right now on oa, despite a down week for the markets, it's been one heck of a first half of 2023 with one week left, how are options traders setting the table for the next six months? we'll break it down. trading the globe. been a hectic week for markets in india, japan and beyond and later earnings on tap at walgreens. can the pharmacy giant find the right prescription to turn

around the struggling stock. we'll go inside the numbers. i'm courtney ragan in for melissa lee. this is "options action" live from the nasdaq market site. and we start with the first half hotties. a number of names on absolute tears this year. nvidia up nearly 200%. meta jumping 140% and tesla driving more than 100% higher. ge, salesforce and more locking in solid gains will they keep this run going in the second that is the key question tell us the answer, tim? >> well, i tell you, you talk about nvidia and you talk about one of the greatest momentum moves we've seen in any stock of all time it's options traders are certainly planning on how -- or part of the strategy is how you deal with all of that up side volume you've had and how you're looking a the the future when i look at a facebook where i think around ai and we recently talked about this, 27% of their content is ai driven, i

actually think they're in a position in the second half to continue to ride because that multiple is much less demanding than some of the other names netflix is a name that i've been long and i'm starting to fade that position. none of this is about netflix. it's been about the profitability and the regeneration i'm staying long but i'm trending that position. >> mike khouw, what do you think of these first half hotties? can they continue to run >> they certainly could. we have seen high flying stocks in other sort of, you know, bullish areas continue for extended periods, and certainly names like nvidia could continue options traders are seemingly quite optimistic this is one of the most active names. if you want to understand what they're thinking, you can take a look at options volumes and nvidia has been in the top ten consistently i think it was number four today and if you look at it on a notional basis, even higher. the thing is these kinds of

valuations if you're a longer term investor, sort of talking about the first half and looking ahead to the second half and beyond, it's a little bit harder for a name like this to really stay ahead i happen to think that a lot of the economic data we've been getting lately seems better than we might have otherwise expected if i was going to be picking things to be long for the second half, this isn't the place i'd put new money to work. >> fair enough bonawin? >> what's the catalyst further nvidia is near and dear to my heart. it's doing well. if we drill down, we've baked in pretty robust and resiliant economic activity to mike khouw's point. then you look forward. ai, the value expansion has been fueled by this specific subsector within technology so you ask yourself, listen, given all of the headwinds that the fed is still eluding to and the

move we've seen in pricing and what's really come, again, at multiple expansion as opposed to earnings expansion, what is the catalyst that's going to take this leg further when i look at these high beta type of names, expect that there's going to be volatility this is not going to be an orderly move marching up and to the right. you will expect to see a little bit more volatilityin the second half of the year, particularly if the consumer feels the second crunch. again, while they could and they have done exceedingly well, i would expect to see a bit more mean reversion the second half of the year? >> what about tesla specifically we talked about it being up 100% there was a downward price revision by adam jonas what do you make of the near term future? >> the story around tesla on the fundamentals is one that is demand driven by lower prices. they're about to give us deliveries on july 2nd and the expectations they're going to hit the 1.8 annualized number.

people can fight thatone out they're on both sides of the aisle. this stock has been all over the place. i would point out that it's definitely a case where one of the hardest things to do in markets is to let your winners run especially if you are a trader there are a lot of long-term investors out there. they are laughing last when it comes to some of these names that i think at times people tend to overtrade them i'm not a buyer of tesla i think the dynamic on the multiple is good it's starting to break out of the 200 day. i think there are a lot of shorts in the way. >> we have seen the names surge in the first half. there are other stocks you're keeping an eye on to drive the second half. tim, what are names we should be looking at going forward let's leave the past in the past. >> alibaba has been in the news and china. this is one of the most recognizable stocks. the fact that joe sai is let back in.

