if you think there is room to run in the record rally mike khouw has the perfect which to play it. plus guy adami is finding much needed zen for the portfolio how he trades lulu lemon into next woke's earnings and later. >> know what can help you sort through the important issues >> what. >> orange mocha frappuccino. >> dan nathan says starbucks lays out a breakout. he tellsyou how to keep from getting roasted in the hot trade. "options action" starts now. >> welcome everybody let's get after it the dow surging more than 330 points today the s&p 500 erased losses the rally following a better than expected jobs report the records across the board, apple and alphabet, both hitting all-time highs and added to the red hot run and if you are betting on the bigger tech takeoff we have a way to play it in the money with mike khouw take it away, sir. >> you know it's interesting we got the payroll report today. obviously the markets responded very favorably to that but i think actually we got some clues that we had some significant strength in the market earlier this week when the trade ne

if you think there's more room to run in this record rally, mike khouw has the perfect way to play it >>> plus, guy adami is finding some much-needed zen for your portfolio. how he's trading lululemon into next week's earnings >>> and later -- >> you know what can really help you sort through these important issues >> what. >> orange mocha frappuccino. >> dan nathan says starbucks is brewing up a big breakout. how you can avoid getting roasted in this piping hot trade. it's time to risk less and make more "options action" starts right now. >>> welcome, everybody it was a big day for the markets. the dow surging more than 330 points the s&p 500 erased its losses for the week the rally following a better than expected jobs report. and there were records across the board including big tech names like apple and alphabet. both of those stocks hit all-time highs and added to the sector's red-hot run this year if you're betting on an even bigger tech takeoff, we've got a way to play it let's get in the money with mike khouw. take it away, sir. >> it's interesting. so we got this payroll repo

let's get in the money with mike khouw. take it away, sir. >> you know, interesting we got a payroll report today obviously the markets responded favorably to that, but actually we got clues that we had some significant strength in the market earlier this week when the trade news which was definitely not positive didn't knock the market down much further. talking about this before we began the show that was news if you consider that was one of the keystone elements basically propelling the market higher and suddenly pulled that away you would have expected the market to get pulled sharply lower. it didn't. in fact, actually it closed all things equal relatively strongly that day then when you add positive news on top of that, and you get some sense maybe that internationally things aren't at weak and everybody said it creates strength in the midst of all this we continue to be, despite this week's movements in a relatively low volatility involvement, options prices remain relatively low. looking at the tech sector on a valu

break from biotech and -- ♪ get out of my dreams >> get into mike's car honk if you want yield mike khouwurns the dreams into reality with a straightforward to play carmax it's time to risk less and make more "options action" starts now. >>> yes, it does and welcome everybody. hope you're having a good friday let's get to it. trade talks taking over the street as phase 1 deal pushed the major indexes to record highs. of course this is a deal without terms that anybody on the street has seen but hey, whatever. dan nathan says if a full agreement does come through there is one payment play that could charge up your portfolio let's get in the money, dan tell us about it. >> the narrative of the last few days has been some of the headwinds to kind of growth or the headwinds to a u.s. consumer have been lifted i have no idea what today means in terms of a phase 1 deal and i think the administration told us we're not going to actually see anything papered until the new year but if this enthusiasm that we have seen the last couple of months or specifically in the last few weeks carries into the

perversely that often gives a pop to stock and that's part what have we saw. >> mike khouw, if you aren what time is it 2:30 he should be on the slopes but if you are already off skiing hi up next, your tweets and the final call >> announcer: "options action," sponsored by think or swim by td ameritrade i see best-in-class platforms and education. i see award-winning service, and a trade desk full of experts, available to answer your toughest questions. and i see it with zero commissions on online trades. i like what you're seeing. it's beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪ i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a p

it's time to look back at open trades last week mike khouw laid out a way to protect yourself from news >> it isn't as if the only problem they have is the 737 max. we have structural problems with the ng things like that. valuation on the company is not that cheap all things considered implied volatility the price of options is a bit higher. we've been talking about the options getting to the upper level, sell calls against it i was talking to an institutional client short the 350s in march. you could go nearer dated i was looking at 345s in feb. >> since then there is major news out of boeing the company firing the ceo monday the stock higher from a week ago. mike obviously is not with us today. but he did generously send us a post card from california. quote, i'm cruising the slopes of squaw valley. but the boeing position isn't going downhill despite the departure of the ceo headwinds persist so i'm happy to continue staying put and collecting premium for now happy new year so christian what do you think of the trade as he skis in tahoe. >> sounds like great snow out there which is

that gentleman is mike khouw he is smiling. if you're right 90% of the time, mike, you deserve to smile he's in san francisco with the options action welcome. >> sure. so yeah, we saw about two times the average daily options volume in autozone this morning going into earnings. this is a name that typically moves a little less than 6%. the options market is implying a move of a little over 5% by the ending of the week the trade that i saw go on the markets today was something called an iron condor. somebody sold the 10 87.5 and the 12.85-12.90 call spread. both are expiring at the end of the week here's the thing, this is a trade that is betting that the stock will stay above the 10.875 put strike and below the call strike if you look back the last 11 years, 44 quarters, only twice have we seen moves of greater than that magnitude which means this trade has been profitable 95% of the time somebody has put it on. so sometimes betting on nothing can really be worth something. >> wow i'd say 95 is betting on something, mike khouw.

