Disagreements of content by the Companies News outlets and other decisions. Thats in his letter that is submitted to the board included in the s. E. C. Filing disclosing this change to the companys board, prett notable move and speaks to the split within that Murdoch Family over some of the political content of news corp back over to you we know, julia, already theres a family rift of james and his wife and his brother lockland over Climate Change denialism that has been put forth by fox news and the other outlets and not entirely a surprise with the division perhaps not surprisingly james donated to Vice President bidens Campaign Fund and investigating in a number of startups around the world specifically in india an backing some Climate Change initiatives as you mentioned. Julia, thank you. Mike, comment on news corp yeah. So, you know, one of the things that news corp is contending with isnt just the News Department but obviously they have some challenges in other areas of their business including issues related to sports that are just a byproduct of the pandemic theres business implications and not thinking that the board of directors is weighing but advertisers get a say in this and theres news about that so im not sure that his resignation basically puts an end to this dispute. Other shareholders may also share some similar concerns as well lets move on here. U. S. Stocks continuing the rally this week as investors also eye a Global Recovery, but carte says theres one stock market that tells the truth about the world. What is it and what is it telling us . Well get to a few charts in a second but here we are and today we made record low yields on the 10year yes, we were lower on that plunge low of early marc as low as 31 basis points, but a record closing low and what does that say when again this week it was all the same thing, energy down on the week, materials, down on the week industrials, financials all down on the week with the same big five or ten driving all the results. Look at a few things and talk about japan. So here is the first line. I have just written here Global Recovery, question mark. I would point out and if one was looking yesterday and last night there was a complete breakdown in the topex machinery index i mean literally a collapse and whats important about that if you look at the next slide of the bold points i have written here, the japanese stock tells the truth in quotes and thats because japan is so dependent on the world for growth right . It has no internal growth and what were seeing and hearing here from the topex machiner good take a look at the next chart, a comparative chart of the s p and the nikkei and you correlate and you can see the divergence again this week, nippon missed massive industrial conglomerate and komatsu, caterpillars big competitor missed panasonic. Really not good. Now, a few charts. Take a look at the ewj, this is the etf that tracks the nikkei or the topex, and you can see the welldefined down tren line in effect for a year and every time its gotten up to that trend line its hit its head to the penny and in fact just a week or so ago. And so, one two more charts next one, this is a little tighter, up close and what we know is we have a double top meaning the ewj couldnt even get above its june high. Then the final chart iv drawn here were hovering ominously right at the intermediate lows in effect so poor relative performance, diverging from the s p, Major Trading companies in japan coming out with very bad earnings, and it speaks to the question of is there a Global Recovery all right mike whats the trade off the back of that one of the things, we take a look at some of the top constituents in ewj, some wellknown names worldwide and easy to imagine some negatively affected by whats going on, im talking now abou toyota motor, im talking about mitsubishi, im talking about honda. That represents the minority when you think about it and you have to think about the broader index here and the hazards that they might be facing and the signs to see from other companies that are in that group that have already reported we take a look at the volatility on the ewj right now, this was typically a ver low volatility index, much like the s p was before everything that we have seen. It was about 11 or 12 and then spiked of course along with the rest of the volatility in the markets globally in february and march up to about 45 and has come back somewhat but it is still quite elevated right now about 21 . Nearly double what it was historically also the ewj is no trading at its alltime highs and it might make sense to use a put spread here. Normally when carter gives a technical view, i like to look out 60 to 90 days but here given the weakness and rolling over, im looking shorter data than that out to september. The 54 50 putt spread and earlier today you can spend 1. 50 for the 54s. Sell the other ones against it and spend about 95 cents, less than 25 between the strikes, also it i less than 2 of the underlying and break even at 53. 