tv Options Action CNBC October 28, 2017 6:00am-6:30am EDT
>> maybe because it is a way to buy baba for less than two bucks ahead of earnings. it is time to risk risks and make more. the options action began right now. >> lets get right through it check some of the names the reporting in the case week mastercard, under armor and t starbucks. >> which would you buy >> if you think about that >> we did not see big boost one way or another we saw some big moves last week and now we are seeing all time highs and massive eye popping move when i think about this season, we start to think of consumer names and we know consumer staples acting really bad. i want to take a look at starbucks. they report next week of 4% move
in either direction. that's the average over the last four kwaquarters this one is pretty interesting to me. it is 15% from making 52 weeks of an all time high back in june >> the stock has been trading for a better part of the last three months look at that right there between 53 and 55 bucks. i think of expectations that are not particularly high. they guided this quarter's sale below expectations after medium. the way that i think about it this way, if they were to be the fiscal 2018 estimates intact consensus is looking for 16% eps and 10% sales growth i think the stock bounces and it could fill the gap i want to do it with define
risk if they do guide down, the stocks is going straight to 51 i want to give this thing some time to play out if the stock were not immediately pop on this today when the stock is trading at 55, you can buy in december that calls for paying $1.30 cents for that >> selling one of the 60 calls at 17 cents and that breaks even at 56$56.30 that's where you are capped. >> it gives you pretty near the money of participation we know it is hard to do that. if you get the direction wrong, it is hard to make money on this thing. i like the settlement set up >> mike, what do you think of the trade. we said this many times. you think it is a reality or realistic to assume that the stock could move a buck and a half or between now. the answer is yes. >> they still have some areas
that have real potential growth. they never took off in europe but they have done pretty well in asia that's still an area of growth probably 20% and although relatively small percentage of their business, too. >> it is really the operative thing. i don't think it is a lot of growth outside of that in the u.s. >> i mean dan started out and often of the case of managing the risk, there is a lot of risk and you know that. when a stock drops on its previous, it is weird that it is isolated just as you gap up, you gap again because good news, is obviously not modelled in and the streets under. the fact that it did drop on its earnings on july 28th and relative strengths since then is so poor, i would say the risk of a gap down of 51 level that seems like the higher odds. >> let me tell you what i got looking at the stock nike had a gap and foot locker's
bad earnings in august and it spent the last month and a half of consolidation near the lows they had an analyst's meeting and the stock rally did not do it i think investors are looking for stories where maybe the news that got them down a couple of months ago >> and ibm, we are talking about a gap pop. >> look at intel and gm rallying 30% in a month and a half. >> google and -- a stock that has a proceeding gap, the burden of proof is on the board >> which way would you say this? >> they also have new management and they're sort of playing out to see whether the company or last time howard shults left the company, they had a problem and now we are figuring out if the
new management team is able to deliver. >> at the end of the day, i would not buy starbucks playing for the gap field. i would like to risk to buy december call set. if nothing happens, i am still in the game. if the worse case scenarios, i am selling back the lows i like the risk reward here. if you think the sediment could change, this is the stock that people come back for >> now, lets go to alphabet surging of an all time high today. last night, one of the keys was a stunning performance of youtube. josh lipton in san francisco on that story >> alphabet did not break out. the ceo did reveal new metrics on a conference call with analysts he said the platform had over 1.5 billion users.
here is the big number that caught people's attention. consumers are watching 100 million hours of youtube from their living radioom every day . why is that important? the company is set to pass, we are seeing a shift that could directly compete with traditional tv youtube has been laying out strategies for r some time now distributors are losing sub. q 2 was the worst quarterly lost ever >> youtube, of course, trying to capitalize in the trend. we have been seeing in the industry and they are investing in original content and launching ads support original programming and partnering with ellen ellen dengenres and kevin heart.
