tv Options Action CNBC March 3, 2017 5:30pm-6:01pm EST
well, hello. this is "options action." while the guys are getting ready, here's what's coming up on the show. >> look, in the sky, it's a bird, it's a plane. >> no. just certain components of the dow jones industrial average. and we'll tell you which ones could pull back of. >> plus -- >> it's the perfect storm. >> that's what some are saying is about to happen to gold. and we'll tell you how low they see it going. and how you can cash in. and -- missed the run and snap? >> too late.
>> maybe not. there could be one way to get in on the social giant for less. the action begins right now. let's get to it. the hot he was trades of the last month. namely utilities and staples be in trouble? let's get in the money and finlt out. >> we're seeing a lot of interesting looks a day we saw the futures in near certainty on march 15. we see the dollar retreat the way it did. it is not something we're expecting. when you look at the utilities, they've kept pace with the s&p. there has been a lot of back and forthwith the valuations of the stock market. if you x out the yield, this is a very expensive sector. i would expect if we do go into a rate like go cycle, that the sectors like utilities. >> i've been very perplexed.
when you're buying stocks like this, you're selling just like buying they will. you have the regular one. the biggest pressure, you have low demand in those off hour periods. as we see more electric cars come out. the amount of incremental demand that could create. i'm wondering whether that's one of the reasons that they're trading at these epically high valuations. >> you said perplexed. you're saying that the price action utilities doesn't quite make sense in the face of what we just heard today from the senior central banker and what is presumably almost a lock for interest rates. i think utilities act very, very well. suspiciously well in the face of what are high odds of a like. and perhaps there isn't a lot of
down side even though they are arguably with the banks. >> look at the breakout the s&p 500 just had. if you think about, let's say they give some expense they're one and done here. that could add some real flame to the fire when you think about what people are anticipating as far as tax reform. we could have a move into growth. we've seen these moves. i don't think would you want to be in utilities. and we don't talk about this a heck of a lot. there was a opportunity of it. it got me looking at it and this was the back drop of us talking about hire rates all week long too. so that got me thinking. >> so what is the trade? >> okay. it is trade going 51.5. you can look to buy the april 5147 put spread. paying $1 for that. selling one of the 47 puts.
you break even down to $50. you break even between 50 and 47. i like the risk reward there. a 3-1 payout. if i'm going to pull up a chart quickly, the one year, it seems to have found some technical resist it's tan. not a whole heck of a lot. some pretty decent report? at 48. that's what i'm trying to target the pullback. >> when you look at something like xlu, it is not like it is going to gap down 10 or 15%. one of the reasons it makes sense. the other thing is that 20 sense, that will decay more rapidly. and that i think makes a lot of sense. the move if it is going to have one will not be that. >> the levels that they said are right. you return to a prior intermediate high and consolidate. but all of us, won has to think,
the statements and the sentiment and temper and tone of the environment, how is it possible banks are not sploesing? the banks peaked. it is three months. utilities act well. there's something that is not quite squaring off with what appears to be a lock. they will raise rates. >> maybe they're reflecting the long end of the curve. >> that's the other issue. >> that's a good point. as it goes hire, especially if it goes up. then the long end may not rise as sharply. ? so do you wear jackets on this show? do you think you're more special than the other guys? >> where's your jacket? >> that's in the 80s. women wore jackets in the '80s. now despite the move, gold is
still hire on the year just as predicted in december. >> the opportunity now is, of course, since the bear market low. the exact low. march of 2009. we have this huge diverge enls. so what i'm thinking now at this point is it is so hated. down 12 weeks, big runs. that it is time to be contrarian. >> so the gld is up more than 8% since then. but they say it might be to take, now might be the time to take money off the table. >> nice to have a few good ones. let's go back and figure it out. it has been a good run. and at this point i'm thinking, maybe it is tired. it had a bad week. let's look at some levels and figure it out. if you look at the levels that we've cited, we were at 1,300 an ounce.
twoin it went to 1050. had if you were to draw the lines another way, what we know is, we got back quite precisely to a line that has worked four times and it fails. now, if we draw the line along the bottom. so that's the down trend. this is the new up trend. and we violated the little up trend since the beginning of the year. put it together. rt the bet is we'll move a bit lower and i want to make the bet that this is just the beginning. i would book gains, write calls, something. >> i think the way to play this is to look out to may. give yourself a little time. a little over 70 days. put this on monday. by the 116 put spread, you can spend just over $2 for that. i was looking at the 116.
