greed as violent drug dealers. >> garry souffrant was a con man. all of the values that he ever had, he betrayed it for the love of money. he betrayed his family, he betrayed his friends, he betrayed his fire-department buddies and his own parishioners betrayed his fire-department buddies and his own parishioners just for the love of money. ♪ right now on oa when there's little money moving in a swiedways market, look to where the money sits in the banks. play the sector ripe for a withdrawal. apple options trade before the big iphone event next week? don't. we've got a wiser apple alternative play. finally, a look back two for one deal on recent consumer staples plays in hormel and kroger, explain the best way to cash in our coupons on both. i'm melissa lee, this is

"options action," on the desk, mike koe, carter worth and brian stutland. as the markets close out, financial sector has been trailing further behind. carter thinks that's indicative of a larger theme at work here. carter? >> interesting, of course, jp morgan has been the best but still the bkx august struggling. they're making all-time relative highs to the bkx and kre, on absolute basis they look lob rolling over. sticking with morgan stanley. first thing to note, it's quite remarkable. morgan stanley is the same police it was in september of 2000. so, now, if you have a stock that's gone sideways for 23 years, that means adjusted for inflation, you've lost about half your money. 23-experience year, year over year, lose 2.5%. that's pretty unhappy. zeroing in closer, this is the

trend line in effect since the covid low. we have converging trend lines, one could say your arrow is wrong, carter, it's going to break out. ic it's going to break down. and shorter term, and wrap here, what we have is that line is in play. do we breach? it is, to be fair, a series of higher lows since the lows of about a year ago. i think we're going to break. >> all right, so mike, do you agree with carter's assessment and what's a trade here? >> yeah, i mean, so let's just talk about the space first, i mean, what's kind of curious about the group, if we're just talking about the banks and brokers, big ones would be goldman, morgan, jp morgan, so on, historical basis, the valuations aren't terribly expensive. probably looking at something in the neighborhood of 10, 11, earnings something like that, but historical average, take a look at the news that's been coming out of these companies, basically since june, almost

every one of them has been announcing a head count for productions, so we've got the barkley, heard that from schwab, and citi. credit suisse. and jp morgan and -- >> mike, sorry to sbrupt, we're having issues with your audio here, we're going to have to try and get that straightened out. we want to get those levels and what you're doing, loud ask clear. across to the audience, brian, what's your take on carter's assessment? he mentioned the arrow could go up but he thinks the arrow is going to go down. do you agree with that? how are you feeling about the brokers? >> yeah, i think some of the banks and the major brokers have really been a trade where they're kind of stuck in the mid. that wedging channel you're seeing that carter brought up is if the market goes south some of these broker could break to the

downside. morgan stanley being one of them. some of the big major players in the financial sector, one thing we'd like to do is trade structured notes with them. that's a fancy word for saying selling a downside put, or vice versa, selling an upside call. we think they're actually relatively pretty good premiums in some of these names. downside risk in big names, selling the way output, going a few months out seems to make tension and the maybe the top is capped off. selling upside call makes a lot of sense. looking at premiums 90 days out that are providing relatively good annualized returns over or near 15%. so, i think when something is sort of just stuck in the mud, or it maybe has the potential to break to the downside as carter mentioned, selling upside call makes a lot of sense in these names, taking premium. >> mike, i think we've got you back, got the audio issues straightened out. so what's the trade here?

>> brian may have been alluding to it actually. what i was taking a look at was selling an upside credit call spread, and using one in morgan stanley that expires before they're reporting earnings, which they do in the third week of october, specifically looking to the october 6th, weekly 86/88 call spread, collect $.072 for that. when you -- stocks get rerated, repriced, and you could see basically all of that premium either coming in your favor or go needily against you and don't try to chase, you know, high premiums, essentially, you want to try to look for situations where your range bound neutral to bearish when you do these types of trades. >> carter, you mentioned the regionals are the worst. is there any hope for them since the stronger banks are rolling over in your view? >> i don't think so. i mean, let's just say one could say, well, there's no downside. okay, let's see that point to the other side. what's the upside? it's always about that. investing is always about risk.

