tv Options Action CNBC November 17, 2018 6:00am-6:30am EST
action, a way to do it less than a month. and apple shares have been rotten this month. but shares could be gearing up for a big rally. time to risk less and make more. the action begins now. >> we start with apple rallying today but still on track for the first month in more than two and a half years the stock she hadding 12%. over mounting concerns over iphone demands gets into right now. >> think about what happened november 1 when this company gave that guidance, it was also coupled with the fact that they are not going to report iphone units going forward. what is really important for investors going into 2019, they start thinking about this as not a peru knit but average revenue
user in the meantime, i think apple is set up to do a good job of capturing those units. they kind of screwed it up last quarter, the way they introduce those phones you can look out to december expiration look where this stock is trying to bottom this week in the section of a one-year up trend from the last quarterback in august it filled the entire gap this sets up for good defined risk play over the next month. for me, it is really simple. stock trading at $192.50 you can buy paying $5 for that one in december. $195 calls for $6. selling one of the $215 calls at $1 can you make up to $200.
i like the risk reward you are basically risking 2.5% playing toward the backfill $215 area prior to the results. >> what do you think of this trade? >> i like this trade thinking about a 2.5% premium trend. that seems like a good do. if you take a look back to wednesday, the two most active options were a november 190 and 195 calls. the people who bought the 190 had the opportunity to play for a little bit of a bounce in the upper end in terms of valuation since they released the iphone going back to 2009/10. on the valuation, people are continue counting whether you will see iphone growth going
forward. >> the thing with apple, they got hit with a double whammy they tried change the way they are reporting. they handled it so poorly. then suppliers come out and say we are cutting back our biggest supplier then you have a lot of uncertainty. they've dropped off here i like this trade for a trade. when you have that uncertainty, markets will rearkt. we have that three-to-one ratio. i like it a lot. >> what would you be concerned with >> unless we have a key announcement by one of their suppliers, i think you have smooth sailing here. i think when you look at the retail earnings we've gotten so far, apple with these new high price points, they are taking a lot of retail dollar those valuations, the company
buying at least $20 million back at their own stock they've really saccelerated. >> it is not today where they bounced. for the past two days, it is acting reasonably outperforming the market at this point. >> it does seem to have found some level here. whether facebook that is trading poorly or stories like nvidia. i think in apple's case, it is bolstered by that big buyback. we are going into a strong season for it. the point dan made, on the higher average, that should be very good. >> now let's move to oil bouncing 4% from earlier as it tries to recover from a losing
streak bob is at the new york stock exchange with more bob? >> energy has been a disaster. down 13% worse than the 11% drop. worse than technology with all the big drops in the semiconductor like caterpillar and abo3 m. a meesely waiting for 5.5%. typically these big declines do produce a rally. oil has moved up three days in a pro. that is a good sign. >> that has spurred a lot of activity it has been a busy week. energy few turz and options reached a daily trading volume record on wednesday. >> the etf for the front month
futures saw above average bullish bets 13/13.60 call spreads. also in the equity space the largest energy equity etf on the 69/73 call spreads which would supply a move up in energy equities you can always hope. >> so mike, how are you trading oil? >> so the fundamental story for oil has been pretty weak that's why we are seeing it perform the way it has been. we saw data coming out of north dakota, one state, that's about a third of what iran or iraq
produces you look at oil production, that is a challenge opec is under pressure when you see oil prices drop down to these levels other producers could talk about cuts creating a boost. if i'm looking for a bounce, i'm more likely to look for a bounce in the commodity of these. some of these carry a lot of debt especially if oil has been low some length of time. bob had pointed out a big spread we had seen. i like that trade for the most part i think the way people should look at this, take a look at december 28 as the weekly options. look at the 12.5 to 13.5 spread. the premium tends to skew to the
upside you won't get that three-to-one pay out. this is a way to get the bounce in oil without getting into a lot of heavily levered oil names. >> dan >> look at us oil trading at 16 a month ago. not really playing for a huge move to the upside this is interesting mike is using for the spread that is 1% of the stock price at that level i'd almost wait and see if you get that move back towards 13 and then look to spread it by just owning the 12.5 it has been so volatile. if you get this trade right, you get it right look what happened on tuesday, we had what looked like a capitulation i wouldn't be surprised to see
cuts back on the table this has been a supply so far. you have a really gl risk reward of buying oil. >> what do you anticipate will happen with opec >> that is definitely true, the point dan made is not a bad one. if one was so infliened and you were ready to manage a claim like this. the reason we are looking at a spread is because we have that upcoming catalyst that will elevate options premiums in energy stocks and commodity. that is the reason we are looking to make a spread the other reason we are making a point. that 10% pop, that is looking at a bear market. i'm not necessarily looking for a bottom
>> looking for actions and while you are there sign up for our news letter. if you dorks i'll be your best friend really so what are you waiting for. this is coming up next >> nvidia struck investors today. >> ever see something like that? >> one of the traders says, a similar storm could be brewing for another tech stock he'll give us a name plus, calling all actions fans tweet us your question at options actions. if it is nice, we'll answer it on air when options action returns. 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.
