Lets get right to it because the financials just posted their best day since november 30th, 2011. Lets get in the money and find out. Dan, what do you say . I dont think so. I think it was a very healthy rally today. There was two pieces of news that caused it. We started out the morning with Deutsche Bank saying that theyre going to buy back bonds that have been something that people have been a bit worried about, about their Capital Position and their ability to pay interest on those bonds. And in the last 24 hours, we had jamie dimon buying 500,000 shares of jpmorgan stock. Weve had this massive rally with horrible sentiment. And to me i think it sets up for a good fade. They remind me of the sort of news we used to get back in 2008 from Financial Institutions when things were a bit hairy. Im not saying that any of these are similar situations. Sure. But the only problem i have is that these european banks even after todays rally, are still well below the financial crisis lows that they were trading at in 08 and 09, and something stinks here. Did i miss something . I thought the financials were down on the week and fairly significantly. Every sector except for one. Actually really amazing. Its easy to get caught up in the last moment because thats really what it was. The last five days have been pretty crummy for stocks. The s p is down over 80 basis points, financials are down over 2 . You know, even crudes bounce, that obviously dragged a lot of this in things with it, maybe. I dont think it was an overwhelmingly positive week. A terrible week. I used to ask that in the beginning, was it a bullish day or a bearish day or week . For the week, a lower high, a lower low and a lower close, usually a bearish week. One sector was up. And the banks are down even with this rally down 18 year to date. And jpmorgan jumping after having plunged the prior day. By the way, jpmorgan, weve got a guy here whos worth a billion bucks so he spends 2. 5 of his net worth. Buy stock in the company that he runs. This is pretty easy. I would do that every day. Why not . As you pointed out, thats why he got paid last year. This is easy money. Without being too cynical too late. Jpmorgan, its a bestinbreed situation, probably one of the cheapest banks on the entire planet and its run by that guy who is considered to be a bit of a maestro. Its shown a lot of relative strength. The only problem i have, though, is this is the only bank stock that isnt above his august 21st lows, the only one. I dont get what that relative strength is. In the rate environment and political environment and the regulatory environment. So to me, i think it sets up for a great short entry early next week. We get a little followthrough here. I think you want to look out to april expiration. We have two catalysts coming up. We have the stress test which we know the Federal Reserve told the banks to consider what it looks like with negative rates and then q1 earnings. When the stock was about 57. 50, you could buy a put calendar. And you have to finance longer dated puts. The price of option is really high. I want to sell the february 19, next friday, expiration 55 puts for about 60 cents and buy the april 55 puts for 2. 60. That cost me 2. That is my max risk. If i get to next fridays close and the stock is above 55, then i own those longer dated april puts for 2. And then i basically have a bid of optionality. Its funny, when you were giving the preamble to this trade and saying it has a relative strength compared to its peers. But none of it matters. Why not . Why not . Does that matter . Relative strength matters a lot, but heres the thing. This is a newsrelated issue right now. The stock literally was collapsing the prior day, and then its making back those gains because of news again. And in fact, if you net the two out, its just as bad as it was if it never happened. So day to to day, but the stock has no life. Whats happening is also the reason why this trade makes a lot of sense because the catalyst is coming up in april. Normally these neardated options would be cheaper in terms of volatility, but because of what we saw this week, thats not the case. Thats why it makes good accepts to sell them. And i chose the 55 strike. Its bounced off there for the last month. It broke. It gapped on massive volume yesterday. Gapped above, i think if you fade it thats the level you want to press looking out to april. To Consumer Staples which despite being down on the year, still one of the best performing sectors behind telecom and utilities and chart master, you say the sector you have with the sectors laggards could be breaking out. A little message there. We do shorts, we do longs. Longs have to be fairly safe and is exhibiting tremendous relative strength for weeks and weeks. I want to do the setup which is how much its layinged compared to its peer group and then look at it more