professor khouw breaks it all down it's time to risk less and make more "options action" starts rightnow. ♪ rocking around the christmas tree ♪ >> let's get right to it you see the clock and heart music. that's right it's just one week until christmas, and that means it is crunch time for the shippers, but the chart master sees some trouble in the transport group as a whole is about to stall carter, take it away >> well, of course, it's an important index. it's the oldest that we have going back to the late 1800s and it's cyclical, right we know the two big package haulers, u.p.s. and fedex, are a 24% weight before airlines truckers add up to 40, and the big four railroads about 35. concentrated index, and it is stalling of late let's look at three identical charts and then one or two at the end. the first of three it's a two-panel chart on top is the iyt, the "i" shares that mirror, the dow jones transportation average, and you can see, of course, that it broke out and it's now above its pre-pandemic high, but look at the bottom panel. relative performance to the s&p is nowhere near

>> sell put credit spreads on best buy >> mike khouw? spreads and to go with my short shorts >> hope you don't wear those that's it for "options action. we'll see you back here in the new year happy holidays, happy new year stay tuned, "mad money" with jim cramer starts now. [announcer] the following is a paid commercial program for rotorazer, sponsored by razor tools llc. (upbeat music) - uh-oh. can't find the right saw for the job? you need a handsaw for this, a circular saw for that, a bandsaw, a miter saw, and a jigsaw? and with all the different blades, that job's turned into an expensive jigsaw puzzle. not anymore. (saw buzzing) hi everybody, i'm joe fowler, and this is the rotorazer. over 3000 screaming rpms of workshop muscle,

. >> the fed is going to be a powerful force in the new year mike khouw, would you at least agree with that part, and what do you think of jeff's way of applying small caps? >> yeah, well, i think he's hitting on one of the most important elements which of course is that with monetary policy being what it's been, it's very hard, i mean, we say it again and again, and of course we continue to see plenty of evidence of it, but you don't fight central banks. when you see the monetary supply increase in the way it has done, you know, it's pretty tough to sell risk assets, right? despite the valuations and i know a lot of people have expressed considerable concern about that, think about the last time we saw a material selloff that was unrelated, obviously, to things like the pandemic, you know, i'm thinking mostly of things like q4 2018 that was concerns about decreases in central bank balance sheets. absent anything like that i wouldn't expect any kind of a material pullback. the other thing we should be taking a look at is think about rotating into things that haven't seen so much streng

volatility vexation, try to say that five things fast and let's kick it off with a call to action professor khouw've been talking a little bit about what the options markets have in store for us in the early and maybe into the middle part of next year and what we are seeing is somewhat elevated volatility so right now, the qqq, which obviously is a fairly tech heavy, the six month volatility is about 40% above its ten-year average. if you look at xlk which is obviously an even more tech heavy etf, it is 45% above the ten year average and combine that with the fact that the nasdaq 100 index in terms of the multiple to earnings, whatever, 37, 38 times earnings, that is about 70 plus higher than its long-term average. translate that into what's going on so we're not at that total red panic zone and we're not at the fully complacent zone, as far as the options market is concerned. we're kind of in this cautious little area. we have higher implied volatilities and traders should be aware. you can expect to see your portfolio bouncing around significantly more than we traditionally would. >> all right,

mike khouw, tune into the full show tomorrow 5:30 p.m. eastern time much more ahead on "fast money." here what's coming up next >> markets may be at record highs. are some of the highest flyers ready to come back down to earth? nyu's dean of valuation breaks down what he's seeing. plus, the bold move by warner bros. that lowered the curtain on the stocks of theater chains today. all that and a lot more when "fast money" returns it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position. you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪ ...i was just fighting an uphill battle in my career. so when i heard about the applied digital skills courses

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which is one of the reasons the banks should be owned as the credit recovery kicks in earnings roofer khouwh were not expected. >> gerard. wells fargo said they want to buy back stocks. it has been under the thumb of regulators because of its cross-selling scandal and trying the reform the culture at the bank i know the fed ditched the pass/fail realm, they wanted to focus on the numbers behind these tests and not calling out specific names do you think from what the fed used to call a qualitative perspective that there are any companies that still have more work to do to be able to meet those demands? >> i think they have all met them very well in the last test and in this test as you know, governor trulio their the obama administration is putting in place the new exam has the banks are using. i think what everyone has discovered is that following the financial crisis, the recapitalization of the industry, the annual stress tests have worked very effectively, and as we have seen in this downturn, which was dramatic, they have gotten through it very effectively. >> mike, your thoughts as we