Do before, brian hosted that one as well. We talked, and i was shocked and i dont know how you feel about this on a friday with all the potential risks over the weekend, vix closed effectively unchanged, closed up three quarters of a percent or not i would have said if you told me all this was going to happen today, the dow had at least 500 points and the vix north of 15 i understand why you would want to buy protection. By the way, theres a lot of scary stuff that the market doesnt seem to think so. The most important thing i would focus on there was some massive underlying weakness in the big market leaders this week we saw it in the semiconductors, in some of the faang stocks. Thats something that makes a lot of sense wednesday, when the semiconductor was down and the s p flat because of the rotation in financials and industrials and retail that was troubling to me its fantastic that s p could be flat, but there is some underlying weakness here. Yeah. I mean one other quick point, one of the things that helps the index stay more stable than weakness and things like fang might do when you see other sectors perform better, today that sector was energy when you see that happen, what ends up happening the index isnt going to move around quite as much. That disguises must underlying volatility youre actually getting. It makes sense to look to january or beyond. One of the reasons the vix is low is because the holidays are coming up. Maybe people arent i just want to make one really important point we talk about hedging your portfolio or hedging individual stocks, doing it tactically, not as a program that would be a huge drag on your returns this trade is tactical, specifically looking to hold on to the new year, if youre lon stocks, this is putting on protection, right, in the s. P. Y. , into the new year. I thin we could get a flash early in january when people are saying, okay, all of that uncertainty that we disregarded for this whole year, im actually going to start moving my feet a little bit on it. That could happen when we get back on new years i like this trade. All right as mike just mentioned energy was, indeed, a bright spot in the market today the Energy Sector up about 1 today and after lagging all year, the group has had a bit of a resurgence as of late. In fact its one of the best performing sectors over the last three months check out names like anadarko, halliburton, exxon, chevron, all surging. How should you play the space heading into the end of the year if at all . Youre the tx guy. Im inclined to make a play that is mostly domestic. The integrated Oil Companies are basically a proxy for oil itself in the long run i dont like that play. Exxon doesnt seem to like that play thats demonstrated by seeing how much they replenished their reserves i think the Oil Services Sector and halliburton in particular is probably the best way to make a play its interesting, although you cited the fact that these stocks have done well recently, overall for the year this is one of the sectors that actually is not trading at its alltime high so from a fundamental standpoint, as long as we continue to see a lot of after the particularly domestically, this is the place you want to be i think halliburton is the most interesting in the space, schlumberger would be my second, and when we dont do in these cases see a level, in halliburtons case, 40 was basically the floor on this thing. If it broke below that its all done guy, you know how theres a restaurant you go to and the food isnt good and you go back after a year and you keep going back and its bad, thats whats happening with Energy Stocks because every time we think theres momentum, you want to go back in, its so good, and you get burned sometimes they actually make the turn and sometimes you are pleasantly surprised i think thats what were on the verge in energy. Thats whats been happening for the last two or three months i like halliburton more than Schlumberger Halliburton has 20 times forward earnings, cheaper than schlumberger close to 30 look at halliburtons quarter they report october 23rd or so decent quarter, into earnings i believe in the middl of january, a bullish play on a benign take, this thing is going to continue to trend higher. Okay. I like the trade. So the trade im looking at is the january 42. 40 put spread. I will be a seller of that collect 50 cents that may not sound like much but youre collecting 1 per month for selling that im stocked up by buying that 40 strike put to the downside basically you can think about it this way if it does decline below 42, thats where were going to own it shg your cost base is going to be 41 1 2 and you have that 40 insurance basically in the form of that lower strike put we dont look at selling put spreads that often 40 is basically the floor, if it broke below that i would be more worried, i would defer to guy on whether thats the danger level. If youre doing this, youre not going to be greedy this is not a big one. This is a slow burn. Let me get in here. Its an options trade. If youre really convicted and bullish on halliburton you wouldnt just be looking at january and selling a put spread where you can only make 50 cents. I mean this would be fair. This can grind higher, a trade you can do again and again. It has a high probability of profit right it has much lower risk than either purchasing the stock outright and a fairly good rate of return. Thats really what were looking for here i typically, when im short premium, im looking to collect at least 1 of current stock let me ask you this, in this environment, halliburton tried to buy baker hughes a few years ago when the price of crude was right before, that sort of thing. Is there any possibility, with these stocks acting so bad, could you have schlumberger, halliburton, could you have a merger in this environment the reason i bring that up, if you really did think there was potential merger potential, you would not want to be short put spreads you would want to be long that would be the tough one because you have the two biggest player getting together, i