it may not seem like it is worth it. you can talk about the levels here. 107 where it bottomed out before we got to this most recent rally. >> that sort of sets your parameters. the point at which the rally started. >> i know that you remained bullish. when you look at that down trend. it sets up nicely. as far as strikes, i really like them. it makes a lot of sents. and i have to say, if it breaks through 1 ty, isn't it going back tom 2015 low? >> that's the reference point. what's interesting about that, that was a retracement of the plunge. when you start to break it, the only reference point does matter
is the prior low. so that's quite a way. >> there are some parallels between this trade and the one we were talk about. if you are thinking that rates are going hire, that could create a stronger dollar. we have some other things going on that could create a stronger dollar if they get traction. and that will be neck i have the. >> have you got a question? send us a tweet @options actions. and check out our website. while you're there, check out our super cool news letter. what are you waiting for? in the meantime, here's what's coming up. >> oh, snap. >> that's what wall street is saying about the snap chat ipo. if you missed out, fear not. we have a way to get in. plus, shares of boeing have been surging. >> we want boeing to make a lot of money but not that much
money. >> don't worry. there's something in the charts that says the stock has come a bit too far too fast. we'll explain. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.
what if we could bring you by having better values? at blue apron, we work directly with more than a hundred family farms. so instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most: making farmland healthier. cutting down on food waste. and bringing you higher quality, fresher ingredients for less than you pay at the store. because food is better when you start from scratch. get $30 off at blueapron.com/cook hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade.
we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. another week, another record high for the markets. the dow breaks through another milestone marker while we're still trying to hover around the marker. it is pretty evident who has been driving the gains. the highest prices have the most impact. as we told you earlier this week, apple, goldman sachs and boeing have made up a third of
the stocks. a lot of others are pulling some real weight as well. of the dow 30 members, 12 stocks are currently trading at least two standard deviations above the average day price. in other words, stocks interested by many to be statistically over extended above and beyond where they normally trade. had 3 m up 6%. also, proctor and gamble gaining up 7% and home deep over, up near record highs, around 10%. and then throw in boeing, up a whopping 17%. there's not enough room to put all the names up there but i have tweeted up that list so check that out. some traders are now wondering whether what they're seeing in stocks could be the beginnings of at least a smaller put-back there these overbought levels. back to you. >> big question. thank you. >> carter thinks one of those has come too far too fast.
>> well, just what he was talking about. it was the one we'll talk about. boeing up 17% for the year. it is steep, uncorrected. let's look at some other angle ts. this is a one-year time frame. up 52% over the last 12 months versus the market up something in the quarter of 20. more than double. here's the two-year chart. up 145% versus the market. about 75. so things can go further. but there are a couple things i would look at that say it is not going to. all right. the long term chart back to 1990. what i've got is boeing versus its sector. all industrials. so united technologies, honeywell and boeing. now let's zero in on the here and now. the point of the moving average, short term or long term. you can calculated how far above
trend you are before you check back. so here's a five-year chart. you can see we're fairly far above the moving average. what if i take it back to 88. how far above was it here? or here? or here? compared to maybe here or now. well, this next chart does that for us. it calculates the percentage that boeing is trading right now above its 150-day moving average. it's only been here about four times in its history. and at this point, almost every time, it is about where it corrected. so overbought, however you might want to characterize it. and then there's this. this is chart of past two or three years. this is often called a mega phone. people use these as a way to measure where you might end up stopping. and we are right at the to that.
to my eye, that's your next move. if you've got gains in boeing. you have to have gains. if you like selling shorts. here's a candidate for you. too far too, fast document something. >> all right. some technical warning signs. >> this is an interesting case. hard to bet against a company as big as they've been. they'll be slowing their deliveries of the 777. and although they are releasing them. it will be a more revenue growth. and more competition on the smaller aircraft. >> exactly right. >> we are going to see some revenue declines. 19 times earnings. i'm inclined to go along with carter. i think the way to do this is by selling 180, 190 call president is. you can collect about $for you
30 for this. the most it will be worth is 10. but mr you can see some profits. even if did it ten for whatever reason to that strike in the short term, it won't go to the full value of this. this is way i would to look collect a little premium. and think about what we do on this show. this was a great lagard last year. >> you have to put in it context. we just spent a lot of time talking about snap chat. up 50% on a $50 billion market cap. if you were going to pick it, in the stock leak woeg up 80%. that doesn't have a dot com after its name. use the mega phone ask the put spread.
to be honest with you, the risk reward sets up very favorably. especially when you look at the lines and the data. i love this trade. ? $111 billion market cap. >> the call spread. >> i may do that, too. >> and nobody is taking over. >> no. the u.s. government wouldn't allow it. >> that would be really clear. i got long put spread on the brain. >> look to get that first move. >> yes. >> so the expected earnings are the same as two years ago. in a situation where we're looking at the growth situations, this one doesn't have any. we'll see top line revenue declines. >> it is the one surging housing stock that continues to pay hefty dividends. we'll tell you the name and if you should get in.
