journey of knowing ryan, what normal people do is not what he would do. >> then asked the question for ryan cohen is, when he does get involved as an activist, will he have success as an activist? not just make money from his right now on oa, countdown to the fed as the s&p touches levels not seen since last august how will it impact the market's bull run the red hot stocks super charged move in tesla and smooth saling of carnival. and later, cashing in on a clunker. carvana was left for dead earlier in the year and now options traders are on a feeding frenzy we've got the action coming up i'm melissa lee. this is ""options action."

on the desk, mike khouw, carter worth and brian sullivan the fed is expected to meet for a highly anticipated meeting the markets rally and the volatility index fell before turning higher some ma o say it could be good carter, kick it off. >> before we look at the charts, it's important be to note the real data point was the inverse of every week the last two or three weeks. the top 50 index, top 50 s&p was down up but only slightly was the oex. then the s&p 500, up 39 basis points you keep going the midcap up 147 and the russell, small cap, up almost 200. that is the exact reverse pattern we've seen week after week with the larger you are,

the more you've outperformed finally, participation from laggards the first chart is the s&p 500 what's so important is how precise today's high was relative to the august high. in fact, they're within pennies as you can see we hit our head there and closed poorly for all intents and purposes the second iteration puts in lines to sort of depict the circumstance and the issue is do we press above the august high or do we check back towards the up trend line. i think check back is what's li likely secondly, let's look at the vix. the vix is almost undone all of its excess associated with it. you can see there the horizontal line drawn we're almost back to a level we were in the autumn of 2019 a surge in the vix associaterd with that. >> mike, what's your take on

these charts and the markets >> yeah, i mean, this is obviously going to be a really big week that we have coming up here what the fed says i think is probably what everybody's going to be keeping their eye on because although we do get inflation data, we know the fed's performance measure is pce and we're getting that closer to the end of the month everybody is basically expecting they're going to pause but with a hawksish tone. i actually would agree with that i'm hard-pressed to understand how we would actually see this rally continue with any significant strength unless we got a more dovish turn coming out of it. first of all, we're trading very close to 20 times earnings for the s&p. if you look back over the course of the past 20 years and you exclude those periods when they were more expensive for very obvious reasons. in the gfc there were massive losses in some of the megacap

banks. we saw eps for the s&p decline and of course the pe was much higher of course, during the pandemic period we saw a significant decline in earnings for a lot of the s&p 500 so we saw a higher multiple then, too the know we should be anticipating earnings to decline a little bit due to recessionary pressures. that isn't really priced in. for me, i do think we're getting to a challenging level here. >> brian, are you surprised the vix is so low? >> that's the million dollar question i keep getting that question fromwholesalers, individual clients. the divergence between the big market cap names and the rest of the market diverging so that makes the index as a whole not that volatile. it gives reason why the vix and volatility is this low options traders basically

selling options. there is some reason for it to be flown the down side, up side call buying on vix july options so maybe there is this turning point to carter's point where you get the reject off that's hot back down to the bottom trend line when this has happened when the vix is up and the market is up on the same day, what we have found is some very volatile balloons 4% moves up and down you get very large moves >> let's turn to the electric move in tesla. shares charging up 14% that stock is a whisper away from doubling in 2023. if you think you've missed this run higher, have no fear mike has a way to play the ev

maker for more gains mike >> we've been talking a lot about tesla since before earnings before earnings we faded this with a short call spread the earnings were disappointing. stocks fell almost 10% after we saw those declines especially more recently after the news that ford was going to be adopting their charging standard, we took a bullish view on tesla now we've got gm following suit this is one of the most broadly held stocks. we've been talking about how vola volatility, at least measured by the vix, is low. enabling tesla, in fact, it is not that low implied volatility going up 2, 3 months is 50%. i was taking a look at the 300 level which is sort of the up side that we've seen in that stock more recently, going back to the preapril earnings if you own the stock you'll consider selling the jum 293

stocks in this case you're getting well over 2% yield on that and much less than two months here which i think is a track i wouldn't think of it as a hedge. you may have some tax considerations there i think that it's unlikely to get above that 295, 300 level at any point in the near future you still have significant up side if you hold the stock and you do that. so i think this is a way if you hold the stock you can take advantage of collecting a little bit of premium even though in most cases we would advise fwieg. >> you did chart, carter, the tesla chart for "fast money. what do you think of mike's $300 level. >> let's do it again and we'll do it quickly since it is a redo we've retraced half of it. $250 stocks, drops to 100. we're halfway back it does annotate how far we've

come then of urs could we're up it against it 300 level is right today's high versus 250 and change we've faded. i think 300 is the level that makes sense in terms of the strategy setup >> carnival, that's up more than 7% and has our traders thinking about the rest of the travel space. >> obviously there is a difference between hotel space, travel sights, exceed yeah, so forth, cruise lines. there's jets, skch let's o look

at them. it's one that we've had converging trend lines and we've moved to the up side my hunch is to play this long >> mike, what's your trade >> yeah. we were just talking about volatility being high in tesla in fact, it hit a three-year low today. i think you definitely want to use a long option strategy i was looking to the july 28th weekly 19 1/2, 21 call spread. that was going to cost 50 cents a contract that's an inexpensive way to play >> brian, what's your take consumer discretionary maybe i starting to turn we've been so bearish. tesla is an early indicator, maybe the consumer and other companies have worked off some inventory to a certain degree and now there could be up side

participation. i love buying the call spread. if tesla and some of the other auto moves move higher, the back half of this maybe carnival has it. thu played there's much more "options action" straight ahead >> announcer: calling all "options action" fans. reach into your pocket, grab your phone and tweet us your question @optionsaction. if it's nice, we'll answer it on air when "options action" returns.