it's mapping managing it. see the point with the person who's bullish. what is that's going to make banks here and now get up on their feet and start outperforming? i don't see it. there's also this, the largest financial in the financial sector is berkshire hathaway, making all-time highs, there's a reason for that, because it's highly defensive. that's an anti-market kind of thing. >> all right. mike, last words to you. >> yeah, i mean, as i was saying before, and maybe you guys heard this and maybe you didn't based on the audio ibssues. the fact is, you don't typically see an entry en masse laying people off when times are good. that's not the pattern. it doesn't seem based on their actions like things are really good. which suggests the cheap valuations we're seeing in a lot of these stocks are cheap for a reason because they are below historical averages. >> turning to one of the big e movers from this week, that would be apple, the tech titan souring 6% this week, but there could be a better alternative in the software space.

carter's peering into his crystal ball for this one, or maybe the charts. carter. >> so, we're going to look at some other old world names. for fun, let's get right to it. do a little bit of fundamentals to put this in context. not clear where apple is growth stock or value stock. and this is to be noted, apple that be in and out of the s&p 500 growth or value index three times each, sometimes it's growing, sometimes it's not. take a look here and you'll see this is a stunner, i think, on a ten-year basis, 2013 to 2023, look at the difference between, of course, the shares outstanding, and look at the multiple. basically, you've had earnings kbrout, you've had revenue growth, all very modest, but the share price is what's moved, it's simply a buyback machine. there isn't really anything very impressive other than multiple expansion and at this point we're starting to see it in the charts and looking at two relative charts, we looked at these earlier in the week. so the last week in september, a year ago, apple puts in its

relative peak. on a one-year basis apple is up only 14, 15%. the tech sector is almost double that at 30. the semis are up 42. you could have bought a broadcom up 60, so many other choices. so the opportunity cost here has been really a disaster, the final chart is the same relative chart, it's a ratio, it's one thing divided by another, we are breaking trend, topping out, apple over the past year has been a bad pick. >> mike, what's your take on this? >> it's interesting he was talking about the buybacks. ten years ago the company essentially bought back 5% of its outstanding shares and each year since the amount in dollar terms has either been flat or declining. but, of course, the value of the company has been increasing. what that means is that as a percentage of the company year -- they're buying ever smaller and smaller amounts of it back. so, you know, the impact of those buybacks is going to diminish as that takes place. so, i get the point that carter is making, using essentially the

tremendous cash flow the company has been generating, and nobody's denying it has been a cash flow generating machine to buy back their shares has a diminishing benefit over time. >> with all this said, brian, people might be looking for an alternative trade, and you've got one on oracle. >> i do, oracle is one of those names if you're looking to move out of apple oracle is one of those plays, it's also a play where if you've had high-flying tech names in your portfolio, such as some from the semiconductors, up huge on the year, i'm looking to rotate to a safer tech bet, oracle is one of those. we have earnings coming up here. the stock has had a big run, trading near all-time highs, sometimes i get the feeling can i buy it here or am i just chasing it? i think they're going to have some good earnings here. we're seeing double digit growth for their cloud applications, they have a play in the a.i. world, not to mention obviously there are continual customers they have and will have, by them becoming a bigger and bigger

player of the cloud provider they are taking over this world and you get an a.i. world play with them. i think, though, if i'm here to just try and buy the stock i think there's a lot of risk. there's a big catalyst event coming up, like i said, earnings, i want to be safer when i go in to first buy this stuff. i think we can use call spreads to do that. they're a little bit pricey, but the earnings move big enough. we've seen the stock. it's been a few quarters before it's moved significantly to the downside. we have 7, 9% moves on the downside a couple years ago. there is some risk here when you step ahead of an earnings event. the call spread when i'm looking for the 125/145 # call spread i'm going to buy the 125, call, sell a 145 call against it to lower my cost. this will expire. give it time to run to the upside here, going out to november. on the call spread, break even 131.34, above this i get to profit all the way up to 145, be called away from the stock at that level, but i think i'm risking a little bit here, i