. >> do you continue to still buy gold >> yes mike khouw is going to talk about it. >> do you want tointro? >> no. >> live a little come on. give it a shot. >> it requires me to -- >> just for once america is waiting for this. >> made a big bullish bet on a gold miner mike khouw is in san francisco with the "options action." mike, what are you seeing? >> reporter: yeah, so we saw quite a lot actually we saw two times the average daily call volume in numont gold corp the trade i saw was somebody making the bet that guy's talking about, that the stock is breaking out here. they were buying the january 45.5 call, 715 of those traded for about 21 cents the buyer of those calls is obviously betting that the stock is going to finish above that strike price by january expiration which is two weeks from this friday and that would represent a 5% increase from where the stock finished the day today. >> okay. let's trade it >> gdx that would be my trade up 37% year to date. i think you're going to get another shot at it if the fed continues to ease even if they're just expanding the balance shee

. >> mike khouw with the "options action," mike. >> you can barely san francisco all behind me all youcity fog for nice ee interesting into earnings two times the average daily options volume in nike today it's implying a move of 4.3% in line with the 4.2% they averaged the past 8 quarters. the most active buying activity taking place in the january 100 calls, over 3500 of those traded for $3 buyers of calls betting that the stock rallies above the $100 strike price by the premium they paid the break even would be 1.03 in this case. one could understand bullish bets in options because the stock doubled since mid-2017 a lot of the price growth came from multiple growth, which it's now trading about 37 times earnings and the same period of time, the s&p hasn't seen valuations grow that much. >> all right mike khouw thank you very much watch out for the fog. >>> more "options action," catch the full show friday 5:30 p.m. eastern. up next final trades ♪ >> announcer: "options action" is sponsored by think or swim by td ameritrade. ♪ ♪ ♪ ♪ ♪ yes i'm stuck in the middle with you, ♪ no one li

if you think there's more room to run in the record rally, mike khouw has the perfect way to play it.lus, finding much-needed zen for your portfolio how he's trading lululemon into next week's earnings, and later -- >> you know what can reall

if you think there is room to run in the record rally mike khouw has the perfect which to play it.ding much needed zen for the portfolio how he trades lulu lemon into next woke's earnings and later. >> know what can help you sort ro

mike khouw is out in san francisco process with the "options action.ke. >> sure we are looking at efa, the msci dwelled market international fkt etf appear it sue two times as put puts as well as calls. over 90,000 contracts totals as somebody adjusted a hem position they sold 15300 of 65.50 puts. and sold 5730 of the february 7.5 equals and used the proceeds to finance the purchase much 15,300 march 69 puts at the money puts. by putting on the trade he give away some of the upside in ifa and get a 5% in the fechlt a in but they notice two different expirations. what happens here is thets february options are actually going to decay more rapidly than march will and if the march apgs oh options have the same average implied volatility 30 days is what they have at expiration the trade will have will little to no carry cost to fut on the hedge. basically this is not a tail hedge. it's looking for potential for a short near-term downside. >> mike, thank you so much efa. is that trade. and for more options catch the live show friday at 5:30 p.m. eastern tim

traders in the options market may have itright the right the answer would be a resounding no mike khouwptions action." >> first of all a lot of people in the options market and pete is one and we're looking at a reason why maybe buying calls is a better bet than going out and buying the stock but looking at it yesterday we saw puts outpaced calls by 2 to 1 that was true this morning and enthe end of the day it traded two times the average daily put volume right now the options market implying a move 7 peppers high or lower by the end of the week after the news comes out where i was seeing the openingist was in the weekly 275 puts trading for a little over $4 whiers of the puts are betting the stock falls bloi the 275 strike price by the premium they paid suggesting the 7 plus% move to the downside as pete pointed out, the calls if you were buying the at the money calls expiring this week those cost you 3.5% of the stock price. if jeffers is right and the stock has a 10% move down even if a count toss it's clear buying the calls would be a better way to make the bullish bet even though t

if you think there's more room to run in this record rally, mike khouw has the perfect way to play itding some much-needed zen for your portfolio. how he's trading lululemon into next week's earnings >>> and later -- >> you know what can really help you