tv Options Action CNBC April 28, 2017 5:30pm-6:01pm EDT
there, the nasdaq markets after a busy week. guy is here getting ready behind me, while they're doing that, here's what's coming up on the show. >> you know what's cool? >> buying shares of facebook for just under $5. we'll show you how to do it uses options. plus it's everyone's fate saying on wall street. >> i am fought just a broker. >> no not. that i was referring to sallie mae and go away. there is something that suggests
you might want to take that had vice this year. and. >> moving for speed. go! >> that's exact lip what shares of tesla have done. if you are worried about next year's earnings. we'll tell you how to protect yourself. the action begins right now. >> let's get do it. the nasdaq 100 posted the longest winning strikes since 2009 t. index hit high, thanks to earnings from amazon and alphabet, scoring on record highs. it ain't over yet. next week comes the big kahunas, facebook hitting an all time high t. potential to spark a $40 million shift. should you continue to buy, which is a better buy, apple or facebook? dan, what do you say? >> the earnings we saw last
night shouldn't lead you to believe we will have natural surprises next week t. way investors are positioned, we know they are overweight. they are massive gainers, driving that massive outperformance. the nasdaq is up 12.5%, versus the s&p up 6% year-to-date. i hate to be so blase about it. it's move on average, 5%. i'd be shocked to see it move outside of that range. >> why would people be looking to offload their winners right here? it doesn't make a whole lot of sense. in apple's growth, if anything is poised to move, i think facebook is it. bake amy, they have a lot to look up to, expectations are year on year, for a 120% income year on quarter. that's a high hurdle for anybody
to get over. >> what does it ends up being? we all know. is it momentum peak for the crowded successful names or are they going to lead? >> let's put the current price in action. that's the biggest annual rate of return except we are up 60. then, of course, 98, 99, we are up 75% each year. the question, how much more can you do? i got some charts. >> we will first do a round of would you rather? we want to see, dan you had to put money to work right now? >> i'd probably go with apple. there are catalysts identifiable. as far as facebook is concerned. we don't know. they make acquisition, they use their currency, they use their cash and work out. to me, they're the ones that have more surprise, apple will be more, you can look down the road and see what's coming.
>> i think we are obviously at the very heavy levels at this point. i think they present significantly lower downside potential refx. given the fact that's the bigger grower, if there is a way to play it with options, tease, then i might lean. >> i wonder what you will have. carter. >> also, i'm going to go with facebook, which means, let's go long. see if we can figure it out. apple and facebook first. let's get ultimately, is this maybe how it all ends? apple, what? i think you can draw the lines like that. something of a head and shoulders bottom t. question is, has it played out? what's the price objective? typically, it's to the high, maybe through a high a little bit. what you dot is the breakout.
apple has check back risk which is often what we see after a stock moves two and also often you will re-visit. so my thinking is apple has risks. by contra distinction, this is facebook, this, obviously, what trend is. in fact, few put lines on it, it has lived within this quite precise can em. the question is this meaning we have been at this low, at this high, so to speak. are we getting close? i think we have a little more to go. we will stick with the bullish bet on facebook, we were working on a month or two ago. let's put it into perspective. okay. these are top stocks. they're valued at 2.3 stwrl.
1990 to sprint. take a look alt these numbers, market cap, cash flow, it's identical. the top five are going faster. it's a better bet. this is a chart 2.8 trillion. it has bounced off this line perfectly. i bet it's a little steep. have you the risks that you come down like this. so this is what's happened going forward. the top five unperform. so back to the chart. i bet you this is also what's going to happen. if i had to pick apple. >> you pecked apple with an options trade? >> i think we have earnings coming up. i was looking at the may-september 155 call spread. basically the options market.
this is a bet that will make it move to the upside t. premium is going to decay much more rapidly than the longer dated one. we will use that catalyst and push along that longer-dated call, you can sell the two after may expiration few want to do that. >> it makes perfect sense for a stock that has gone on this leg higher here. if this stock couldn't go up 10%. the idea of steling your data premium, i got to tell you, that chart of the five stocks, when you look at the move. >> it's scary. what do you do when you buy an index? the collective growth and all that stuff. it makes me nervous. i haven't seen it. you said you saw it in the '90s. >> in effect they reached,
market are always buyers to a few successes. >> just what in particular because of the stellar growth. >> they're all the same types of things. >> jim cramer makes this point all the time, few own the stocks rather than the etfs, you would have alma generators. >> shares hitting a fresh new high in footoday's session to r the glimpse of what the upcoming electric semi truck will look like, he projectsed they will add four new gigafactories saying it can be driven around like a sportscar. this comes as tesla gelts ready to report next week. how should you play it? >> it's up 70% from
may-december. i think there was a loot of trepidation t. rhetoric was fought going to be particularly favorabl favorable. the stock had that massive light higherch ethink there is risk near the 280 level. you should consider near dated protection. when it closed 314, can you buy the may 310, $8 for that buying. selling one of the may 280 puts at $2. it breaks zoup at 3.02. you have break even protection down to ten or 11% or so. this trade makes some sense, it has given q1 deliveries. they have raised their capitals.
