so far, they have found nothing, but everyone fears that, one day, remnants of lock's terror will surface again. right now on "o.a. the market is set to enter the lion's den of earnings season next week as investors digest early results from banks, the falling that are and rates how options traders handicapping the action we'll debate. plus all charged up. tesla, ahead of its results. the stock up over 125% this year can the ev making keep rev up its returns? later, we'll see if netflix can keep streaming higher, if energy

names can keep the summer going, and if rebounds are ahead for the health care owner. in sara eisen in for melissa lee. this is "options action" live from the nasdaq market site. on the desk, mike khouw, carter worth, and brian stutland. we're going to start with the huge week for stocks as we roll into earnings season the major averages rallying for the week as cooler than expected inflation data boosted optimism on the economy and the fed banks kicking things off with results this morning jpmorgan, citi, black rock, wells, all delivering beats. the stocks trading mixed on the results. as we head into the heart of earnings season, what is on your radar, mike, and what do you make away from the signal so far? >> yeah. so, you know, we had some mixed signals this week for sure. first of all, as you pointed out, we did get somewhat better than expected epi data at the same time that happened we did see increases in oil and copper prices, which we might think of commodities that are

tied to the economy, sort of industrials there. so that's, i think, obviously, a positive. on the downside, though, we saw two tens that went the wrong way. ten-way rates go lower rates go lower. that's not necessarily a positive when we take a look at what the banks had to say, it wasn't all that great. net interest margins at jpmorgan were very good, but, overall, they're talking abou increasing delinquencies, talking about lower level of consumer borrowing, and net deposits turned negative you put all those things together with the fact that nvidia, the bellwether for the market, i think so far this year, gapped higher on the open, hit a new all-time high and closed with a reversal, closing lower. that, which the market seemed to mimic doesn't look good to me. >> that was a big swing. carter, what do you make of earnings >> it's impetuous of late. three unfilled gaps in a row

and then the reversal today, including nvidia >> we got a frozen carter. >> -- priced in, i think most specifically in the nasdaq in any event, yes, impetuous, and i would be fading the move in ndx. >> brian >> yeah, i think it's interesting what happened this week basically mike mentioned their little reversal at the end of the day. one positive thing is we saw the vix volatility go down the market closed down. historically that's been a sign for a rally, meaning people are kind of selling puts into a down-sided market. maybe it's just a breather at the end of the week, but obviously carter here talking about the dollar being weaker. it doesn't feel like a dolla crash, but certainly there's been a big reversal in the dollar, and i think basically when we've seen ten-year rates sort of not be able to get above this 4% mark, it's really weakened the dollar, because the rest of the world basically saying, maybe the u.s. isn't doing enough to control inflation there, take inflation to that 2% target.

maybe we'll have to live with slightly higher inflation in this world, and that's going to weaken the dollar. that's helped names like in the dow, which have a ton of exporting situations there so a weaker dollar there we saw the dow continue to rally and sort of bounce off lows at the beginning of the year as we saw struggle, and maybe tha reversal here, those big cap, mega cap names might be beneficial. >> we want to talk about that exact topic here with carter, honing in on the currency and bond market move carter, you're seeing a big theme in rates versus the dollar. >> that's right. so what do we know someone who specializes in many ways in currencies, we know the dollar peaked in september the third week then one month later, rates peaked in october. let's look at rate charts and the dollar so, what do we know? we know again there was this bit of strength. rates moving up, but it's a head fake we've moved up and out of those converging trend lines now fallen back to it. again, that's almost ten months

ago that rates peaked, despite the street thinking we're going higher look at the ten-year yield, five-year, two of year we can look at one chart after another. those are all head fakes that are not good now, the two-year, of course, right back to the former, and we might even have real ten-year yields, which you'll see next. all of this would suggest that despite the, well, rates are going higher, well, they're not. i don't think they are. you used the phrase one and done i think that's possibly what we're dealing with the dollar's never confirmed any of this. we can look at the chart of the dxy, and what we know is the reits are acting well, the dollar not acting well, it would all suggest that very much an instance of rates having peaked for basically ten months and not going higher. >> so there's a risk to that, though isn't there? mike, the risk is first of all we've got strong data today on consumer confidence and inflation expectations

