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tv   Options Action  CNBC  August 15, 2015 6:00am-6:31am EDT

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blow. land governed, risk less and make more. that's where two men in search of fortune and a host found themselves. in search of the best trades and the wisest options strategies, this is "options action's" call to the west. >> not the only show going live in sunny san francisco, this is
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"options action's" call to the west. get it, call to the west. i'm michelle lee. very special guest fast money host -- it's very difficult to get to you change. we welcome you to the show in your debut. >> awesome. >> in the heart of tech, one tech name catching traders tesla, shares of the automaker up the third straight day after secondary is an even bigger surge coming. let's get in the money and find out. what about you? >> i didn't drive a tesla, under the best of circumstances they can only make is 200 miles. they are going to come out with model x soon. this represents an enormous opportunity for them. this is a company i underestimated on a number of occasions thinking about what their auto sales would be. think about it this way. the most profitable car company,
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normal car company is porsche, 20% net incould. if this company does this with success they could justify value. you don't need ford money company if you have options. >> a big share of that. if he stayed away the stock would be significantly lower. he didn't, bought a significant share, priced at 242, trading 243. i was in a camp once it failed 290 we would retest 225. we got to 236 a week or so. is that enough? maybe. i still have to give this a couple of days to sort it out. against 225, this is a name you can still own. i know dan won't agree with me on evaluation for a number of reasons. >> you don't have to look at it from evaluation standpoint you have to think standpoint, a week ago they lowered delivery estimates by 5,000 cars.
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that's on a 55,000 number here. i think, you know, at one point not too long ago, about a month ago making 52-week highs for all purposes at 290, investor sentiment is positive. they have been given a decent reason to think twice about very key execution issues that need to go on in the next six months for this stock to continue to work. there's another one. i want to bring that up. that that is right, that is a potential head and shoulders top formation. it really feels to me if the sentiment has shifted and we do have a minor execution blip in the coming months, you could see that stock back toward the line, $200 bucks. >> to your point the sentiment shifted in high valuation growth stocks. basically everybody was willing to buy them all, now not good enough to hold them in hold. whenever we see cracks in the story these things are getting thrown out. i think that's part of what's happening here. the flip side of this is, this really does -- best part of
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their growth opportunity ahead of them. >> obviously i'm cautious here. i wouldn't be buying the stock at 245, because it's an option show here we can express our views in different manners and have different break even. if you want to buy at 245 you recognize potential for execution issues in coming months. i think you look to do what we call risk reversal and look to january. you want to give yourself time here. today when the stock was 244, you could sell january 2016 expiration 200 put at $10. you could use the proceeds to buy january 2016, 290 call for $10. that cost you nothing. here is the trade here, people. if you are willing to give up some potential near-term upside and want to actually help to find your risk to the downside, 200 on january expiration, then you have the potential for massive breakout. if they get everything right over the next six months. that's why i think this trade to me is a stock alternative, a
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stock replacement trade that gives you that optionality to the upside but actually doesn't get you put the stock on expiration down 15%. >> phil, so much smarter. it's like my brain is exploding from this. this is unbelievable. these are bright guys here. the thing about head and shoulders tops, dan makes a great point, mike talked about it as well. you don't know until it happens. you have to draw a line in the sand at some point. the fact they priced 242 and held is interesting. yes, the benefit of a decent tape and ely support a portion of it, which gave people some sort of hope an encouragement, 245 is the ultimate line in the sand and then 180 back to play. >> makes a lot of sense. what you're hoping for if you're getting the stock, break out to new highs. that's the reason you're looking at the upside call. downside, this is where the stock found support historically. discount valuation to take it down 20% current level. when i take a look at this it
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makes sense. >> what is your concern going to january. theoretically we'll have whether or not they meet guidance for the year which they have already lowered. >> here is the i think, if there are any production issues. they are producing two cars, the giga factory, stationary storage, a lot of balls in the air for the first time the you'll know in the fall if they are executing on front very well. >> breaking news on kkr. let's get to kate kelly. kate. >> hey, melissa, interesting news breaking in the "wall street journal" in the last hour. sam son esources private in lbo by confirm kr and others, largest oil and gas at $7.2 billion planning to file for bankruptcy in mid september according to journal. i just spoke to kkr, declining to comment. could be the first wave of bankruptcy as companies struggle
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with cheap, flat price for oil and natural gas in which they were a key player. >> thanks. a slew of retailers reporting earnings next week attachment a look at this. walmart, home depot, target, lowe's to name a few, especially given retail sales in july, better than expected. >> retail sales numbers obviously looked pretty good. still, i think we have a secular shift that's going on. i'm not that enthusiastic about the targets and especially the walmarts of the world when take you a look at it. let's look at walmart specifically. here you have a name that's growing essentially at 1 to 2% in terms of revenues each year. that's less than the economy is going. emotional terms it might seem okay. the fact of the matter is they are actually shrinking in real terms. exact same timeframe amazon double digit top line growth. i think this is ultimately where the pressure is going to be. the same story we've been saying for the last five years bricks and mortar versus online sales.