net-net, pun intended, he's one of the owners of the nets. this is jack ma's boy. he's got a dynamic where it's going to continue to -- at this point the sum of the parts is something i think you can start to play. i realize it's been less about the valuation. the energy sector. after being -- we could have said that about first half winners. with all of '22 it's underperformed the xle to the s&p 22% year to date i think energy, it's with some irony kind of the circular nature, some of the better data, some of the looser financial conditions are coming from cheaper oil prices there's some sense that this is stimulative in terms of what it's doing to the economy, while we might get some up side prices it's weaker because demand is down energy companies run differently. you want to stay long xle. >> mike, what should we be looking at the second half the past from the past and the

winners that will drive their way forward? >> i think some of the themes continually talked about make a lot of sense we've seen adichotomy, the ai fueled names, high multiple expansion types of stories for the first half of the year there have been a lot of stocks left behind. there have been some technical analysts that have suggested that that actually is a warning sign for the market that you basically see just sort of a small group of winners and then a much larger group of companies that haven't been doing as well. i would say there's another way to look at that, and that is that those names could potentially play catchup a lot of them are not that expensive on a valuation basis the two companies taking a look at similar in some ways tim was talking about in having underperformed general dynamics defense is defensive if you are concerned, if you think the market is going to get rocky here in the second half,

reasonable valuation and not likely to face a lot of economic pressure on the same sort of theme we could look at bunge. it's trading at a reasonable multiple some people would point out they have seen real increases in revenues in pandemic inflation. >> bonawyn. >> you're going to help me i'm going to kind of pump the brakes here. kind of like shower. we're up and to the right. everybody is excited i want to bring everybody back down here. the second half of the year is going to be about defending your gains much more than chasing the hyper moves we've seen on the first half of the year for that reason, short term treasuries give you great risk adjusted returns it's not about chasing the

highest flying name, particularly when you're thinking about managing a portfolio. if you can slide down the risk curve and pick up incremental yield, that's a compelling story. the second name is mcdonald's. the fed has told you, listen, we're going to have to continue to raise rates as you trade down i want a name that's going to be strong and mcdonald's offers that. >> we've been talking about doe mets stick names and domestic situations india's prime minister here and all on the back of president biden labeling president xi

jinping labeling him a dictator. mike, tell us what you're thinking >> that was not helpful for the chinese stocks, the comments that were made, it hit them fairly hard. i'm trying to focus on the economic activity side some of that hasn't been quite as bad, i think, as some people have been making out we could see some additional rate hikes what bonawyn was suggesting. we should be looking to emerging markets. this is a similar play to materials and energy some of the materials tim was talking about. things are not as bad as people are making out this is a sector that has severely underperformed and is looking relatively cheap in my view this is a place that people could take a look at cautiously getting optimistic

i was looking at selling the september 37 to buy a call it's around 37 bucks which is discount to where it's trading against some participation and offset some of the decay. >> tim, what do you make of this trade or the general idea behind the trade? >> you kind of teased this segment, say we're going to be trading the globe. there was a great show on cnbc, it never went anywhere i have spent time in international markets. mike is laying out the options background on why emerging markets are interesting. the eem outperformed the s&p by 20% once the dollar peaked in october of last year a lot of dynamics that have em under owned can be better. currencies tend to be 50% of your return when you're investing in emerging. look at what's been going on in

japan. a dynamic where a market is running into inflation coming out of decades of deflation. japan is a place that is a proxy. i think japan can continue to run. these are places that is a very interesting time i think the allocation of portfolios by hedge funds is moving towards international. still to come, we are laying out trades in front of key earnings how to play some of the names. for everything "options action" check out the website and newsletter more "options action" here on tv live after this. calling all "options action" fans reach into your pocket and get your phone and tweet u us @optionsaction. if it's nice, we'll read it on air when "options action" returns.

welcome back to "options action." check out the names gearing up carnival walgreens, micron and more let's lay out the trades walgreens down nearly 16% this year how do you see it trading after the results? >> yeah. you know, it's interesting because i was just thinking about this during the break. i realized it might seem like we've got a little bit of what charlie monger has referred to as the cigar butt strategy trying to basically have a dash for trash here this is obviously a name that has been hard hit this year. i think there is a possibility after a fairly disappointing beginning to the year that we are getting to a level where it might start to make some sense to make a bullish bet. you know, it is obviously a

risky thing to do. could break through it take a look at an options trade. i was looking at a call spread risk reversal. things to think about. when you use a call spread risk reversal, you want every part to be long a call that is attractive short an up side call to finance it if you sell the down side put as well, you're looking for some level of support you can collect a little bit of premium on this trade spreading it out by 2 1/2 bucks a side this is a way you can dip your

toe into it. >> bonawyn >> i echo mike's thoughts. redefine them. these are relatively closely tied option tracks, right? if you look at the name, you aren't expecting outside moves you don't want to be paying a ton of bleed for a move you won't get. that was a very thought fully laid out trade. >> let's turn to micron. how are you playing this name? >> micron's kind of an interesting one. they're not catching the fire that the ai buzz has created as tim who i know speaks about this name quite a lot really it's going to come down to pricing. seems like we might be getting support there. this can move around a substantial amount this is implying a larger move even than walgreens.