i know the theme has been better growth numbers and moderating inflation numbers, but we still have a healthy labor market. housing is ticking back up some of these commodity prices are rebounding, like oil and copper. there's a risk that inflation pops back up, isn't there? then rates might have to go higher. >> well, you're saying exactly what larry fink said larry was basically pointing out that people should not discount inflation too much here. you know, i think that bringing it down from 8%, 9%, to 4% to 5% is a whole lot easier than bringing it from 4%, 5%, to 2% or below the fed's stated target, particularly when the labor market is as strong as it is we haven't seen a lot of these prices come down. inevitably because you have higher price levels, that's going to create pressure in combination with higher wages, and that's what makes essentially inflation behave in a cyclical manner and makes it stickier than you might otherwise think. but consumer confidence numbers are one thing, and what

consumers are actually doing is something else you know, consumer debt levels basically the level of borrowing has slowed considerably. in fact, i think it hit levels it hasn't since april 2020 which was basically right when the pandemic was breaking out. >> brian, we'll give you the final word on rates and the dollar's direction, how that impacts the overall market. >> yeah. i think if rates are going to stay somewhat tempered here. if the dollar's going to weaken maybe it's time to look and pick up commodities in a portfolio. energy names out there. i know xle was down on the day, but that might be an area you want to consider like i said before, i think some of the dow mega cap names that were beaten down to start the year that have so much involved in a u.s. dollar trade, where things get cheaper for them to sort of export and profitability increases might be another area of the market that i'd be looking to sort of add to my portfolio. >> like a staples? like a png

>> anywhere from big dow cap, microsoft to american express, some of the other bank names that were sort of beaten down, and a name like deere, cat, i think those things could be in a good position now to take off. >> all right by the way, microsoft did close higher, even though nvidia was lower. now for a name we can't help but talk about the most actively traded options name on paper and, of course, in our hearts, which is tesla the ev maker continuing its massive run, now up more than 120% last month mike laid out an options trade to get in on the surge. tesla shares kept getting higher putting that one firmly in the green, but now with earnings due wednesday night he's laying out an update on the name, mike. tell us what to do. >> yeah. so i think it's important to remember when earnings seasons come along that this is really when stocks move. the first four weeks of earnings season, typically kicked off nowadays with jpmorgan earnings, s&p rises 90 points on average. versus 60 for all basis periods.

this is when stocks really move. tesla is no exception. this is a stock that's moved nearly 20% higher or lower in the month over the last three years. we have cybertruck coming out probably later this year. one of the things we're beginning to realize as cars are going ev, that tesla is the legacy ev automaker, of course, without all the baggage that most of the legacy ev automakers have they don't have dealer issues. oftentimes when you have high demand cars, it's the dealers who end up making the money. the thing is, we've had a very nice run in the equity. i'm looking to move out of equity position and into an options position going into earnings and i think one of the things i'm looking at doing is purchasing the august 280, 330 call spread. that's looking at four weeks after earnings notice also i'm looking at that approximately 20% that the stock move has been on average, because that's basically where

the upside target is you can risk about 5% of the current stock price to do this i think it's a lower way to risk this, especially net of today's reversal that we saw not as high flying as nvidia, but it is definitely up there. we've had some nice gains and i think we can sort of play with house money. >> yes, grasso said it's going to 300 carter, what are your thoughts on tesla >> my thinking is certainly if you're long, you take measures, which is to say, trims, buy calls, puts or some variation of all of that. it's a steep uncorrected move far above its 150-day moving average. if we have a chart we can pull it up. if not, again, i think one wants to consider something that was loved and hated and is once again loved. usually when you get lopsided like that, it's right to take the other side >> brian, what's your take on mike's tesla trade >> yeah. i really like it especially as a stock

replacement. the last four quarters the stock moved over 6% after earnings a call spread that's costing less than 5% of the stock, that's a way to limit some of the risk on the run-up i bought tesla a few months ago. now the stock's run up now maybe time to sell buy a call spread instead, get upside market participation but sort of take out the earnings event but get the earnings in if the stock continues to run higher that's a great way to play it. >> all right for everything "option action," check out our website and newsletter there's more "options action" coming up after this >> announcer: as disney discusses a radical shake-up of the media space we look ahead to netflix earnings next week. plus, with oil on a recent rebound, we drill down on schlumberger plus, 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.