think 145 is sort of my price targets on willing to be called up away at that level. there's room to run and this is a call spread, a safe way to get into a stock and trade your all-time high. >> for everything "options action" check out our website and newsletter. there's much more "options action" right after this. >> announcer: adobe stock is up more than 6% year to date, and ending this week sitting right under its 52-week high. with its quarterly report out next week now is the perfect time to deploy an options trade. we'll show you how to set up. 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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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 wac to "options action," another tech name out with earnings next week, adobe, the software stock surging this year, up nearly 67%. if you think photo shopping this one out of your portfolio after its big run is a good idea, think again, mike's got a way the play it. mike, what's the answer? >> adobe is one of our holdings, and one of the reasons or two, really, the reasons for that is that they are at the intersection of a couple secular tail winds that i think are quite important.

one is digitization, we're talking about the fact that -- this was accelerated by remote work, where increasingly move to digital work, and,you know, if you think about how that impacts people just imagine something like docusign, their equivalent is e-sign, but that is a big benefit for them. another, of course, is social media creators who will use a lot of their products, including things like creative cloud. we're talking about people creating videos and putting them on youtube and elsewhere. they create a lot of software that they use. so that's a real benefit. of course, if we're taking a look at enterprise spending if there is a little bit of caution there, that is one area and one other thing i would certainly say is that kind of like the oracle situation that brian was talking about before, this is a company that's had a heck of a run, up more than 60% year to date, it is trading at a slight premium to its own historical multiple, probably trading around 515, 520 area on its own

h historical multiple. as we were mentioning before, the time to essentially look at things like call spreads, which is the trade we're going to articulate here, you want to have an identified catalyst, got one in the form of earnings, so i was simply taking a look at buying a call spread here, a high-dollar stock, something important to remember, 550, 560 bucks, i was looking at the november 565/625 call spread, cost $21, $22 per call spread, a decent outlay of premium, an important point of people looking to reduce the amount of premium, one way to do that is by tightening up those stripes so essentially you have less reward, but lay out less premium and that's one of the things you face if you're doelg with options on stocks that cost 5, $600 a share. >> carter, the charts? >> the key here, year to date performance is arbitrary, january year to date means nothing. so what's important is where you are in relation to where you've been. apple has recovered all of its losses, and gone on to make new

highs but is faltering, whereas oracle has recovered its losses and is making new highs. but adobe has yet to make it back to the highs, and that's the reference point that matters. so, i think you play this for a catchup, and we might have a comparative chart as well, just to make this point. as a matter of technique, you either go with a real winner, playing relative strength, that would be oracle, or you double back and find a laggard like adobe. but the one in the middle is the one that's not interesting, that's apple. >> brian, do you like this one too? >> i do, actually, i like the length of the strikes that mike picked here, when you look at earnings prior adobe, 5% is about the norm for a stock to move after earnings, that could put you all the way up to that upside strike, which mike is short in this case, and as we know after earnings events those short strikes lose implied volatility, lose premium after the event is over, and so i actually like the distance between strikes. you have to have more stomach here, it's a higher-priced stock, but using a call spread

to play to that pside, especially on the charts that carter laid out, the all-time high to get back to level, seems like it could hit that. >> lookbacks on consumer trades, a couple of staples names saw big moves. rinse and repeat. don't go anywhere, "options action" is back in two.

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welcome back to "options action," last week we told you to skip the spam, and laid out a bearish trade on hormel and the stock has dipped 4% since then, putting this one in the green. carter, what do you make of this price action? >> pretty bad. staples have taken a hit as a group, hershey, general mills, but this one is under particular pressure. the setup is longer base, this stock has quadrupled if performance of s&p on a 50-year basis. hormel foundations, 50% of the float. it's losing all of the luster of that very long period. my hunch is that it's not over. i would continue to be a seller if you're long, and if you're a short seller, retain the trade. >> all right, and we've got a bonus, look back for you tonight, staples shares of kroger jumping better than