could see push back on that. If you believe theres a deal do not mikes trade. If that was part of your bullish thesis, you would want to be long premium, long calls or call spreads rather than short put spreads. I think we have a lot of activity in north america and theyre going to profit from that ge is the worst performin stock in the dow this year, the worst performing s p stock is baker hughes, bought by who . Ge its been a tough year they zigged when they should have zagged. The point is i wonder if there will be any deal making . That ship may have sailed i understand what dan is saying, i think what dan is saying tha if youre as bullish as we appear to be in halliburton, why not buy the stock or play it with calls that you might get more bang for your buck instead of just making 50 cents, is that correct . I think dan makes a cogent point as he typically does fridays at 5 30 to 6 00 thank you youre welcome. Got a question . Send a tweet to optionsaction for Everything Else options action, go to our website and or sign up for our news letter in the meantime heres whats coming up. Thats incredible thats what america is saying about bitcoin and well tell you how to cash in using options plus chip stocks are getting crushed. And theres something in the charts that suggests even more pain well tell you what that is, when options action returns. See thats funny, i thought you traded options. Im not really a wall street guy. Whats 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 youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade wifiso if you cant live without it. T it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. 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. And welcome back be to options action. Thanks for joining us. It seems like everybody has gone nuts for bitcoin, the Digital Currency its soaring to highs this week, at one point cracking 11,000. Just this morning Bitcoin Futures were approved for both the cme and the cboe, the cme saying that they would launch on december 18th. Bitcoin, despite some shakiness lately, is up nearly 1,000 , yeah, 1,000 this year how can you cash in on the action mike is at the big screen breaking it down very good news for the exchanges when you start listing products everybody is excited about. I think its pretty safe to say that bitcoin is attracting a great deal of attention. Were going to take a look at selling a put. Why would you want to sell a put . One reason is because you want to buy the stock at a lower price than where it is currently trading. When you sell a put, youre selling somebody else the right to sell the stock at the strike price. The other reason you would do this is when options are expensive. Often when stocks go higher, options premiums go down cme, that isnt the case also because were looking at higher probability of profit lets take a look at cme and we can see that obviously the stock has had quite a run here where it really broke out from, in my perspective, is right here, around the 140 level lets Pay Attention to that. Now lets take a look at the price of options what we see is that they too have spiked. So we want to try to capitalize on the fact that options prices are high and have the opportunity to buy the stock at a lower price. So whats the trade . Were looking to january you can sell the 145 puts for 4. 50. Basically whats going to happen is if the stock declines, put to you at 145, netted 4 1 2, you collect, your price is 140. 50, right at the level it broke out from the nice thing about this trade is you make profits if it stays here, if it goes here, even if it declines a bit. All right, guys what do you think of mikes trade . Can i chime in here dan, whats wrong with you tonight . You just talked for half an hour during fast money. You Say Something no. I said real quickly. This is an interesting trade. I just want to say this, i heard you talking about cme before you should talk about the Company Evaluation let me talk about the trade real quickly. I like this put sale because the stock has just run up. Maybe its run up with enthusiasm about them listing this thing i think it continues to run up into listing if you do this trade next week youre risking 4. 50 or 3 of the stock price. You get put down 9. 50 thats where it broke out. I think this trade makes sense also you have to think about the fact were going to get into holiday trading soon you want to be net short premium in that environment. This makes sense if youre bullish on the opportunity that being said, i suspect its going to trade with the volatility of bitcoin too. You may have to have a near term view on that so we have two exchanges that are going to be lifting products, the cebo and the cme i heard you talking about it trading 26 times earnings. It has the growth potential. Cebo is trading at 33 times earnings of the two, this is the cheaper way to play it if you have the stock put to you at 145 and paid 4. 5 of getting the stock there, youre going to own it at a discount youre talking about 24, 23 1 2 times earnings i dont think thats so bad. The right level dan and mike pointed out correctly and probably is expensive committon valuation. But i also say this. You do have a catalyst probably coming on monday and tuesday, in the form of november volumes if you look at october volumes, theyre up i think 14 year over year my sense is youre going to see similar in november. I think this trend can continue. Yes, december will be historically a blase month but i think youre buying on the hopes that things get done so i like what mike is doing here i also do think you can own the stock outright own it outright thats what we said on fast money, you just hosted the show, we had a whole conversation about the chicago mercantile we didnt have a whole conversation that was your final trade. No my final trade does for the second day in a row, you had a minor, small conversation can i just make one point on the bitcoin one of the reasons the people are watching this program right here, rather than saying buy a stock at an alltime high up 30 on the year, mikes trade