thinkorswim® by td ameritrade is more than a trading platform. 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.

is it possible to protect my business from cyber threats? ♪♪♪ it is, with comcast business. helping every connected device stay protected. yours. your employees'. even... susan? hers, too. safe. secure. and powered by the next generation 10g network. with comcast business, advanced security isn't just possible. it's happening. get started wih fast spees and advanced security for $49.99a month for 12 monts plus ask how to get up to a $750 prepaid card with qualifying internet. sleepovers just aren't what they used to be. a house full of screens? basically no hiccups? you guys have no idea how good you've got it. how old are you? like, 80? back in my day, it was scary stories and flashlights. we don't get scared. oh, really? mom can see your search history. that's what i thought.

introducing the next generation 10g network. only from xfinity. 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." we've got an update on this developing story, the lawsuit against jpmorgan over it banking relationship with jeffrey epstein. the u.s. virgin islands saying in a filing late this afternoon that it would seek at least $190 million in damages. well, now a spokesperson for the

bank has just told cnbc the document filed today "does not reflect the nature of settlement conversations. as for the u.s. virgin island's misdirected damages theory they are not well founded and are being challenged by jpmorgan in court as mentioned, earnings season kicking off here, and we are looking ahead to a busy week. more banks, airlines, home builders and a lot more. let's lay out options trades on a couple of your favorites brian, considering disney's media sector rocking comments this week about getting back to core, you're looking hard at netflix ahead of results wednesday. >> yeah. netflix should be an interesting play next week given we're starting to hear potential strikes from the actors out in hollywood and how that will play out for a lot of names i think netflix will be less impacted than other bigger media people out there, but netflix has had such a huge run, it's already retraced 50% from its low to high of 2022 already.

i think there's probably some more room to run, but i think there's ways to use options to sort of benefit this area. here's a company that is now probably going to have $3.5 billion of free cash flow that's a significant increase over last year when i start to see cash flow increase, to me i can start to sell a put, not be so worried about the downside. i'm going to use an options play to continue to play the upside in netflix and use options to do that with a little bit risk-adjusted take on this i'm going to buy a call spread, 440 strike all the way up to the 500 strike call spread i'm going to buy that call spread and i'm going to look to finance that by selling a down side put spread. these are all options that expire friday. all goes away if we don't make a move within the parameters but i can pay basically $7 debit here on this to do this between the call spread i'm going to own and the put i'm going to sell on the downside. i get to make money all the way

up from 440 all the way up to $500 a share, and here i don't own stock until it's down to that 420 level like i said, the free cash flow is look going for this stock if they meet those expectations i don't expect the stock to fall there. if they do, i like owning the stock down at that level, so i'm okay with sort of the risk/loss down at that level but this is a nice way risk adjusted i think to play netflix to the upside. >> mike, what's your take on that trade >> i love call spread risk reversals, especially such as netflix. i might try to widen out that put strike, just drop that down, take that long call strike up a little bit the idea being, if i'm going to put the stock, i'd like a bigger discount than 5%, which is what you'd be getting if you put the stock at 420. other than that, i like the strategy maybe push it out longer as well. >> let's get to another name with results next week slb, formerly schlumberger. the oil stock ripping higher, but just like the broader energy

sector, it's still underperforming the market mike, you've got a call to action if you think the recent rally can keep pumping, what do you do >> yeah, so obviously i like this space i usually talk about how -- we did on a couple of occasions just recently. but i think we sort of have to talk about slub -- that's what we'd call it back in the pits back in the day. they're the biggest player they have the broadest possible exposure to anything good that's going to happen in the space we talked about halliburton' targeted return, 50% slb, looking at a bigger one, 50% if they manage to get up to it i will say as a caveat, their free cash flow was disappointing in the last two reporting quarters i think, again, expecting if there's going to be a move we're probably going to be getting it coming out of earnings. one of the things you can do,

similar to the tests of trade, risk a little bit of the current stock price to make a bullish bet here. i was looking into august, 57 1/2, the call spread. lay out $1.50 for that going to be risking less than 3% of the stock price to make that bet i think that's the way to play it going into earnings here. >> carter? >> strong stock, a lot of immediate momentum and i think it goes higher we can look at a chart, but what we know is a big week for the stock, a big week for oi services, and this is the third big week in a row where you're up more than 5% on the week, and yet so far below where it's been i'm a buyer. >> brian >> yeah. i mean talking about stocks to own in a weaker dollar environment. i think slb is exactly the name i do want to own, and i like owning a call spread ahead of an earnings play. i think it gives commodity exposu exposure, plays the weaker dollar