05 to the down side so not a big move is required to see it go in the money and the idea of a slightly shorter day to put spread here is if it does roll over sharply you wont necessarily see it go right to the maximum value of the spread and the more of that value youre likely to capture so i think thats probably the way you want to play it here, a little bit shorter data than we might normally use o carter technical setup but a trade where you can risk less than 2 for a bearish bet. Tony, what do you think of this trade i quite like this trade because there are quite a number of concerns out of japan you have a rising number of covid19 cases over the past few weeks, and you couple that with whats been relatively soft economic numbers both from an employment perspective, sentiment in both manufacturing and Service Industries looking still particularly weak so i think this risk here are skewed to the downside especially when you couple them with carters chart and i think mike has in my opinion the right trade chart because ewj has not broken below the 54 support level that carter pointed out so a debit spread like this is th right to strategy to play for that potential breakout. Its only risking less than 2 of the etf value with almost a 3 to 1 risk reward ratio those are the types of setups i like for these all right we may have just closed out the biggest week of earnings season but it is far from over yet and take two gearing up to report next week. But tony says a name on deck to lose the magic on the results so, tony, what are you looking at yeah, im looking at disney going into earnings next week. Now, while im fairly longterm bullish on this particular stock, i think that the risks are here skewed to the downside for disney next week and previews are predominantly driven by the fact that we know that theres a significant decline from theme park revenue. We know that the media and Studio Division is going to be relatively soft and then the disney plus side which we know is the only part of this business that is growing, but the numbers for q2 has not looked particularly attractive and not particularly strong on this Earnings Report and if you look at the chart here, disney when they have reported when they announced disney plus the stock rallied up to 128 level and pretty important to be support for quite sometime before breaking below that during coronavirus and came back to retest that level as carter would say to the penny and got rejected here in june. It is trading lower since then but the real story is the underperformance here of disney stock compared to the communication sector it actually printed a new low relative to the sector here today. So if you couple that poor relative strength with the fact that youve had relatively weak guidance over a past couple of weeks from analysts i think that you have a potential miss here for earnings next week. Now, the options are implying a pretty big move here about 5. 8 compared to the average of 2. 8 over the last 4 quarters, so Options Market are implying a pretty big move and the trade structure that im looking to us to play this is similar to mikes going out to august, a relatively short dated option and buying the 115 105 vertical put for the august 115 puts and collecting about 95 cents for the august putts and only about 2. 5 of the underlying stock price and i purposely chose a short dated option because the goal of this trade is simply to trade the binary optio of the announcement and looking to get into the trade maybe on monday and probably exit this trade by next friday. Carter, your take on disney well, i mean, you jus heard a perfect characterization of the chart, both absolute and relative i have a chart here of disney and what we know is that take a look at the picture here this is a welldefined series of lower highs and higher lows working into the apex and that happens before news comes out and then you get a resolution. Bulls like the case that it breaks to the upside i think it breaks to the downside and tony talked about relative performance disneys relative performance to the s p is not only making a 52week low, it is making 7year relative lows. Wow. With the covid news, what is it thats going to make it take off . Im betting against disney with tony. Mike, your take on the trade . I like the trade, and im definitely not bullish disney here we talk about the relative wakeness but i think its important to point out tha just in terms of valuation at a 270 billion enterprise value and that number might surprise some people, but they have taken on a little bit of deb since this began and the valuation of the business might not be as cheap as you think, probably at the pea of 318 billion and of course it is trading at a lower valuation and just consider that virtually every aspect of the business is severely impacted by whats going on except for disney plu as tony pointed out. And of course as good as that is it is not enough to make up for the other things going on here. For everything options action check out our website. While there, you can sign up for our newsletter heres whats coming up next announcer coming up, mike khouw has a way for you to share a ride on uber plus, calling all options action fan, reach into your and jab your phone and tweet u your question options action if its nice well answer it on air. Options action sponsored by think or swim by Td Ameritrade you say the customers maklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept. 5g, everybody is talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. We just have to make more corners in this building. Chad . Your wireless, your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch to Xfinity Mobile and save up to four hundred dollars a year on your wireless bill. Plus, get two hundred dollars off when you buy