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i think they will ultimately end up being the loser. >> target was interesting. that was the clear winner up until the last month or so. target appears to be rolling over as well. i think it's a function of the entire space and maybe people taking profits out of tgt. ask me to play the game we play on cnbc's mad money. >> would you rather. >> i'd still rather target, tgt ahead of wmt. >> i'll throw another name in there costco is interesting down to 135, consolidated 145, acts well. i know mike has a different stance on walmart, costco looks okay setting up into back to school sort of selling season. >> yeah. i would just quickly say on costco, this one passes the holly test. i look at what shows up on my american express bill and that's a number -- that's american express's fault for having lost that relationship. as i take a look at this, we've got walmart reporting soon.
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i think a simple way to -- that's what you're doing here, the stock is down 20%, look out and look at october 62 1/2 put spread, spend $1.60 to put the trade on. one of those suggestion trading 15 times 12 month earnings if you're going to make a bearish bet this the only way. >> you might want to add a dozen flowers. you spend money like she does i'm sure. right or wrong. holly, i'm on your team right there. >> guy, walmart. do you like his bearish. >> he's been spot on. the stock has not been able to rally until what has been recently uptake. you ask yourself if you want rally when the tape is in your favor, when is it going to rally. >> i'm going to take the other side here. >> you'll buy. >> mike and i go way back here. here is the thing. when i look at the long-term chart of walmart, 70 is the massive level, stock closed at 72, 38, if it can hold 70, a
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push back to 80 in the fall. throw in a little extra trade here. the october call offered 370, 250 in the money here. that looks like a good way to make a defined risk back to the upside. >> this thing has not shown any real signs of support the way i look at it. the thing is trading straight down. their competition in the online space is going straight up. that is telling you pretty much everything you need to know. >> i like how guy joins the set here, gives us advice on stocks, marriage advice. >> i want to help the brother out. traversing -- just saw him in new york, now he's here. it's nuts. buy some flowers, you're off the hook for the weekend. >> i've got a question out there, i have a marriage advice question -- "options action," send to me, check out "options action" @cnbc.com. "options action"s videos of the week as well as exclusive trades.
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check it out. here is what else is coming up. >> they have got golden arches, golden arc. >> now shake shack has options. that might not be a good thing for the stock. some traders feeling indigestion. this woman has a stern message for shareholders. she'll reveal it when "options action"s returns. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.
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ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
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traders less excited about calls and puts, 1800 contracts traded. mike, why do you think? >> obviously, the spreads are wide. a lot of people looking at prices and find them confusing. the reason they are confusing, hard to borrow, high float, short interest. what that means when people want to short the stock you have to pay up. options prices will do that. look at options prices, suggesting shake shack a $47 stock come january. you look at the options prices, people are saying i'm having a hard time figuring out the stock. >> some of the enthusiasm for the stock this year kind of carried forward today first day. call volume more than 2 1/2 time
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that of puts and nine of the most active strikes were all calls, too. some investors are looking for ways to define their risk. the main point here very simply, the spreads are really wide, the prices of options are expensive here. i think you need to see marketmakers settle in here. >> you hit on exactly the right point. if you are really inclined to get long shake shack, i don't think you want to buy the stock, you definitely want options. calls are cheap relative to puts because of the dynamic we discussed. you're limiting your risk. go out and get lockhart link burger, it's one of the best you've ever had. buy calls if you want the stock. i personally would not, options -- >> i wouldn't recommend the burger. >> my constitution. i've got to get on a plane and fly 5 1/2 hours. i have a comment and question. >> go ahead. >> mcdonald's trading well. i think dan mentioned last night.
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the fact it continues to stay around this $100 level where it's had trouble last three years maybe they finally figured outnumber one. number two, question for esteemed panel on oa. the fact options trade take the volatility out of underlying stock. >> good question. >> isn't that a good question. we no longer see crazy fluctuations. >> professor can handle that question. >> i do. we can look at almost every other hot ipo that takes place. what happens after options trading, volatility starts to go down. that's what we see happen as well. >> another way to think about it and you own the stock and looking to add income, sell calls, the stock is not likely to go back up to $100 any time soon. you could use opportunity to sell short, at yield to position. >> twitter shares getting a boost in hopes of new leadership. kara swisher in her "options action" debut will tell us who she thinks should take the top spot when we come back. ♪
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here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this. look aon tripadvisor.l hotel wait. why leave the site? don't you know
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ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
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welcome back to welcome back to "options action." call to the west out here in beautiful san francisco just blocks away from twitter's headquarters. today shares of the social giant got a nice pop amid whispers of the search for a new ceo could soon come to an end. here analyst bob peck said today on the halftime report. >> we think structure, ceo while still being ceo over square adam bane as president and ed williams as chairman of the board. we originally targeted right after labor day and then heard they are speeding up the process. it could happen as early as next week now. >> so is twitter about to make a move and who might top that
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list? kara swisher executive editor she joins us here in her "options action" debut. how are you? >> good. welcome to sunny san francisco i wanted to dress the part. >> you are. in terms of who is top on the list, jack dorsey. >> yes, i would think a company should a 100% ceo, public company, square is filing to go public. i would assume if you're shareholder you wouldn't want 50% ceo. that would be an issue. henry blonlger brought that up, super fair point that said he's the founder, a product visionary. he's got the support of the board had any ways. i don't think it's imminent. i don't think it's imminent. >> you had a great interview on recode radio the other day. he basically was saying what bob said today, what he thinks, should have this kbroopg.