is a way to actually put a placeholder in there if the stock just sat here for a month, youre going to get paid 3 , okay if the stock goes to 145, youre going to actually own it 3 lower than that. So to me, this is a much better way than getting long right here at all time highs. The critical piece is if you end up opening the stock, youre essentially going to own it at the prenews price and if it doesnt fall back to those levels, youll get paid 3 in just over a month i would say thats a pretty good risk reward. That was you appear on fast money many times you just took a not so subtle dig at the whole construct of what we do my second favorite show on cnbc lets focus on the thing still ahead on the fast money, the semiconducto stocks posting their worst week in two years theres something in the charts to suggest more pain may be ahead. Well break that down. Plus big day for the markets overall. If you have any questions at all, let us know tweet us optionsaction. The traders will try to answer them later on in the show. Much more of the options action right after this see thats funny, i thought you traded options. Im not really a wall street guy. Whats 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 youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from 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 at some of our open trades. Almost one month ago dan said there was a shipwreck ahead. I want to look for a trade back for that september breakout in smh towards 90, i want to look out towards january expiration here. Today the stock was trading at an alltime high i wanted to buy the january 102 spread paying 3 for that dan, you were right in a big way. The smh had its worst week in nearly two years whats your next move . Except for one problem, sully, i was a little early. And so this was one that was actually really tough, i was convicted of this and added to it closer to 105 and got it almost up to 106 when it did break 100, that was a pretty significant move. Its kind of found a little floor here near term but i think it was a bigger underperformer to me, i took a little off but im still in this one. I think well see mid90s and hopefully this thing starts to accelerate a little bit to the downside that being said, it could be a great opportunity to get back long the semi trade, down in the low 90s. To me but more pain ahead in the short term i think so. Guy, would you agree . I mean, this has been the option just the equity side, this has been one of the hottest sectors in the market not only from deals galore as well, now dan says we may have another, you know, six to nine bucks down smh look how quickly, stairs up, elevator down. If you look at micron, for example, heres a stock that went from 35 to 50, was sort of a slow, you know, slow climb and then it gave it all back in about two and a half, three sessions here we are at 42. I think you do a backfill. Micron, where we broke out from, which was 38 right around earnings a month, month and a half ago, dan was spot on. Was he early, maybe by a day or so but he had this one nailed okay. Moving on, a few weeks ago mike made a bet that rokus amazing run was far from done. Here we can take a look at how big this move was. We may get a move as large as this one when we get the next earnings what are we looking at out to january, i was looking at this today, you could sell the january 35 put for 6. Since that call, roku shares have skyrocketed this has been a redhot stock, mike people are wondering what do you do now and this is one of those situations where weve made most of the money that you can by selling that put i mean, obviously this is one of the situations, high probability of profit, you could have made six, we made at least four already about 180 at 2 00 when i looked at it this is a highly volatile stock, i would take the money and run taking the money and running. Thats right. Steve miller song, if you recall. Steve miller from the great state of wisconsin, take the money and run. You know what you are, a joker. One point about this, this was an outright put sale, a few weeks, now hes taking it off. You dont wait for the last drop of this. Thats the same thing with your halliburton trade too and the other when you knew. Abracadabra up next, see what im doing here folks, tweets and the final call we fly like an eagle. See thats funny, i thought you traded options. Im not really a wall street guy. Whats 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 youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade hello there friend hi hey there. Im an Imaginary Friend of a kid just like you. Youre going through a lot right now and i know youre scared. But youre stronger than you know. But look, well get through this together. And remember. We at the Imaginary Friends society always have your back 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. Lets take a tweet frank asks, when is it better to roll a profitable position versus taking a partial position off the table . Mike when you still think theres room to run, stay in the trade and roll it out. Otherwise you take from your profit nice. Final call . Keep it on you, mike west lake chaps, go spy, 264, 250 put spreads this might be my last appearance on o. A. Because dan was not happy with me this evening. But if it was, its been a great run. Brian, thanks for being here, i have to tell you you rock, man. Thank you, my pleasure. And yes, i do. That does it for options action. Mad money with jim cramer. Up next. [narrator] the following is a paid advertisement for the 3 week yoga retreat. Brought to you by beachbody. Are you a woman of a certain age . If you are, pull up a chair and sit with me, because this is for you. Im Leeza Gibbons and it was a big year for me, i turned 60, and im all about aging gracefully with empowerment, and all of that, but lets be real, there are some parts about getting older that are just hard. All the symptoms of menopause from a to z, i have them. My body is changing. Im not as flexible as i used to be
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