Well give you the name and how to profit. And talk about ingenius trade. Weve got a way to get long on apple for just 3 bucks no way. Way and well show you how its time to risk less and make more the action begins right now. Lets get right to it because next week is the busiest one for earnings season. Well hear from 172 S P Companies and 12 dow components, names like mcdonalds, cat perfect ter pillar, boeing, amazon, microsoft, ups you get the picture. Roughly 70 of Companies Think eps and revenue beat should you keep buying stocks into earnings . Lets get in the money right now, mike . This is interesting we have a volatility paradocks i dont know that valuations are the precursor to a drop. I see volatility as low as it is i see continued confidence in the market right here. The other thing is that we are seeing some dispersion that is that on these Earnings Results we see financials which probably did a little bit better on an operating basis. Stocks dont move. You see Something Like materials which basically are otherwise flat, stocks do well stocks not so much stocks are going in Different Directions thats going to create some steadiness in the market i think market unsteadiness will cause investors to mikes point, i think weve seen all year long this rotation between different sectors, right if you have this dispersion, then youre going to get active managers back in the space moving between sectors and thats going to give you opportunity. Dispersion meaning things arent correlated . What weve had is the index funds. Now things are not core rated, separating, you have the opportunity. Well, in terms of the cycle here and talking about the earnings, the thing thats really important is that the revenue has been better than expected if you look at the blantended average, its 1. 77 , a fairly muted area the top line is exceeding the bottom line. Its harder for management to manipulate revenues. You can have share buy backs that can boost earnings per share but revenues, that basically tells the tale if its growing at a rate thats better than expected, that signals under pinning strength. Carter, youre taking a look at a sleeper pick. I know big names like tech names. Lets look at your guests. Transports, industrials. Huge laggards. Ge coming to life. I thought we could drill down ups which has earnings im going to make the bet that its going to be good. Its going up whether its good or bad ups versus the markets, it is a market performer the numbers speak for themselves the issue is of late since inception back in 99 ups versus the s p, its a dead heat from the absolute low, the 6th of march, 2009, i think this is where it gets interesting. Ups, of course, has lagged the market now more immediately take a look at where we are just over the last one, two years. I think, again, this is the opportunity, that ups has lagged its a big name. We know whats going on in the internet shipping. I think its a name to play. Heres a chart no drawings or annotations by me, but i think what you can see here thats important is that were right at the prior high. The presumption is that after we back end fill in this high we can exceed this high look at what i draw, put in actual, i think youre going to get this line here youre going to get your breakout here and im going to make a bet that ups will make a high want to be long. Michael, whats your trade . This is an interesting trade. Usually earnings are basically large contributors to price movement, but actually in the case of ups the movement on earnings is typically around 2 . What you do often see movement is through the Holiday Season. Theyve had operational challenges theyve had situations where theyve ultimately disappointed in the next quarter. I think the best way to do this with options premiums is to buy the at the money call. Looking out to january you can buy the 120 calls. When i was looking at those, they were 3. 20. Youre spending 3 relative to the current stock price. Has to move up 3 between now and january. And i think the chances that it makes a move of that magnitude or larger is very, very good i dont expect it necessarily for earnings. What do you think of the trade . Im going to have to disagree with carter a jee jeer andko you have other head winds coming out. Amazon will have their own air fleet. There are other issues out in the last couple of years theyve had the operational issues id rather take a shot on the short side here. Dont you think though that what is really going to propel the stock is how Holiday Season operates for them . Theyve had some operation aal challenges they seem to have fixed those. They seem to be benefitting from emerging technologies. Theyre doing some other things with their less than full truck level deliveries that are going to benefit them as well. Its also trading, by the way, at a discount to the historical valuation. Discount to the market. For a reason, right i mean, its trading there for a reason to me i think theres more risk that they dont hit the numbers, that they dont hit expectations. I think the market is going to be higher through january do i think the market is going to be higher do you think the market is going to be higher through january . Yeah. You think this is going to diverge further from the market . Even in a rising tide or that the gap will be filled that the disparity wont be thats the opportunity. Theres a sleeper thats going to surprise. Now to a stock that was a big winner this week, the ibm. Big blue was the mvp of the dow surging 10 . A surprising view given the stocks troubled past. Who better than to break it down, dom chu. I am here for cnbc and options action. Ibm hasnt been pulling its own weight no secret its been one of the bigger laggards year to date and last 12 months the Earnings Report on tuesday afternoon went a long way towards clawing back some performance. By the time the dust settled on wednesdays close, big blue had gained more than 9 . That was the day it gained over 11 . It was also the best post earnings day for the stock going all the way back to 2002 and according to an Investment Group it was only the third time in the last 18 orders when the stock got higher after the Earnings Report. We saw a lot of that action play out in the Options Market in the first four days of the week. We saw options Trading