use the in the money call spread that's the trade i was looking at offset that decay using this as a proxy for stock. i was looking out to july the 62/72 call spread in the money going to cost four bucks, paying 5 bucks for the 62 calls, selling the 72s against it it gives you a little bit of asymmetry. nominal for the k. only a few cents to make this bet. this is disappointing news this is a company that has been losing money you're not taking much of a risk. >> the options call is certainly playing to the fundamentals. there's asymmetry. stabilization and pricing is doing good destocking has been the story for a few quarters again, he pointed out this is a stock proxy to the long side i think that's right remember, it was just, i don't

know, two weeks ago when micron was under the gun being named by china as one of the countries they were not going to -- basically strategic companies could not be a buyer it very well may be, but right now micron's effectively recovered most of that from an earnings perspective, the risk is to the up side. >> bonawyn, this has a little more potential to have beta unlike walgreens what do you make of this >> the call strike in the money gives you stock like performance. i will say the stock has pulled back a bit from the peak i prefer the options play because it does limit your down side if it were to rollover. >> coming up next, carmax in the rear view. a look at mi'ske trade how to manage that one now when "options action" returns

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welcome back to "options action." last week mike laid out a way to have carmax. how are you managing this now? >> you know, it's always nice to look back on a winner. i think the story in carmax is one like we've seen in housing everyone expected rates to crush demand this trade is a winner, what you want to do you shouldn't necessarily pare your gains the stock traded well. i would roll the 82.5 calls up and out. basically take some of the money off the table but continue to play to the up side. >> mike's playing with the house's money as he should congrats as you should. i look at the fundamentals around kmx trading 25 times forward i get what's happened. 14 million shares traded today i think that was it and i think

there's a lot of short covering here i think we're going to see positive revisions and i think you see some of it straight out. i don't think it falls out of bed but i think you fade the trade. >> bonawyn, up 10%. >> i am going to straddle the fence. a little pun i'm going to take half the trade off and i'm going to take my other half best of both worlds. >> no wet blanket there. up next, your tweets and final call it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. 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.

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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. welcome back to"options action." it's time to take some tweets. our first fan asks, quote, looking for a strategy on how to play the following position. long nvidia 200 options and sold covered calls 380 12/15/23

>> this is a 22, $23 stock and short some relatively deep longer dated calls here's good news the december options have $45 worth of extrinsic premium your stand still rate of return, if you just held this position and the stock went sideways from now to december, you're going to collect better than 10% of the stock price in less than half a year however, there's no extrinsic premium deep options out to january. you might think about rolling those up a little bit. i think it's going to be kind of painful to take off the decembers right now given how pricey they still are. if you bought these when the stock was much lower, well done. next tweet our next fan asks can you share your thoughts on square? is it a buy? tim? >> this is a tough one i'm long the stock i've been long through different periods. look, it's the longest in a neo bank out there with 65 main. seller gpv has been increasing it's a stock that has under

performed some of the other high multiple techs we've talked about some of the other fintech companies. i like it. i stay long. i think it's been a painful run. i think the comps get easier and they are conservative on the april guide and we might see something newcombing through. our last fan wants to know if you can explain a short straddle please. give an example of in the money or on the money. >> there you go. sometimes better to be lucky than good. >> you're shorting a call and a put. you're betting the implied volatility of the options is not going to be realized you need it to be staying within the premium you collect. >> time for the final call mike >> yeah. i think we could look to a couple spaces where we've seen some underperformance so far this year. i rather like general dynamics and bunge. >> tim >> interesting how vix is falling with the market action markets stabilize next week. >> all returns are not created

the same risk adjusted returns. treasuries. >> that does it for "options action." back next thursday cnbc documentary "making of the meme king" is next starts right now never talks. 12kw5 : what do you think that ryan cohen is doing? woman $32: i have no idea. ♪♪ man: ryan cohen is a man of mystery. i've never met him. i don't believe i've ever even heard him speak. woman: he doesn't like to show any more cards than he has to. he's a contrarian, independent-thinking, independent-minded leader. 30-something entrepreneur who, essentially, took amazon on successfully, and built out chewy to the great company it is today.