>> again, your competitor is hulu and and netflix it is now available in 15 metro areas. >> melissa, back to you. >> josh lipton in san francisco. thanks a lot viacom falling 2% today. >> break it down carter. >> yeah, this is been a bad space and not just today was chronically so for the last six or nine months a year. >> the real insidious thing is they were such out performers, so look at this relationship this is the s&p 500 index. its got 16 stock and worth about $800 >> of the last three or four months, they diverge
maybe we can play for converg t convergent watch the next chart it is media on top media is such an out performer that this recent weakness is quite new. going back to this, this is just the beginning of what will be much more trouble for media. that's the group itself. here is viacom your broken trend, that's quite clear, yes, the idea is that a broken trend will follow through the downside and now lets talk about, look at this >> i mean you are talking about a stock that peaked in 2014. equities is also impossible not to be up viacom straight down how far can it go? where your imagination wants it to go? that's a well define formation
>> that's the lows down over here >> wow >> trading of one-third of evaluation on a historical basis that the s & p is. >> next year's earnings both the equity and the market is saying there is some real problems here i was looking at january of 22.5, you can spend about 70% for that >> that's the first out of the money strike that we can get of this thing this is a company that has some really troubled asset. we'll talk about it right before the show mtv and vh 1 these are the things that we watch when we were kids. my kids don't touch these stuff. >> probably don't know what it is >> it when all the way to the
upper reaches where it is that or the country music channel >> we can see where they are going. they're not going here they have a real problem they need to resolve. >> as far as a trade, you are going out of the money and you are reaching a certain amount to get to a certain level where it is not traded out for seven or eight years like that. >> you are looking at some of the parts and we look at what's causing this you said it, it is google and facebook and netflix and it is going to be apple and amazon and that sort of thing i wonder if some point if those guys and jeff bezos are doing what he did with whole foods >> what other sector is basically as cheap as this retails, things like macy's and they are facing the same type of secular. everyone single time you are trying to draw the line, it is so cheap and it cannot get really cheaper, people realize
that the business is deterior e deterioratideteriorat deteriorating and that's when they go lower. >> question for you carter, why would you play disney back to the '90s >> it is not viacom, it is disney or cbs and the whole thing is under so much pressure and would take a lot to fix it >> when you take a look at their closest comps though, this is the worst of the group >> it is down from 90 to 25. what i am saying is disney's price level. >> i know but the under lining business is deteriorating. >> we are risking 70 cents >> obviously, does not like the trend. >> that's all right though >> check out our website on optionaction.com >> sign up for our newsletter.
what are you waiting for? >> up in the sky, is a bird and a sky or a plane >> no, it is shares of alibaba plus, calling all options action pack reach into your pocket, tweet us reach into your pocket, tweet us your question 5 years, hmm. you ever call your broker for help? >> option action is provided by ameritrade e e your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.
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it's not just a donation. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.
welcome back to "option action." >> the nasdaq is soaring at a new high in case you are keeping score, 94% of big tech's big move and apple and alibaba is reporting on thursday, apple is climbing of a 4% and alibaba could see a 5% move. together, they represent $84 billion shift in market cap. >> call to action, hey mike. >> we'll talk about using a call spread risk. we are looking at alibaba, we are targeting a catalyst, earnings that's reported midweek. elevated option premiums is what we are seeing. implying a 5% move which is
largely than what we have seen this is a stock that's up a lot. one of the things we are looking to do is risk less than purchasing the stocks here taking a quick look, you can see the kind of move that we have seen and basically what i am trying to take a look at here is i don't want to take -- if it is going to move 6% downside, that's what i am looking weekly options, i can buy next friday for $5.70 and sell the 162.5 at 125. this entire trade you can do at $1.70. i was trying to put this trade on i lost my market data by the time it came up. this is a trade that i will be looking to put on on monday. i did not manage to get into it today. >> dan, what did you think of the trade? >> the most important thing is recognize the fact that worse
case scenario you get the direction wrong and putting the stocks at the premiums that you are spending that's a level that you would be buying a stock and if there is bad news on teearnings, you shod feel good about it >> i like target event and short dated. you are doing one week and you are not giving a ton of time and trading the event. if you are wrong, you will move on >> when you use trades like this and expirations that you choose are long dated sometimes they don't behave as you think they will. you will know the answers next friday if it goes through 175, it is above there right now. this will be al winn winner. >> the market implying a move of about that size or less. that would represent the stock close rate of 177 so it is $15 decline essentially if you get down to the 162 or half level. that's more than what the market
is expecting downside risk is a lot lesser. >> weakness. amazon has had google. and if you are betting it will do the same thing, it is going to be big. now, there is one that have falter, it is fighting it is a stand alone and at this point. >> and one thing that and maybe it is just my perception of it taking a look at this entire earnings season, it seems like with the exception of mayb maybe -- there is a handful of isolated incidents, in general, it seems like the market is favoring tech here regardless of how their earnings came out. the news is viewed positively. it is not true across every sector of this earnings season >> up next, the yield on the u.s. ten years surging to its highest level since march, despite the move, there is one sector holding up very well.