recently. We have a fivecareer chart. And obviously the orange line, coke, is a big part of the blue line which is to say this is all s p 500 from pepsi and Philip Morris and kraft and so forth. Youve got a marquee name thats underperforming by a lot. On a fiveyear basis. Here is the tenyear basis. Again, ten years, and coke is really sort of not kept up with its peers, with its sector. But of late, guess whats happened . Its the exact opposite. So take a look at this. This is one week, one month, two months, six months. And ive got coke, the sector, the market. So whos down or the best . Whos the best . Whos the best . Coke. So in a situation where theres been underperformance, we have nascent outperformance meaning relative strength thats starting to mean something. All right. Heres another way to look at it. Ive held the sector as a constant. And this then exposes coke on a relative basis. This has all the hallmarks of a bottoming out formation. So that chart there is the exact same chart as that. But what youve done is held the sector as a constant. Okay. Now lets go to the breakout. Absolute chart itself. To my eye, we have a nice setup here. And we have the prospects of ultimately breaking out above these welldefined tops off of our trend line and going for, watch this, an alltime high. We are fractions above that level. The alltime high was 4488. I think were actually going to manage that. Regardless what the market does, youd rather be here than almost everything else. Wow, bullish words, carter. Take a look at rates this week. Youre dealing with a corporate earnings yield of about 5 here growing with the economy, even if thats fairly slow growth. This is a fairly safe place to be. Its one of the places where youre likely to see a Dividend Increase sometime soon. I bet you, within the next 18 months, were going to see a Dividend Increase in coke. They have nearly 8 million in free cash flow. Take a look at what utilities have done. If yields are going lower is it expensive, though, coke . At 22 times next 12month earnings . Yeah. Its traded about earnings valuation. Sales are expected to decline this year 3 . What are you paying for that 5 yield . You have the dividend and buyback. It looks like a great technical setup. If youre making money, thats the difference. The premiums what you have to worry about. Right now the options are extremely cheap. The april 43 calls, spend 1. 15 for those. That is the reason i would do it. Now tell him hes wrong. If id known it was going to be that simple, thats a great trade. I mean, listen. You know, you guys are singlehandedly picking apart my xlp short i did a couple weeks ago. Its the same chart. I think you kind of said the same thing. Buying relative strength to his point, you back test, it works. I cant get my arms around 22 times negative eps and sales growth. Soup is trending that way, campbells, jelly, pepsi, Philip Morris. In a perfect world, i dont want stocks. Stay away. Regardless, 99 is fully invested. Big endowments, mutual funds and so fortforth. At this point its working. This kind of thing is unchanged. Yeah, but none of those sectors broke out to do highs. They were coming out from conditions that were very different and cheaper. Well, theyre trading 16 months ago at alltime highs. Absolutely. And i secular there have been secular pressures here last word, mike. Thats not what were really seeing. If rates are falling, we could see the dollar stabilize or even go lower. Right. I think that the staples have actually caught this bid, trading where they are, given the commentary that theyve given, weve seen it out of pepsi just this week. It hasnt been good. Thats what makes the market. Got a question out there, send us a tweet for everything options action, check out our website, optionsaction. Cnbc. Com. Exclusive trades. Its like you died and went to options heaven. Heres whats coming up next. You can run, kid, but you cant hide. Actually, you can, and thats exactly what traders did in the treasury market this week. But is the trade becoming a bit too crowded . Well explain. Plus well, that pretty much sums up what oil did today. With everyone looking for a bottom, weve got a safe way for you to play into the energy space after the break. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Here at the Td Ameritrade they work all the time. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. Welcome back to options action. Big day for the Energy Market as crude oil posted its best session in seven years, wti finishing the day with a more than 12 gain, 29. 