two separate expirations, i'm looking to buy the june -- yeah, the june 70 calls for just under $8, sell a may 80 call this is an expiration that's expiring next friday so as long as the stock doesn't sort of gap through 80, which would be quite a big move for the stock after earnings, we haven't seen that in the past on previous earnings, move that great amount to the upside, capture that extra dollar, lower the cost of the call that i initially bought in june and continue to play this to the upside it's got catching up to do to some of its competitors. >> carter? >> yeah, here again, another

stock that's in an established downtrend and the question is, does one speculate going into the earnings i mean, obviously there's risk to that, and there's great reward my hunch is to leave it alone. no trade. >> say it carter, just say it. pair of twos, right? >> yeah, that's fair. >> all right, now we can move on up next, a coffee catchup, how to navigate starbucks after its earnings spill "options action" back in two 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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and a dedicated trade desk of expert-level support. 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." last week mike laid out a trade on starbucks before earnings shares took a nose die on results. mike, how are you navigating this one >> this is an interesting situation. a good case for using options. take a look at what happened, the stock fell about ten bucks from 115 down -- it's around just under 105 right now remember, the trade we actually targeted, the upside of 125 #. so by using options obviously we risk less than purchasing the stock. unfortunately because the move down was severe, not a whole left interesting thing we now have

new information, and i think that basically the stock has reset to a new level i like to wait about three days after you get this kind of disappointment, so carrying into monday or thereabouts. but implied volatility hasn't fallen that much i might look at selling downside put credit spreads to help finance the remainder of the decay left in the call spread now that we have this information following earnings. >> brian, what would you do? >> that's not a bad strategy that mike lays out, using credit spreads to capture the premium i do like that in general, i'm more of a player of the consumer staples right now, big balance sheet, the staple kind of stock is where i'm playing versus discretionary, where starbucks tends to fall in that area right now. that plays out next few months where things shake out maybe stay away. but a put spread, credit spread, i'd be out of the money, obviously, taking a buck or two of premium, and keep it to that. >> carter? >> yeah, pretty heavy damage, obviously a drop in gap associated with the earnings

disappointment on the other hand, this is important, and you see it on the screen, the selloff leaves the stock very close to its well-defined up trend line in effect since early 2022. my hunch is to, if one is still long, retain the longs up next, your tweets, and the final call you ok, man? the internet is 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℠. and it's easier than ever to get your projects done right. with angi, you can connect with and see ratings and reviews. and when you book and pay throug you're covered by our happiness

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welcome back to "options action," time to take some tweets, first fan asks with the recent run up in eli lilly how would you feel about fading this pop with the june 16th 430 puts? brian? >>lilly based in minneapolis i'm heading down there in a couple weeks buying a put probably makes sense, financing it with a 410 put against it the stocks had a huge runout kudos to them, the alzheimer's drug looks like it's having

proportioning results, the weight loss drug for diabetics also very good but it's probably time to take some profit, market cap, nearing johnson & johnson levels, take some profits, use a put or put spread to do that. >> i'm curious if carter remains long on amazon after earnings, price action, carter >> the day before earnings, stock popped to 111. close today, 105.60. i think the stock is bottoming, yes, i like amazon long. >> time for the final call back to you, carter, kick it off. >> sure, silver, gold will do it too. >> brian stutland. >> i think paypal's got some catching up to do the upside, buy the call spread vertical. >> all right, mike khouw. >> you know, sometimes in the money call spreads are a way to take advantage of the dynamic of call skew, i like that in gld and sld. >> don't forget, carter said to sell apple

that was something i wasn't expecting tonight, but he said it that does it for us here on "options action. back next friday at 5:30 # p.m. eastern time don't go anywhere. "mad money" with jim cramer starts right now - [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,