Volume for ibm four times greater than average. If you look at the vast majority of that volume, yes, it happened after the Earnings Report was released so, could this be a turning point in sentiment for big blue . The skeptics say it will take a lot more to get it back on track, the stock at least, but the bulls say this could be a turning point on a stock that many have given up over the last couple of years. That debate rages on. Well take it to the desk dom chu back at headquarters ill kick it off with you, b. K do you think this was the moment for ibm . I do. This is a change in sentiment, a change in the way the company is operating. The way that the market is perceiving that. Weve had this turn around story that the market has not believed for a long time. After this quarter you have to believe in this turn around story. To me, i think they hit all the different areas of the growth areas going forward. Talk about this is on the market i think this has much more potential to outperform than the other news we talked about. From a fundamental standpoint weve seen this where youve had mature companies, Companies Like microsoft and so on where people were concerned they were not evolving and taking advantage of new opportunities especially in services, things like cloud, that is at ai, something ibm has been touting a lot of. We have such bad performance coming into this point but if there wasnt actually a big change, we wouldnt have seen this pop. There would have been plenty of ready sellers and there werent. It seems to me that people are beginning to believe this is going to be it you have a lot farther to go you have a company that had 100 billion in revenues, 15 billion in clouds. Heres what it is theres no operating business per se what theyve done is theyve cut their flow in half they eat themselves. They buy back their shares theyve done it more aggressive than any Prominent Company out there. The issue is, this is a matter of technique and its quite right. When something caps up, it usually is not an isolated event. You have two down in quarterly misses a quarterly beat thats this aggressive is typically followed by something thats equally aggressive the risk or the chance here is that you get back to those drops of may when it plunged from sort of 170 i think weve got a chart to show that. Thats the up side of it wow yeah. What do you know i agree with them on ups and now i feel bad. 3. 7 perfecti dividend is no. Thats right. If the market gives them a pass in a sense, which i dont think they have quite yet, but to carters point i think theyre going to start giving them a pass similar to how they give amazon a pass and you believe in the story, the expectations are still too low for this company therefore surprise to the up side. Take a quick break for everything options action. Optionsaction. Cnbc. Com sign up for our super cool newsletter it is an absolute must read. What are you waiting for apples market cap is north of 800 billion. Good lord, thats a lot of money it sure is. So well show you how to buy shares for just three bucks. Plus, calling all options action pads reach into your pocket, get your phone and tweet us your question at options action. If its nice, well answer it on air when options action returns. Logical 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. It sure is. Logical 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. Apple unveiling its new Flagship Store in washington today. Hey, josh. Melissa, actually, the governor of illinois just walked into this apple store right behind here. The mayor of chicago, ram emmanuel is here take a look at this line melissa, this is a line of people waiting to get into this store which will open its doors at the top of the hour also on hand was apple ceo tim cook who talked about why he thought it was important to be here for this opening. Our very First Flagship was right here in chicago in 2003. Now 14 years later we are here in this beautiful store with a great connection to the community in a larger way than ever its got all of our latest innovations in the store in a connection to the community thats deeper than anything weve done before. So it feels fantastic. So apple, of course, isnt the only Big Tech Company opening new brick and Mortar Stores there are others, for example. Amazon is, too but apple retail chief Angela Aarons told me she isnt worried about that. I dont think about that frequently ive read theyre ininvestigates, google is going to invest billions and open stores i have read that honestly, i think its great i think its great for the economy, employment, and i think it reinforces that physical retail is not going away, that there is a purpose people want the Human Connection they want a place to pick up their products, et cetera. I think the great news is, as you said, were nearly 500 stores ahead of them the tenure of our employees is unbelievable we have an over 80 retention rate in america alone so i think it will take them a little while too catch up and more stores are on the way including washington, d. C. , paris and milan. Melissa, thank you. Josh lip ton in chicago. Apple shares have been under pressure after unveiling the next generation iphones. The stock down 4 since the debut. With earnings and release of the iphone 10, how should you play it mike is at the plasma with the call to action mike. Were going to talk about using a calendar spread in this case one of the things we would expect if were going to put a trade like this, the stock is not going to move that much at the near term. Looking at near term consolidation. The other thing youre looking at is youre boog a dated option is a longer term catalyst. You might say we have earnings coming up the first week in november the catalyst is going to be holiday earnings, not so much the earnings event finally, oftentimes options premiums get elevated. I want to sell that premium and buy the holiday move we can take a look at the stock price here and we can see basically whats been going on sideways slightly. Its im not expecting good earnings out of this for the reason this is the trade pretty easy. For 3 we can by the november january call spread you can by the januarys for 5. 85. You can sell the novembers for 2. 