shorts have gone sweet. >> you can't short a stock like it is. it is obviously not trading on trailing fundamental also and the future is pretty murky. energy side is the side of duke energy. >> we do you think is more vulnerable facebook or -- if there is trouble? >> both. >> that's good, hollywood. what do you think? >> it's a good one. i think facebook is a $400 billion stock. people will be left scratching their head. >> you loved the chart. >> and it's worked. >> what do you do now? >> i think we will stick by it. >> what do you leak better, facebook or -- >> yeah, that's clear. i think i will go with tesla. >> same for me. >> got a question, send us a
tweet. check out our website. check out our super cool news letter. maybe 2 billion already have. not 2 billion. >> let's not get carried away. if you weren't worried about the month-of-may, we'll teleteach you how to protect your portfolio. plus . >> that's impressive. not nearly as impressive as mike's option trade. he has a way to be keeping more cash when "options action" returns. zblmpb
zblmpbls. "options action," the s&p 5 result just posted the possible month. the stocks near record highs. should investors adhere to the olded a annual, sell in may, go away. bob. >> reporter: this is one of wall street's most famous add annuals. you can argue why it works. over the long period, there is something to it. since the s&p 500. it's been up since a gain during november to april period. they first brought this
connection to light back in 19 ex-. it sounds good. in the past ten years, they've refined this call architect nickal signal and a signal based on presidential cycles. the test signals will get you in earlier and longer than may 1st. the opposite is the market was trending down. don't sell in may in the third and fourth year of the presidential election psychole when markets tend to out perform. make a trade every four years, combining these signals produces turbo charge results. an annual loss to the s&ps from may until october compared to a gain to april. a $10,000 investment in 1949 to the may-to-okay period would have $45 million. it's a loss of $5400 the same
will produce a gain of $2 million plus you can see why it has staying power. >> how can you protect yourself? >> let's get to the call to action. >> let's talk about ensuring your portfolio. one of the things you want to time is hedging, if you do it all the time, it will create a drag on your return. the next thing, are you concerned about a big decline or just looking at a potentially modest decline, finally, volatility. the volatility of the broad market and at the s&p you can see what i was talking about before him right now, you would have made money if you were there here, here and here.
natsz five times. the rest of the time you would have been spending some money. >> that also emphasizes how important it is to focus on that timing. now we will look over the last year or so. if you can imagine you are looking for approximately a 1% return, maybe you are hoping for 3%. i want to have this much upside. i want protection down there. you can do that with something called a collar. you can use those proceeds to help with the 230 strike points. they will be paying a dividend of about $1.18 estimated in june when you have 3% from the upside. anything worse, we got you
covered. >> a e42 hedge, doesn't sound too bad, dan? >> new york et doesn't, hedge funds used to slack on a bunch of spy shorts. i prefer the sell out the money call, which mike is doing, using the proceeds to buy a put. >> that is the collar tan selling the spy. you are giving that portfolio room to the upside to appreciate. you also have that disaster preex below. you didn't pay a lot for it. rather than neutralizing the potential gains. so i love the idea of a collar. i like it more so on a single stock. i get why you are doing this. >> insurance is something, if one goes with seasonally, there is another ran, we have construction arguments foret. energy continues to fall to the consumer. this crowding into these very successful but perhaps overdone
growthage. >> one 79al point is if the market doesn't take the stairs up ap the elevator down, call lars protect you against the catastrophic crash. that's essentially what we are looking forward here. >> still ahead, the trade open mcdonald's. definitely getting his money in a week. he found a way to have more cash. dig deep into those pockets. think nice shots, sends it to us. much more options action right after this hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go!
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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. welcome block to "options action". it's time for the upside calls where we look back on our winning trades, last week mike got hungry for mcdonald's and made a killing. here's how. on options, a how to make fast profits, risk less so you can make more.
it gives us his bullish bet on mcdonald's. my thoughts is they were gentleman higher. buying the stocks, 100 shares that cost more than 13,000. he thought he could buy it for less than the cost of a big mac? >> it's simple, mr. president. here's how. to make a bullish bet mike bought the call for $3.40. >> that is the most he could lose on the trade. shares arrived above the strike by more than the cost of the trade or in this case above 13840 by eseptember expiration. it get better, that call will increase in value faster than the president donald's stock, meaning more money in mike's pockets. this is the time of the trades, mike's trade is right in the sweet spot.
>> there is still plenty of time on the clock. >> there isn't, but "options action" spans all over the world and wants to know one thing, what will mike do now, if he thought it was so great, have you bought shares up around 6%? not bad. >> that 135 strike call is now worth 740. >> that is a return of 120% in one week. do you keep this trade on? >> the day it came out, it was trading $141 at the time. the advantage of option is the fact that you are risking very little. you have that upside. i said you could take a portion of the profits you had and roll out and up if you wanted to make a bullish bet. i think we got a break.
>> thaik take your money and run. >> we can't all be winners. that's the case of dan's bearish bet on tech. >> i want to look out to july. the etf was trading 132 half. you can buy the july put pay about $150 cents on that. >> how are you managing this trade? >> listen, this is one i like on an outright basis. the concentration in all those five stocks, they make up 40% of the qqq. they can't keep growing like this or this much higher. so the trade was for 250. it broke even. thing to is at 136. it's worth about 140 right now. it makes sense on long premium directional trade. that's how you manage. >> we have plenty of catalysts that can get the market to rock.
we are looking at this for insurance. >> up next your tweets and the final calls from the options pits. -app chat on thinkorswim. only at td ameritrade. whoa,i just had to push one button to join. it's like i'm in the office with you, even though i'm here. it's almost like the virtual reality of business communications. no, it's reality. intuitive one touch video conferencing is a reality.
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the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade back for some tweets. tap, what are your thoughts on using out of the money radio put spread to minimize or eliminate the cost of protection between mike ko? >> in a situation like this, i think it's a ricky prop session actually. normally i love this strategy. the problem is, selling more puts than you are long, you want to sell our own it? >> or you want to be quick, can you turn it into a put but tr fly. >> that takes care of margin implication sfwls time for the final call. >> next week facebook over apple. the growth. >> mike.
>> and i would use countertwist on facebook for modest upside bet. >> nathan. >> a lot of teams we talk about the directional put strategies, to me tesla is great protection for long holders. >> all right. our time has expired. thanks, for 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 money. my job is not just to entertain, but to educate and teach you. email me or tweet me.