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Floor. Heres a hint. Were going to turn it on were going to bring in the power well give you the trade. Its time to risk less and make more the action begins right now. Lets get right to of it rates have been on a tear, the yield and tenyear hitting highest levels since july, sending bond rates tumbling. Will the rise in rates continue . Its really exciting that we had this unprecedented 3 gdp growth in q3 who knows . There should be no reason why rates should not be able to rally with a 3 economy, right you guys all agree with that for a lot of purposes, i mean, i would say, and im being a little facetious one quarter of 3 annualized growth does not make 3 annualized growth. We were thinking what a quick rise in Interest Rates would be as we go into qt, as we go into a rate tightening cycle. Theres only been two rate increases this year. Were going to get a third in december the tenyear treasury yield is still below levels that it was a year ago, you know what i mean to me, it seems a bit rangebound. We know the one thing that bears will point to or potential people looking for a pullback would be if rates rise too quickly, too fast. We know that janet yellen is on a little bit of the hot seat here i suspect we get this push and pull between dovish and the fed Balance Sheet is obviously one of the levers that they have. We also have global levers in play that yellen does not control. And the fact is that even as our own Central Bank Begins to tighten, that is not the policy anywhere else on earth money flows very easily. Its changing, mike is that the no one of the stories right now . We went from dovish Central Banks all over the world, and we were the ones starting to tighten a little bit now it seems like everyone is falling in line. The narrative has changed think about where we were to start the year 265. And consensus was 3 1 4. Here we are in october, we are sitting here debating about 2. 2, 2. 3. Carter, you say the rates are about to back up i think so. I mean, i think theyre going to come off here. Weve just moved up pretty dramatically lets see if we can draw some lines. All right. You see the chart. Ten year yield one thing we could do is the following. Theres a pretty welldefined channel. And it has lived within this channel all year in fact theres a lot of symmetry between the order of magnitude and the duration of these moves. Lets take a look. For starters, these are all the moves weve had. One, two, three, four, five. Look how similar, 25 base points, 32, 26, 29, 34 refuse what about duration . Number of sessions, two weeks. Two weeks, eight two weeks, 12. Two to three weeks, all between 25 and 35 base points. Im not sure anythings changed. And lets say it does press on a little bit so what . Rates are low. Im not sure its enough to really change the backdrop for banks and all of the things that are expected in any event, im going to make a bet that utilities can bounce here two ways i would draw the line one, we kind of come back to support. Two, that were on this trend line but either way, i think youve got a pretty good chance of, after this 5, 6 selloff in the xlu, a bounce here i want to be long at this point. So utilities for a bounce, mike what do you think . Well, first of all, im going to always go along with carter, or most of the time ill go along with carter. One of the nice things about trading Something Like xlu is that its one of those places where options are really, really cheap. And when they are extremely inexpensive, if youre trying to make a directional bet, trying to make a trend type trade, it sets up really nicely for that this is certainly one of those cases. And i think we can talk about it a little bit more, but i was just looking out to january, to the 53 calls you could spend 1. 45 for those, those are the at the money calls. Doesnt take a big move for these things to be profitable. On top of that, youre risking a little bit less than 3 of the current price of xlu to make that bullish bet if that trend proves to be unfounded, then youre really not risking a great deal one thing that was really interesting about the charts, thats clearly a down trend. That being said, could you have a pullback in the tenyear yield . I guess the question is, would they rush back into the xlu . Its acted pretty well its kind of an expensive sector we have this conversation all the time about growth versus value, that sort of thing. Where i shake out on the whole rate trade, on your trade, it makes sense, youre right, options are cheap, it sets up technically, that sort of thing. If the market and the economy and all the stuff that we talk about every night on this desk are as good as we think it is and its all happening around the world at the same time, the stock market should be able to go up with rising rates. It should be, for all intents and purposes and weve had nothing. What it tells me is, whats wrong here, why is it rates can go up . Because Everything Else is saying all systems go. One thing i could quickly throw out also xlu is not like trading tlt. Tlt is a fixed income instrument xlu sometimes trades like fixed income but it isnt. These are utility companies. Many times you have regulations that can impact their earnings its obviously a capital intensive business earnings can rise in the sector. Thats an important thing to remember, in that way, its probably more like trading in inflation adjusted instrument rather than a fixed income and like for instance, staples is tied to this, staples had risks associated with the operating business that utilities dont. Some of those businesses are real pressure for structural reasons, whereas utilities as an aggregate are going to trade true rates will either not bounce or rates dont do much. And telecon is also in this dividendyielding. Right, there too its having to do with their businesses and market share and all that stuff. One final thing i would say where utilities are concerned, and were thinking about the ability for them to maximize generation storage, batteries, if you have cars in the garage that are electric, plus the fact that you have electric cars so that is a potential driver that you could think about that i think is different than some of those others that you mentioned. Now to a group of stocks that have been on fire, the chips, the smh Semi Conductor surging micron, applied materials, intel, some of the top performers in the last month, up double digits. Are any of these names still a buy . Second try is going to be a charm here last week i picked the one Semi Conductor stock that closed down on this week i want to look at intel this week one of the reasons here is that i think theres a lot of things that are going for this company right now. I think theyve been digesting a couple of really big acquisitions they bought altera in 2017, they bought mobileye for 15 billion. There was a couple of ai deals in between that. I think this is a company that is pretty dead set on not missing the next Big Technology trends the way they kind of missed mobile over the last ten years. When i look at intel here, i think theres a really interesting setup. We have a couple of charts right here this is a fiveyear. Its banking up against, you know, the 52week high that was made earlier this year, 38. 