85. I dont expect them to decay that much. This is the money youre hoping to collect but youre only risking 2 of the stock price to do this trade. Do you like calendar spreads . I like this trade in this particular case because you have two catalysts, right when youre looking at that, then i think this works out very, very well. And we all know that this apple story is about the iphone 10, its not about the 8 its the Holiday Season that matters. I like it a lot. How do the charts look . I get nervous when somebody pulls the chart and starts drawing lines. No, listen. Chart is just a pictorial representation of the collective judgment of our participants i think if one were to take that and look at this chart here maybe, what we know is that apple has broken trend its on a big break, massive rollover, but the performance is sluggish we think thats what the word dorm mants is about. Its what youre trying to do. The stock is the same price as late may think of where the market is versus late may. The trade that were making is its going to be in the same price after earnings what people want to know is are their products going to sell really well . Are these new stores, like the one in chicago, not going to be a destination for people to go and look at product but for people to actually buy it. They have very Retail Sales Per square foot. Thats not the only answer for this company were going to need to see ver strong holiday sales for it to go higher. This will be a tricky setup we will get little data points here and there about howell the preorders have come in. Thats what data points were made a week, two or three weeks ago. Always these things lurking. Thats exactly why this trade is great, right . I dont think much is going to lap. After that in the Holiday Season i suspect josh lip ton will be showing us the lines lines are big, apple goes higher lines are small, apple goes lower. We like situations where we can sell some premium into events its very hard when options premiums are low here were buying dated and were selling. Thats the way you can find some ways to collect. Up next, intel hitting the highest level in nearly 17 years today. The charts are pointing to more gains. We will break that down. If you have a question for one of the traders, you can send us a tweet if its nice, well read it later. Much more options action straight ahead rific. 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. Time to look back on some of our open trades. Three weeks ago carter and ko said home depot was about to break out. Thats a heck of a setup. So the presumption is a breakout from these welldefined tops i think thats an opportunity. Specifically what im looking at is the 1. 65 october january call spread. I could buy the januarys and sell them at 1. 05 well, its been a bit of a wild ride for the Home Improvement retailer rallying to an alltime high before pulling back mike, the first leg expires today. What do you do that one expired worthless. Thats what we want to have happen were still long the longer dated call now the real question is do we think the breakout is going to happen otherwise ill sell the november 1. 65. We have this breakout and its fallen back if you can buy some more time, the presumption is home depot goes higher. We have the time. Thats why we had the calendar. Also three weeks ago, dan bet that the intel spreads were going higher he bought them expiring next week intel shares are up already more than 6 . You may have noticed dan isnt here with us today, but he did send us a message from an undisclosed, apparently wooded area in upstate new york to tell us how he is managing this trade. Hello, options actions viewers. Sorry i cant be there i wanted to give you an update on the intel trade the stock was 38 i was targeting earnings this coming week at the time it was the october 27th weekly 38 calls for 80 cents at this point i think were going to roll them up a little bit to the october 40s those are also about 85 cents right now and the stock was trading at 40. 30. Thanks a lot good luck. Very, very undisclosed. It was like when you do the blurry part. He could be at a home depot in the back. Mike, what would you do here i agree with him on this. That was a great trade it was one of these situations where options premiums were simply too low you had the calls trading what they were worth the day before earnings weeks before earnings. Now hes looking at the 40 strike calls theyre only trading very slightly above parity. I think thats a good way to make your bullish bets. 17 year high on intel wow. I like this trade im curious what dan is hiding from hes whispering in the woods creepy. It seems like hes on the lamb. On the lamb, exactly. For sure on the lamb. This is a classic sleeper trade. Semis have been hot. Intel has been lagging this is what you can get if you get a catchup. Up next, your tweets and the final call from the options pits 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 to take your tweets our first fan says, hey, melissa lee. Its a nice tweet. Please read it just did just did moving on. Our next fan asks whats the options play leading up to microsoft earnings next week mike volatility again has been so low. This stockstill looks pretty good to me i think you want to make that basically looking out to january. That chart looks pretty good. Something so good, never in its history has it gone this long without having a check back to the 150 day average. Is that good . So worriedly good b. K. , is the tesla double top played out what are your views into earnings certainly i think it will break three fortyfive you want to be aggressively short. Double top is in and going lower. Time for the final call . Are the kaer long ups into earnings for 5, 6 move to 125. Mike ko. Buy january calls into ups to play. Brian kelly thanks for joining us. Thanks for having me. It was a lot of fun. Look for the vix protection on your portfolio on the low volatility portfolios. Im melissa lee thanks for watching. For more options action check out the website optionsaction. Cnbc. Com or tweet us. Mad money with jim cramer starts right now [narrator] the following is a paid program for the kitchenaid artisan stand mixer and attachments. Stay tuned for the newest offer to try the kitchenaid artisan stand mixer and select attachments in your home, risk free. 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