send us a tweet to "options action." if it is a good one, we'll answer it on the show. more "options action" is still ahead. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.
well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome back to "options
action." >> back in september, dan's play for apple. >> today when the stock was trading at 159 you can buy the november 160, 170, 180 call butterfly paying $2 for that. >> well, it has been a wild ride for the tech giant the stocks took a dive but since rally back we do have earnings next thursday what are you doing, dan? >> in light of amazon of the biggest stock today. the move that google had, i don't think you want to be a butterfly into the event anymore. i actually take the profits and roll it into straight cause. if these guys beat their estimates that they raise last quarter when they give guidance and be again giving all the
sediment and supplies. if they raise, the stocks are going high at the end of the day, you don't want to be the structure like butterf the butterfly. >> already, moving on. one month ago, cone colin cartey utilities are heading higher >> one, we kind of come back to support and two, we are on this trend line either way i think you got a good chance of after this of 5% or 6% for a bounce here. >> i was just looking out to january to the 53 calls, you can spend about a doll$1.45 for that >> the utilities rise up slightly and hell pretty well.
carter >> in the period of one month period, utilities are more than the s&p. what it says this market of the market moving up in the move of tenure i think we want to stay there. >> you can buy the 55 strike calls for a little over $1.10. what you should do is sell this one by the 55. you are taking all the original risk off risk off the table we are playing with house money. >> if this chart did not say xlu, it says something of tech relater, you will be buying it as across out. >> the head win for the trade is this rate cycle. to me, i think mike's rolling the trade makes sense. >> up next is is tweets and
final call for "options action." 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade. my "business" was going nowhere... so i built this kickin' new website with godaddy. building a website in under an hour is easy! 68% of people... ...who have built their website using gocentral, did it in... ...under an hour, and you can too. type in your business or idea. pick your favourite design. personalize it with beautiful images. and...you're done! and now business is booming. harriet, it's a double stitch not a cross stitch! build a better website - in under an hour. free to try. no credit card required. gocentral from godaddy.
well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.
welcome back to "options action" time welcome back to tweets >> i bought facebook shares. >> it is a 13% probability of those in the money so it depends on your conviction >> our next fan. with the pull back to the trend line in xbi, how do you feel about the january 90-calls >> tough week, all the news are coming out you are k llooking at it the ri way. it is the way to play it >> juit bounced beautifully >> all right, time for the final call >> viacom.
i don't know, get away from it >> going into baba, the action are expensive. you want to sell more options of your money >> i am not buying another friend, i am using to find risks. >> looks like our time have expired. i am melissa lee, thank you very much for watching. "mad money" starts right now >> announcer: the following program is a paid advertisement for the hd mirrorcam, brought to you by inventel products, llc. yep, they're out there, driving recklessly, causing accidents, and driving up your insurance rates! this is a show about car accidents... ...classic cars... ...and the hd mirrorcam, the personal security camera for your car. this is... "accidents caught on camera" with the hd mirrorcam. today, we're going to hear from people who have been in accidents and used the