45, you get through that, thats a multiyear high then we have a 20year chart this is one of the really few mega cap tech stocks i know carter has been talking about this on fast money over the last couple of months, that has a ton of room to go. It trades about 12 1 2 times, well below market multiple to me, my bullish thesis on this stock, for most of this years, is that theyre going to digest these deals. If we can get something of high Single Digits Earnings Growth from some cost cutting and other things that people are not expecting, youre expecting a 3 earnings number. This stock could easily be rerated back to probably, i dont know, 13, 14 times you have a 45 stock. Investors will start thinking about that option prices are cheap. Im looking at their earnings event. Its going to be on october 26th so i want to look at october 27th i just want to target this event. Ive been long this stock. Im considering this as a stock replacement strategy option prices are cheap. When the stock today was trading at 38. 05, you could buy the october 27th weekly, 38 calls, for 85 cents if you do the math right there, thats about 2. 2 of the stock price. The stock has just rallied 10 its at that massive resistance level. The stock is going higher. I think you probably see in the low 40s. We rarely talk about the ability to essentially rent options for nothing. This is actually one of those circumstances. Whats going to happen is these are actually not going to decay the way an option of this tenor normally would effectively, if the stock rallies, ahead of the earnings event, you will actually have an opportunity to potentially monetize this thing with minimal decay in the meantime. Then of course if you dont get a move, you can sit there at that point and make a determination whether you want to stay long using this. I like this trade a lot. Itspoised, thats what tha is, those precise levels and also, intel was so not liked as this was going on because it wasnt m a related and all this stuff. Other large cap sort of mature tech names have all been quite good microsoft has been good, oracle, until the recent setback, quite book i would think this ultimately is going to break out it will catch up and do what the chart implies. It was probably because of the earnings youre looking at when you say ultimately break out, do you think the october catalyst is going to be that ultimate does that fit the ultimate timeline, in your view sure. So the 38 level, and you saw the chart that dan put there, is very precise its not only the tops over the past say year, but it goes past to 2014. All in the context of that huge base so that even, lets say even if it doesnt work, youve got limited downside presumptively with a setup like that its like a heads you one, tails you win. This is a stock that moves about 3. 5 on average the day they announce earnings if you think about it, that straddle, the 38 call plus 38 put, should be worth 3. 5 of the stock price the day before they announce, all right . Right now its only 1. 60. You could think about just how little decay youre likely to experience unless some material bit of news comings oes out in meantime those options, 85 cents, depending on where it was trading, when i price it up today. I can tell you this, on october 25th, the day before earnings, i think that at the money straddle that mike is talking about, the call and put premium together, is probably going to be about 40, 50, Something Like that. You basically get a free look at this to answer your question about that exact date, i dont know what the numbers are, okay of course im just telling you, the sentiment is so bad, this stock is only up 5 , the semiconductor etf is up 30 persi . It will play quick catchup. And give you a dividend too, unlike most semis. Thats true 28 for more options action, check out our website, check out our newsletterer rumor has it mike khouw reads it before bed every night why not you . Heres whats coming up next heres the market and heres your portfolio well give you the stock that will catch you up. Plus calling all options action fans. Reach into your pocket, grab your phone, and tweet us your question at optionsaction. If its nice, ll swweaner it on air, when options action returns. Logical c. Your kids go to college and you start trading. Yeah, 5 years already. 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 ameritrades elite service team can handle your toughest questions right away with volatility, its 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, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its 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. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Welcome back to options action. The dow saw its best threequarters of the year since 2013 a dream team of stocks like boeing, caterpillar, apple, mcdonalds paved the way are there another names you can play catch up with if you missed the rally . Carter home depot is making alltime highs, 52week highs its lagged in many ways in certain key aggregates of which its a part. Home depot is here compared to the Dow Jones Industrial average. Basically over the past 18 months we see quite clearly, it might not seem like a lot, still youre talking about underperformance at this point and i think thats going to be sort of narrowed home depot versus the dow. Here is another way to look at it home depot versus the s p. Albeit barely, but still here too, lagging lets go again, here is the s p 500 pure growth etf. This is a growth stock this has lagged as well. I think theres an opportunity here lets look at the charts a little bit of data this refers to what i was talking about. Im not sure were moving. You saw that lets go forward again there we go. All right. Take a look at this. Got some lines coming. Thats a heck of a setup so the presumption is a breakout from these welldefined tops i think thats an opportunity. We close at 163 today. Take a look at where the stock is in relation to the fiveyear channel. It has been just in the middle were we to get back towards the highs which is every distinct possibility, youve got 10, 12, 15 points. Its probably the earnings that does it. I want to be long on home depot, i like it. Mike . Im trying to take advantage of some of the same numbers. I have a feeling that whatever happens in the meantime is likely to be gradual theyve gotten a little bit of a bounce because people are talking about a pop due to Home Improvements going on unfortunately because of these storms specifically im looking at the 1. 