if energy prices hang in there to tick higher, i think profit margins expand, and slb will be a perfect one. up next, we're checking on unh, united health care. after its big move higher today, how the traders are managing that one when "options action" comes right back

welcome back to "options action." last week mike laid out a way to play united health ahead of earnings results that beat expectations this morning, sending shares surging finished up 7.25% even with a market reversal. mike, how are you managing this now? >> this had a much bigger move than expected to the upside. good for holdings but not for the override we did selling a credit call spread against it. now, if you closed that straightaway you may have lost $2.65 a contract often that's what you want to do in this situation. i will say, though, it does feel to me like it needs to get above 490 before we can say that it's out of that downtrend we've been seeing. >> carter, we know how you felt about the chart, god-like. >> it's a stock that's recovered to its declining 150-day moving average. it saves what has been an

ongoing bad circumstance down again 20% from its peak. of course, much better than the qqq or s&p but for a very benign, orderly, all-data uptrend, it's been struggling. what to do now it's a pair of twos. i would neither be long nor short. >> part of the reason it had maybe such a big run-up, comments at that conference a few weeks ago about how elective surgeries were going to be back and it hurt. sold off hard on that news. >> basically saw it reverse, and now it's short players getting squeezed. now play to the downside, now it's run back up mike makes an interesting point about whether you want to cover this short call spread or not. that's what i like to do pick a price point, stop myself out and cover it if it gets there, and i think mike hit the right point for the stock. because if the dow and dow jones goes higher, unh might get pulled higher with it. >> all right. up next, your tweets and the "final call."

hi, my name's steve. i lost 138 pounds on golo and i kept it off. so with other diets, you just feel like you're muscling your way through it. the reason why i like golo is plain and simple, it was easy. i didn't have to grit my teeth and do a diet. golo's a lifestyle change and you make the change and it stays off. golo's changed my life in so many ways. i sleep better, i eat better. took my shirt off for the first time in 25 years. it's golo. it's all golo. it's smarter, it's better,

it will change your life forever.

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℠. welcome back to "options action." time to take some tweets of yours. our first fan asks, i have been rolling my 170 apple covered calls every week to avoid getting my shares called away. time to the considered or to you see a pullback to continue rolling? what's your take, ryan >> this will be interesting. next week the nasdaq has a major rebalance and the top seven stocks are over 50% holding waiting in there that's going to cut back around 30% waiting. apple is one of them, so there might be a pullback next week, so i would wait to role calls before and let's see if there's pullback in top names in the nasdaq. >> all right our next fan asks, a while ago i sold a september call. on jpmorgan. should i repair the trade, and if so, how mike. >> first of all, if it was a while ago and september you

might want to consider shortening up the distance out in time that you're selling these calls. that's the first thing i would say. of course, this is already done. i would take a look at the extrinsic premium that's left. if all you are is in a call that's trading at parity, that's a short position, and i would actually consider just taking that off and possibly rolling up, but because you're so far out in time, i might just close it. >> all right one more tweet this one asks thoughts about an i-share silver trust october 27 call. could be resistance at 25. dollar trends and weakness may cause slv to go past carter >> well, that's exactly right. it's about dollar weakness a big strength in silver, silver outperforming the all commodity index year-to-date. overhead supply notwithstanding. i would stick with the trade >> time now for the final call from each of you carter, you go first. >> let's go with silver, slv. >> there you go. make it easy. brian? >> netflix, buying a call spread, selling a put.

i don't care about the actors strike i think stock goes higher next week, earnings. >> all right mike >> tesla, take the stock off put in a call spread that's going to do it. cnbc special "techcheck" with deidre bosa starts now. >> this is a paid advertisement for csn. >> you know, i've been doing this a long time, to say -- to say it simply. i've sold silver eagles since they came out in 1986. so, that's kind of my history, '86 to 2023. and every year of the american silver eagle has kind of its own story, its own flow, its own everything. and at the beginning of 2023, it didn't seem like 2023 was going to be special.