expected earnings, and updating investors on its deals move. kroger represents an easily repeatable fundamental options strategy. >> that's exactly right. the strategy we talked about was a buy right or cover right if you already own the stock, which is a situation where you sell upside calls to basically collect some premium along the way. and one of the things we often discuss is whether or not it's advisable to sell calls going into catalysts such as earnings when we discuss this we sold a call that expired prior, although it would have still expired out of the money. now that catalyst has come and gone. other news out of kroger, they announced the opioid settlement which is important, it's good to get that potential obstacle out of the way and another obstacle they faced was antitrust concerns with respect to the merger with albertson's, and they're looking at a pretty significant divestment and hopefully that's going to get that across the finish line. for those reasons i still like the stock but i also think that

this is one of those things where i'm not expecting any kind of explosive price action to the upside here. this is steady as she goes, a yield play, i think you can look to sell, additional upside calls against the stock that you own. >> would you do that, brian? >> yeah, in fact, i was taking a look at it, you look around the 48 #, $49 strike, the top end of this channel that it's in, go maybe let's call it out towards the end of the year. there's decent premium to be left and after the earnings event is over with, i'm less afraid of getting called away too soon, and seeing the stocks collect premium on that, go a couple months out, look at that $49 strike area as a place to go ahead and buy right, and sell calls. >> what do you think, carter? >> pair of twos, big hand, other things are better, pair of twos, not so good. >> all right. up next, answers to your questions and the final call, "options action" back in two.

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where smart investors get smarter℠. ♪ our new set, first "options action" from the set. welcome back, it's time to take questions, our first fan asks is uber in a cup and handle pattern, if so, how would you play it? what do you make of this assessment, carter, the charts? >> on a short-term basis that's exactly what the pattern is, if you look a week over week basis, there are a couple things about over, one, we know that its ipo price at $42, we've finally gotten above that from may of 2018, and it's relative performance lift is at its covid low, uber really stay long, be long, and i would play it with options or on the stock. >> do you also like uber, mike? >> yeah, i do, actually. you know, i think, you know,

this was both -- you know, both uber and lyft, i think uber is obviously a demonstrated, they've been doing things a little bit better of late. but yeah, i think this is one to stay long here. >> all right. let's move on to this one, this is a stock everybody asks about, nvidia, our second fan is asking your thoughts on puts on nvidia, brian, your take. >> yeah, i mean, the seasonal trader in me says we're in for a little bit of choppiness in the markets, and nvidia being a high flier is probably one to undergo. i would buy puts, a put spread, 440, 400 or 410 put spread as a hedge to stay in this stock, keep it long. use a put spread to sort of protect it. there's been a lot of rumors around nvidia cooking the books, or other analysts denying that. i think we're in choppy waters next few weeks. >> how does that chart look, carter? >> the key is it's made no forward progress since its

earnings beat, it was a popular number but there was no follow-through on the price, and so at this point, stall is the word that comes to mind and i would take measures if i were long. >> so not just consolidation? >> it's -- let's say this, up down or sideways, cover 100% of the odds, sideways or down gets you about 98. >> last one, last fan asks i've had a lot of success with amazon put credit spreads at the 135 to 130 level. but my brokerage ties up funds. is there a way to avoid this with options setup or collect interest. mike, what do you say? >> there isn't really, you have to think about this, there's two things, you have the margin requirements, which are regulatory, and then of course what your broker is going to impose. the interest, of course, is going to vary from broker to broker as well and right now i'd be reluctant to sell 135/130 put spread spr spreads given the run we've had. >> carter. >> sell goldman sachs and morgan stanley. >> brian. >> spread oracle, you guys look

good in the new set. >> thank you, mike khouw. >> call spreads and adobe. >> that does it for us here on "options action." we'll be back next friday 5:30 eastern time. don't go anywhere, "mad money" with jim cramer starts right now. - [spokesperson] the following telecast of "the draftkings sportsbook report" is a paid program sponsored by draftkings sportsbook. - it has the power to make the regular season feel like a game seven. it can turn even the most casual fan into a die hard, and it may cause you to never watch a game the same way again. - it's the draftkings sportsbook app, and it's completely changing the way fans experience sports. - and we mean pretty much every sport out there. if it's on a field, court, course, track, rink, ring, diamond, pitch, mat, board, whatever, odds are it's on the draftkings sportsbook app.