65 october january call spread sell the october 1. 65s at a buck oh five im taking advantage of the fact that i dont think theres a whole lot in those preearnings options. Do you like home depot . Do you like the trade . The chart is a beautiful breakout its one of the strongest names in the last year and a half of this rally it bucked a lot of trends, when we saw prior leaders fail, it never failed, it kept on going i love calendar. Mike is selling that go shorter dated one and setting up to run the longer dated one the only thing is are you getting too cute with selling that october 1. 65. You have three weeks this thing could blow right through it he said, 12, 15 points, Something Like that. Who knows . I think if youre playing for that breakout and you believe in his charts and you like the fundamental setup into november, holiday selling season, i think you actually just buy a january call spread and Something Like that and sit with it, rather than getting too cute. You wont lose money if that stock goes up three or four dollars in the next few minutes. Evenmore than that, probably you can think about that 1. 65 strike, january will still have at least three bucks of premium in it. I do hear what youre saying you get all these inputs right and you get the trade structure wrong. Its a little tight. Its an absolutely fair point, if youre looking to get more leverage to the upside, a dollar for the calls is not a great deal on a 165 stock well be clear about that. These options like so many of them are cheap options are cheap for a good reason weve obviously had very low volatility fundamentally, of the two, between this and lowes, this is clearly the better company, a better managed company youre talking about twice gdp growth on the revenue side and a better chart than i think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 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 ameritrades elite service team can handle your toughest questions right away with volatility, its 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. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats up to 16 times faster than slow internet from the phone company. Say hello to faster downloads with internet speeds up to 250 megabits per second. Get fast internet and add phone and tv now for only 34. 90 more per month. Call today. Comcast business. Built for business. Comcast business. Well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its 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. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Welcome back to options action. Time to take a look back at our open trades. Two weeks ago dan made a bet that American Express was going to break out to me, i think this thing place some catchup. The price of options is very cheap. I think you want to target that earnings event in midoctober. To me this is really an easy one, the vol as low as it is, look out the stock was trading today at 86. 80 you could buy the october call it looks like dans bet worked out since the time of the trade. American express shares are up 4 and just hit a 52week high today. Dan, whats your next move this is how you trade the options. You dont have to read a book to learn how to trade the options you should, though. Ive got one a great book. Heres the deal. Those cost 1. 40 the stock is now at 90. 30 those are worth 3. 40. I think you roll them up, you take profits on the 87 1 2 strike you say, you originally paid 1. 40, you paid 2 in profits. The calls are offered at 1. 40, i could buy those, i have a break even at 92. 40. I was targeting a move to 95 you roll up that premium and youve locked in, you cant lose you could lose the new premium you committed to it but you cant lose from the initial trade and youre booking two carter said two weeks ago that mcdonalds run is done. My guess is were going to check back, check back, check back to trend. If im long, i want to take profits. If im a short seller, you have just you get a 5 to 8 solid december, 155, 145 put spread thats a 10 wide put spread goes all the way out to december you could spend 2 1 2 dollars for that its been a bit of a roller coaster ride for the stock mcdonalds fell more than 2 and recovered some of the losses carter, what do you say . Its done nothing and the markets surging, massive underperformance a great setup for further trouble. This thing has almost no decay. I would stay with it naca fm e tis weets and the fil llrothopon desk i think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 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 ameritrades elite service team can handle your toughest questions right away with volatility, its 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, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its 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. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Time for tweets. From josh, he asks, why would you use a debit spread versus a credit spread and viceversa mike if youre expecting a big move and options are cheap, spend money. If youre spect small moves, spend credit how do you determine when to roll up or down in an active trade . Good question, we hit that with the American Express trade. Its long in the money, im going to take that profit and define my risk a little better last word from the options desk i want to be offensive and buy home depot i want to be defensive and buy xlu. I really like the intel call, ive got to say. The intel, this is really important, because youve got to get october 27th, not the october regulars, because earnings fall on the 26th. I like those calls our time has expired. Im melissa lee. Thanks for whapping. For more options action, check out our website. See you back here next friday at 5 30 p. M. Eastern time mad money starts right now. My mission is simple, to make you money im here to level the Playing Field for all investors. Theres always a work somewhere and i promise to help you find it mad money starts now hey im cramer, welcome to mad money. Welcome to cram america. Other people want to make friends im trying to make you money. My job to ed katd and teach you. Call me at 1800734cnbc or tweet me jim cramer holy cow, we got through some

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