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welcome back to "options action." we're starting in the middle of the week with lennar up 26% this year could there be a foundation of issues in the trade. mike's got a way to play it. mike >> yeah. first of all, i just want to point out lennar is a name that we own it's trading 10 times full year estimated earnings i think everybody is aware that ingle stamly home instruction has not kept up with pace of demands. that said, in there's ever a time where it could be under some pressure, this week is it

one of the things i noticed is you can put on a hedge for a short amount they're implying a move of 4.8% or so by the end of the week i think a simple way to hedge this, i was looking out at july, the 110, 105 foot spread that was going to current stock. if it's going to move within the implied move, less than 5% or so, i'm okay with that what i'm more concerned about is the outside event. even if we get that, the likelihood much lower than the 105 strike is actually quite slim this can you pare a little bit of tlail risk. going into the next week. >> how does the chart look >> well, we're fighting back and that is the setup for a breakout

or failure just a coin tows toss. my hunch is it pushes a bit higher, but it's a muted thing we're right at the former high usually you contend with it before you pick up itb is not back to the high. i suspect it will get there but not exceed it. let's slide into a software name reporting next week adobe, shares up 35% if brian's photo shopping a trade ahead of those results brian, walk us through >> adobe is a name we own in our value play i still will own after earnings, but i think a lot of people techniques are to use options plays and use the fact earnings are out and it's elevated. i've been looking at an options

trade in august looking to buy the 480 call while selling two of the 510 calls in august i use this basically as i'm long stock f510 i'm called away on my first call and stock position i collect the net $2 a premium on this trade. what it allows me to do is if i want to buy it, hedge somewhere, i have that extra cash available in case this stock continues growth you can't beat that. i can double up on the way up and play some catch up on the tech value names that have had a huge run if they miss, i don't think the down side is huge. this is a press your luck kind of play to the up side trade that i would use in a long stock position to overlay that with options. >> did mention ai. could be off to the races.

what's your take on adobe? >> yes we also own adobe. what i like about this strategy is you're trying to squeeze as much juice as you can out of whatever you happen to think is remaining. if you are hoong, my zbes we are closer to the end of this most recent tech rally. using strategies like this one where you don't take more down side risk but give yourself more juice for the near up side moves will allow you to get a little extra exposure here. >> carter, how does adobe look and how does software in general igb look >> igb looks very similar to adobe. it's the point of a laggard that it's playing catchup we looked at cisco a week or two ago in this same light so these do have legs relative to the most extended legs.

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obs observe vags, she spends 300 days a year on the road. >> each day we live we make some impact on the planet and we have a choice as to what kind of impact we're going to make 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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is actually mostly debt. you know, if you go back to the tail end of the last quarter the market cap was 900 million and they had 9 billion i'm using round numbers here, in debt which means if the value of the company, the entire enterprise went up by a mere 10%. the value of it, they had $400 million in cash and anticipated negative free cash flow for the following quarter of $7 million. there was significant doubt whether they could raise the capital. they're playing off the leverage that's built into the equity, they're playing with the fact there is a big short interest and a chance for a surge there once they get enough equity where you have 3, 4, 500 un

million. if they can keep the free cash flow, they may live fto see the next couple of years. >> i think we lost brian carter, what do you see in the charts. >> they might live to see a couple more years. it wasn't the prognosis how they were postponing the death. look, there's something to say about a stock that loses 99% of its value. you can lose 50 and 40 but the record shows when you lose 90 plus percent of your value the great ma are the jo, this is bounced, it's tremendous today's action is poor it gave back almost the entire move of yesterday's surge. it's, again, late. the debt is serious. is this just a bounce? if you've got profits, i would take them. >> brian, quick thoughts here?

>> yeah. implied volatility levels are enormous here. that's why you're seeing the 20% swings if you look at 2025 options, the implied volatility for you is a lot and as things simmer down, watch the 14, $15 level. if you crash below there, the eyeballs are exploding more and bankruptcy becomes real. 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.

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jha the foot credit spread 61/55 with a september 15th

expi expiration do we adjust, still hold or take profits? i believe he's referring to the june 16th expiration what's your take on this, brian? >> if you take a little bit of profit, i think retailers are starting to get it to turn around we've been very negative and underweight on consumer discretionary. amazon and nike are the two i like signs of tesla breaking out. carnival cruise line breaking out, maybe retailers are next. i'd like to see one more earnings cycle maybe the back of the year is when i get long xrt. wait for july earnings and see hue they play out in foot locker and those kind of games. >> our next asks what are your thoughts on gold carter, do you still like gold >> well, gold, yes, but the ticker, barrick gold, gld, underperforming.

you want to have exposure and i would do it through etf, gdx or gld. >> time for the final call let's kick it off with brian >> mike? >> adobe call spread >> that's right. we'll tweet this out that does it for us here at "options action. back here next friday. "mad money" starts right now >>the following program is a paid commercial announcement, sponsored by "america's next investment." (upbeat music) before there was space travel, there was an idea. before there was ever an automobile, somebody had an idea. before there was telephone communication, it all began with an idea. dronedek has an idea you could invest in, which could disrupt packaging and shipping industry as a whole. call now to discover how to become a shareholder in dronedek. eventually, most online purchases will be delivered by drones. a drone can be an aerial craft, driverless vehicle, or it can be a robot, in addition to deliveries from a mail carrier or ups.