we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. >> welcome back. a storm taking down nvidia plunging more than 19% now down more than 40% from the high last month. dan sees similar dark clouds forming over another big tech name. >> let's talk about what happened here. nvidia closed down 19% today this company has $100 million market cap look what was shaved off one poor earnings report
is this a canary in the coal mine for a lot of tech what other tech stories. this is the one chart of nvidia. october 3, making a new all-time high up nearly 50% the year look at this down draft. down 50% from those highs. from 52-week highs to 52-week lows, that is not good stuff let's go to the five-year chart. this thing was a ten bagger. when it broke a couple of weeks ago, you went, i don't know where this is going to stop. let's go to adobe. sales grew up to 20% that was good news investors like it. it's still down from there look at the stock. look at it sitting at 235.
this is an expensive stock, trades about ten times its sales and about 30 times expected earnings let's go to the five-year chart. it resembles a lot of that nvidia chart doesn't look great to me now i want to overlay the two of them over the last five years. kind of similar. massivy out performing the s&p we saw what happened there here is adobe. december 13, it has that earnings event i do not, if i own this stock want to be sitting around for some disappointing guidance. i might think about as a health or if i'm looking to kill some whales here, i may go after this
on the short side here today, the stock was trading at 239. in december, you'll catch that earnings announcement, paying $8 for that buying one of the 235 puts setting one of the $200 put. maybe up to $227 and $200. that is your max gain. that is your reward. i just want to make my last point. this is not a high proeblt if you see any continuation, this is a name you'll want to be in on the short side. >> mike, what do you think of the trade? >> you are discounting the possibility. this is a name that has historically moved the day they announce earnings. we have several weeks to go
before this trade expires. that's all you need for this stock to break even and after that, it is all gravy. the chances that it will move 5% one way or the other over the course of the next three weeks seems like a pretty easy bet to make if you are thinking of shorting this stock or putting on the put spread, it is surprising me that the options premiums are as low as they are. granted adobe and nvidia are different business areas we have seen situations where people thought all the damage was done it turns out price action was telling us something very valuable it might be telling us something like that again now in adobe >> a lot about sentiment here. >> really important for adobe. that has been support since the middle of october. dan through that triangle called
the triangle of death. if you do break the bottom, i think it could go to 200. >> carter is not here, you can draw whatever lines you want and he won't challenge you thanks, dan. facebook face plants the social stock hitting a fresh 52-week low. any hope in sight? any hope in sight? we are livaccess to research. e at thed ameritrade's got that. nasdaqess to every pla aorm. time square. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees.
evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you? welcome back time to look back at open trades lat week we were told nvidia would crack that earnings. >> peeking before tech and tech peeks relative to the market in june as a sector it is just not a good set up >> looking to january, you could
buy the $200, $160 put spread. >> you may have noticed that carter is not on the desk tonight. he got stuck in the snowstorm. he did send us a post card. >> he wrotes, well for nvidia, that's it. a big roll over foreshadowing a problem, and today, the problem was exposed. a good example of price action leading fundamentals a testment to concept and there's wisdom in price. sorry i can't be there >> it is going to take him a week to get back here. how do you manage the trade. >> my flight also was canceled i'm thankful i didn't get diverted here is the thing. nvidia is a try fek tau of bad
news nearly tripling our money and a chance to take this off on monday i think that's what you want to do >> i think you take it off on monday something down 20%, yes, you've had the move here, right especially when you you are talking about options. there will be that timex piration there i don't see a big rebound in nvidia >> this is just a great, great call i thought if the stock ever got down to $160 or so, you'll have a lot of people who are very bullish. i do think you take this trade off. you have a couple more down days close tore $150, people are going to buy this stock. >> as of last week, dan made a call as to earnings. >> it just broke
it went through that most resent support. a pretty dicey time. i can do the december, january call >> dan, in the first leg of the trade here expires today whachlt what do you do >> it continues to get worse you are left long in the january $160 call for $270 worth about $2.50. could you see see money flow set it and forget it >> what do you think about that premise? >> maybe i don't know i would cut my losses and move ob on. i think they've got a lot of
head wins and until you can really get a handle on the way they move their handle now i'm just a seller cut your losses move on. >> coming up next, your tweets i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪
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 pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade we've got time for a tweet our viewer asks, what do you think of buying tesla november 30th 360 calls for a move to $370 >> if you are going to make a bullish bet with tesla, i wouldn't be buying the stock here >> time for the final call >> i think call spreads and uso are the way to play for a small bounce >> brian kelly, thank you for being here >> the dollar is the new fix
if that goes lower, the market could go higher. >> dan nathan. >> so apple, i think you look for a year-end rally and look for call spreads >> don't go anywhere, "mad money" starts right now. - [voiceover] the following is a paid presentation introducing the new dermawand pro, brought to you by ictv brands. introducing the new dermawand pro, 50% more powerful than regular dermawand for even more exciting results. also, dermawand pro is thinner, lighter and with soft grips, easier to hold and use. and anytime during this show you can call to upgrade to the new dermawand pro. now here's lisa. - hi i'm lisa varga, i'm 40 years old. i've never had cosmetic surgery and i'm not afraid of high definition cameras.