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you seem to disagree. >> this is where i disagree, no reported, chris thinks a good idea, whether it's going to happen. i don't like to declare -- i'm not clear. >> tremendous command over the story. is he on the board when he's out with the board shake-up? that would be a great idea. >> no. i think that interview angered people at twitter. he definitely knows how to push buttons. he doesn't call himself an activist shareholder but that's what he is. >> isn't 50% visionary better than 100% manager at twitter at this point. apple post steve jobs. >> 100% steve jobs. >> they did have 100% of him. i could easily imagine them getting 100% of jack back after square ipo. to me i'd rather have 50% of visionary, seems like zero guidance. >> silicon valley myth, the founder coming back and saving
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things. it's only happened once and that's steve jobs. i think jack dorsey is really talented, stuff like that. it's a myth it's not necessarily workable all the time. jerry yang came back to yahoo! that didn't work out for yahoo! or him. >> he saved the company for all intents and purposes. >> he pushed for it, he arranged it. >> a lot of people did. this were lots. i'm saying, yes, he's a great person. was he the right ceo. i think they fall in love with this idea of the founder ceo. jack was forced out before for evan williams who is now going to work with him. twitter is such a dramatic, like a soap opera in a lot of ways of it will be interesting. them working together will be interesting. adam bane i have nothing but high regard for, top executive. >> we were just talking, he was saying they are one night's sleep away from making the right decision, turning things around and that would be if they turned twitter just from a straw for information and data into a fire
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hose. >> he said that. >> i'm just wondering what your thoughts on that -- >> there's a lot of directions it could go with twitter. i personally think it should be sold to a bigger company, my feelings. i know they say it reaches all these people, it could be, a great advertising medium. seems like attaching itself to a larger steam engine, like a google, just makes more sense, it would work better. that said you lose innovation. >> seems so obvious to me, that conclusion. your reporting said google is not going to do this. >> said why they wouldn't. >> when you think about it, when it was purchased for $22 billion, twitter has an enterprise value of $17 1/2 billion. to me it's got to be the most scares social media and messaging property on the planet now. >> now he's running alphabet, whose call is it now in google who would buy this thing, where it would go. they have been terrible in social. it's realtime socially, it's news, it's advertising.
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i've also thought natural. there are others, ali baba, microsoft, apple, go through a zillion facebook, which also doesn't seem interested at this point. >> kara, thank you so much. >> thank you. thank you. you must acquiesce to ray-bans. i hope you'll be back. >> we'll be back. thank you. coming up next your tweets and final call from option bids. more from san francisco. we'll be right back. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns
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like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this. i'm here at the td ameritrade trader offices.
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ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.
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let's let's take a tweet. lowe's or home depot, which do you play on, which would you rather. this is a true matchup tonight. which would you. >> lowe's. a turn and a half cheaper, even though same growth rate, earnings. their options are onbit more expensive. take advantage by getting into the trade with buy rate. >> home depot makes me a little nervous, kind of reminds me of a crowded trade like disney last week in earnings report. i'm not a buyer. >> last call from options pit. we're actually going to our special guest here. >> coming to me. i think walmart reports on the 18th. mike, i've got to tell you something, always spot on. mike, the quiet man is always right. i think this negative call on walmart might come home to roost next week. >> the quiet trade, put spread october 72 1/2. >> here with dan. >> hey, tesla, i'm not a buyer
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but look at risk reversal for stock replacement. >> looks like our time has expired. i'm melissa lee. thanks so much for watching. for "options action," check out the website. we'll see you back not here by friday 5:00 p.m. eastern. >> announcer: the following is a paid presentation for the nutribullet rx, nature's prescription nutrition extractor, brought to you by nutribullet llc. >> my stomach issues literally went away. >> my acne has cleared up. >> my hot flashes have subsided. >> i'm saying goodbye to diabetes. >> my shoulder pain has gone. >> i was able to sleep better at night. >> i've lost 100 pounds. >> announcer: over the last two years, all across the country, an astonishing 10 million people, at a rate of 15,000 a day, have joined the nutribullet healing revolution, using the power of nutrition to completely transform their health and

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