an eligible phone. Welcome back to options action. If you thought the earnings train was slowing down, think again. What of the next attractions are uber shares remain in positive territory, but instead of hitting the gas on the results crossing the wire, mike says the stock might be gearing up for a breakdown. Heres his call to action. Mike, take it away yeah, so this is an interesting situation. Probably somewhat unsurprisingly the Options Markets implying a move of about 9 , but as you pointed out the stock is still higher on the year this is pretty extraordinary when you consider everything going on and talk about the shutdowns impacts on a lot of businesses, but that assumes that the company didnt have other issues that it was facing ahead of this, which it certainly is big negative cash flow certainly being one of the issue theyre facing, and that would be a reason to be bearish. Antitrust concerns we have the litigation going on in the state of california with respect to employees, so if you have a neutral to bearish view on the stock, then you might look to put on a position here, but the thing to be cognizant of is that options prices are high, and we have elevated volatility, and one of the things to look at are ways that you can capitalize on it and take a neutral to bearish view i was looking at selling a call spread, specifically the august 30 1 2, 31 1 2 call spread i could collect 40 cents, 40 of the distance between the strikes to sell that going into earnings if the stock stays here that will come in somewhat and below that level through august i will collect that premium. If it declines, obviously i could collect that much more quickly. If the stock does somehow come up with a positive surprise and go higher, it is probably not going to go all the way to the full dollar valu so it isnt as if youre simply in the short term risking 60 to make 40 cents. In fact, it will probably stay somewhere in the neighborhood of 80 cents if it went all the way through so its a situation where three things could happen. Two are good and of course if it does rally, it is a lot less risking than shorting the stock would be and if you simply went out and bought a put you spend a lot to do that i was looking for example at the september 30 puts costing abou 1. 75, a significant portion of the stock price and you would need Something Big to happen to see it prop on a bearish bet here you dont need to. Tony, what do you think of this trade so i think this uber Earnings Announcement is going to be an interesting one because the primary focus here is going to be on uber eats which has grown a little faster than expected but it is a much substantially smaller part of the business and a lower margin business and most importantly its a really competitive market thats difficult to gain any market share and the onl way to do so is to acquire companies and thats why uber went after postmates, so im not particularly strong here on this particular earnings cycle, but i think that one of the most parts of the trade is mikes trade because hes collecting 40 of the width on a credit spread like this. Normally when youre selling your credit spread youre looking to collect about 33 . So the fact that hes collecting 40 gives you a fair amount of edge and as mike said even if it goes against you, youre not risking closer to 60 cents so you have a 1 to 1 ratio with a better probability of profitability of the 50 so i like this type of trade carter, how does this look to you . Theres a technical expression the stock doesnt act well people understand that when the picture is not doing well or a player and thats what this is. Down 3 of the past weeks, down 5 of the last 8. Its heavy i mean, this stock, two things it dropped 67 on this march low. Its not for the faint of heart then theres also the problem that its first day of trading was its best day back in 201 and never gone above the ipo price. I dont like it. Excitement about eats, though, its a good point, mike. Yeah. I think that is a good point but also one of the issues thats bringing up the antitrus concerns you have this situation where everything is going on and whether its a Necessary Service youre probably not going to get out of the way of that, an Something Else which is this is one of the companies that ha been trying to get into Autonomous Vehicles but this is an expensive, a capital intensive type of buds and facing stiff competition from quarters in that area and not clear to me with the current cash position and the negative cash flow they can keep all of these things up, acquiring businesses, embarking on Autonomous Vehicles and the other businesses going on and a bad recipe and something will have to give at some point. All right. Coming up, shares of boeing hitting some turbulence this month thats good news for one of our traders. Well tell you why send us your questions at options action and well answer some of them on air well be back right after this announcer options action is sponsored by think or swim by Td Ameritrade. This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Walk to end alzheimers alzheis everywhere. Tion all of us are raising funds for one goal a World Without alzheimers and all other dementia. Because this disease isnt waiting, neither are you. Go to alz dot org slash walk. This piece is talking yeah . So what do you see . I see an unbelievable opportunity. I see bestinclass platforms and education. I see awardwinning service, and a trade desk full of experts, available to answer your toughest questions. And i see it with zero commissions on online trades. I like what youre seeing. Its beautiful, isnt it . Yeah. Td ameritrade now offers zero commissions on online trades. Welcome back time to take a look back at the open trades. Last week mike khouw and carte went out to paint the town green. Going back to the beginning of data 1985, sherwin versus the s p, a sixfold increase over the general market now the next short if i introduce the nasdaq 100 we know these are the this is apple, microsoft sherwin is even beating the nasdaq 100. I was actually looking out to september. You could buy the 6. 