much more after the break. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. well, you could get support fr thinkorswim's in-app chat.n? it lets you chat and share youry with live person right from the app, you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. hi, i'm frank. i take movantik for oic, opioid-induced constipation. had a baback injury, my doctor prescribed opioids whh helped with the chronicpain, but baed me up big-time. tried prunes, laxatives, still constipad... had to talalto my doctor. she said, "how long you been holding is in?" (laughs) that was my movantik moment.
my doctor ld me that movantik is specifically designed fooic and n help you go more often. don't take movantik if you have a boweblockage or a history of them. movantik may cause serio side effects, including symptoms of opioid withdrawal, severe stomach pain and/or diarrhea, antears in the stomach or intestin llour doctor aut any side effects and about medicines you take. movantik may interact with them cag si effects. why hold it in? have your movantik moment. talk to your doctor about ioid-induced constipation. if you can't afford your medication, astrazeneca may be able to help.
oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where yocan share strategi, ideas, even actual trades th market professionals and thousands of other traders? i know. your bin told my brain before youold my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim.
only at td ameritrade. welcome to "options action." we look back at our trades that are not working. last month dan thought snap's ipo would help boost twitter. >> the run up to the snap chat ipo could be good for this relative valuation. okay? here's the thing. i think you could look to a june expiration. sell the down side. use the proceeds to buy the june 20 call for $1.15. it will cost you 35 cents. >> who told to you wear those glasses? twitter shares have plunged. >> my thesis still stands. i think twitter is a scares company. they're not doing a lot right
right now. let's talk about the trade structure. i didn't think 17.50 was a good thing. the trade is horrible. buy an upside call. give yourself some bigle room. it is short to june 15. the trade is a loser by about a dollar. okay? it would have been down 2. >> are you comfortable you didn't put the stock at 15? i think that was the thesis. >> i'm with you of i think you let this play out. >> what makes it go up? >> well, listen. i'll tell you. at some point, snap chat with a $35 billion. i know i've been saying this for two years and i've been wrong about it. i think it needs to be bought by a google, a facebook or a consort-up of copies of. >> maybe snap chat. >> now on to lowe's. last week mike thought home improvement the giant would sink on its earnings report.
>> the trade i'm looking at doing is selling the march 77, 81 call spread. you can collect a dollar by collecting it for $1.30 and then buying the 81s against it. this is a bet will hold below that level and breaks even around the 78 level. >> since then, lowe's is up more than 7% on its earnings. >> how about -- >> so this stock rag rallied 9.5%. it hasn't done in it ten years. 40 quarters. so that was a pretty epically bad call on my part. interesting that it ran to the long strike. had it is kind of a tough one on there. while that might have worked, the thinking was, wasn't that big a move and perhaps the low's, which is the weaker player. maybe it was going to not do so
well. but this was huge. >> how about the chart? >> it gapped right back to its high. it was in june of 2016 that the earnings related pop puts you right back. >> what do you do with a short call spread at that upper strike? really, this trade needs to be managed. >> the short answer is you cover. right now, time is work go against you. before we had time on our side. now we don't. coming up next, your tweets and the final call. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it foeveryone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary.
♪ weathertech. made right, in america what?pony neighing] hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. time to take your tweets. our first one is from jeff who says, i'm looking at bank of manager, december 30 calls for.80. does that seem all that unreasonable with three rate likes? >> it's really interesting
you're going out in time to look at these. i like that. i'm curious why you wouldn't push it to 2018. try to get they will to a year if you're going for the leaps. >> what do you think of bank of america? >> similar to jpmorgan. they've all made new highs but not enough highs to the s&p of will. >> our next tweet is from william. he questioned, when do options trade for snap? >> tune in to options action next friday. we'll talk about it. they trade next friday. we'll get snaptastic. for you who missed out, you can work your way in. >> so one week from today. the snap options start to trade. >> you can wear my spectacles. >> i wouldn't recommend it. >> i want to take profits in boeing. if you're a winner in that or selling short. if you've had some profits in the big run-up in gold.
same thing. >> that's it. i'm inclined to buy the put spread but also, i like i am a put spreads. >> it's been so fun being here. it looks like has expired. don't worry, meellissa and the gang back. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job, not just to entertain you but to educate and teach you. but to educate and teach. so call me at 1-800-743-cnbc or tweet me @jimcramer. trump. trump's been trumped by snap! yep, the ipo of the sexy social