20, 6. 80 call spread and spending 26 selling the 680s against it for a net price of 20 per share sherwinwilliams jumped nearly 5 this week. Mike, what are you doing yeah. It was a great call by carter, i have to say, and it worked out nicely too for us on the options side because it didnt run through that short strike that we have, but the thing is, we got the move we were looking for, so i think now that we have it well in the money probably makes sense to take the profits and move on. What happens next with the stock, carter . Well, thats right. I mining, obviously there ar two ways to approach a winner. If you are there for a specific event, in this case earnings, a specific chart setup, we were, is it cause to maybe move on i think so it was a big week for sherwin and housing stocks in general. Rate environment continues to favor this group over many other groups, but there will be other plays. I think take the money and run. All right meantime, tony said boeing could be in for some postearnings turbulence. If you look at the relative performance to its sector, it is really starting to underperform here over the past few weeks so you couple the estimate revisions with the underperformance were seein against the sector and typically the things i look for for a potential miss here on earnings. Im going out to the august 28th weekly options and im selling the 180, 195 call spread im collecting about 14. 50 for the 180 call and paying about 9. 10 for the 195s. Live boeing is down about 8 since that trade so, tony, what do you do now so if you sold this call spread on monday you collect roughly 5 in credits. Earlier today it was trading 1. 65 which means you would have collected about 65 of the max gain a rule of thumb is usually once you collect more than 50 of the max gain and you still have more than three weeks left to go, it is time to take profits, so i think as of earlier today you would have collected 65 of the gains, take those profits. I do think theres further downside for boeing in the airlines so i would roll the profits potentially into buying some puts. What do you think about that, mike yeah, i agree i mean, the weakness i think is likely to continue i mean, for them, and it doe make sense when you have the right trade on to take the profits in a credit spread like this because theres not that much left in it and obviously if you want to press a bearish bet because the thesis is intact what tony is suggesting makes a great deal of sense. Up next we have your tweets and the final call announcer options action is sponsored by think or swim by Td Ameritrade. Designed a firstofitskind, personalized education center. Oh. Their awardwinning content is tailored to fit your investing goals and interests. And it learns with you, so as you become smarter, so do its recommendations. So its like my streaming service. Well except now youre binge learning. See how you can become a smarter investor with a personalized education from Td Ameritrade. Visit tdameritrade. Com learn action. Time for a tweet one viewer asks what is the best way to manage in the money options when youre the seller, for example, yesterday i sold the apple 405 calls that expire today for a credit the rest is history and it was a tough loss how would you have handled this . Mike, some advice . Yeah. So two quick things about this and i think both are important selling naked options exposes you to unlimited risk. You might want to consider selling credit spreads in this instance you only had one day to expiration anyway and there was nothing you could do but take th pain and move on and know next time. Ouch. Good advice though time for the final call. Carter i dont like japan, black rocks ishares etfs and ewj. Were sellers. Tony . Disney lost its magic this quarter. Buy a put vertical spread going into earnings. Mike khouw . Yeah. Taking a look at carters ewj thesis, i agre with it fundamentally. Looks like trouble and best way to play that is puts spreads 54. 50. That does it for us see you next friday. For another show dont go anywhere. Summer school is in session. [man] the following program is a paid presentation for the oxypure air purifier brought to you by nuwave, llc. Asthma and allergies are at an all time high, and it seems to get worse every year. Its not your imagination. Allergy season continues to get longer and more intense as temperatures rise, and airborne viruses are becoming an epidemic problem worldwide, with the changing environment, and unseen dangerous air pollution surrounding all of us. You need clean air more than ever. If you suffer from mold, dust, pet dander, smoke, odors, or sleeping problems. Discover the Nuwave Oxypure air purifier
comparemela.com © 2020. All Rights Reserved.