44 is where we ended, definitely talk of a bottoming process and traders looking for prices to touch the january lows of 26 and change and they did yesterday. Others saying not so fast. Todays move was a technical one. Buy the dip mentality, also some Short Covering here. Typically as we head into the holiday weekend. The dollar also playing a part in this. Its come off its highs and a lot of chatter about what opec will or wont do. Still no clarify there, of course, and some are skeptical of the headlines that seem to be very interestingly timed. What to watch for next week. Well, 28 more oil rigs came offline this week. Will that ease production in the u. S. In a more meaningful way . Find out on wednesday when we hear from the d. O. E. And also, will inventories continue to build . Still some concern that were running out of places to put oil. Lots of variables when it comes to this trade. What i can tell you right now, expect this volatility to continue. Melissa . Thats for sure. Jackie, thank you. If were near a bottom what should you do if youre looking to dip your toes into the Energy Market and dont want to be clipped off . Mikes over at the smart board with a way to get long big oil. Mike. Heres the thing. Dipping your toe is probably all you want to do, and this chart right here basically tells you the whole story of why crude prices are so weak. This goes and takes a look at crude oil storage excluding the Strategic Reserve going back over 30 years and take a look at whats going on here. Basically what were seeing is weve got incredibly high levels right now in terms of inventory and until you see that turn down i think its hard for crude to really take a turn up. Look at what crude prices have been doing also. What youll notice here is this is the nominal price of crude oil over that same period, more than 35 years, and would you notice were not actually quite back down to the previous lows, but on an inflationadjusted basis actually we are closer to those lows. So the thing that i think you need to do here is rather than looking at crude, i think you need to take a look at a stronger name in space and make a modestly bullish bet. Basically trying to dip your toe in. Schlumberger, strongest in the oil space and cash flow positive and this is a company that made very good money, even when they had revenue substantially lower than they do right now, and even as it is, 2016 forecasting revenues down 15 from the 2014 highs. You can right now sell the march 67. 5 put and 2. 50 for that, own it at a net price of 65 bucks and to me this is a situation even if it does come into that level, continues to trend down, you can probably sell some calls and basically, you know, tread water. All right. Or tread oil. Any time anybody goes over the smart board, i always have to get carters assessment of a, the performance and b, the interpretation of the charts. Right. Youre doing it as a structure that will allow you some wiggle room. Buying things in downtrends is a dangerous game and this is clearly still in a downtrend and crude is clearly in a downtrend. Superlatives, strong, stronger, sprng strongest, superlative. Comparative and were always getting our best day. The best day in seven years after the plunge. Banks had their best day after the plunge, meaning big deal. Nothing has really changed in the oil complex. The Energy Stocks dont act well. Exxon, okay, it does, and this is not my kind of thing. If youre going to do it, got to do it the way mikes done it, but notice he said im only going to dip a toe in the water. Im going to stay on the side of the pool with my drink. Lets take a look at what the trade is. March 67. 5 put for 2. 50. Thats collecting 3 essentially of the strike in one month. If i only stock it will be substantially lower than where its trading. Volatility, as jackie was pointing out, will remain bid so youll have an opportunity to sell more premium. Its very tempting when you see low prices to think that this is my big chance but if you take a look at that chart and you see where inventories are, you realize the only way to do that is very, very carefully. Thats the way to play it. Youve heard mikes case in this. What do you think . About the trade its really important, want to sell options in a name like this and the way the underlying commodity is moving around and i do believe if youre going to sell a put you want to do it one month out. You dont want to look too far out. Kind of in a crashy market and the only question i was going to ask for carter, you just brought up exxon, its actually been basing if you think for all intents and purposes. Procter gamble. It looks a lot better. And the issue is this. Guess what that is, the face of fear. Energy only dedicated managers who have to have exposure so they are hiding. The same thing thats going on im fully invests. And the more money goes into exxon, its exactly the opposite, people saying ive to do something and im worried. Those companies are a big bucket of reserves. Crude oil prices are low. I dont see them bouncing any time soon. You need a business thats actually making money even with low oil prices and this is a company thats done that consistently over time. So heres a question. You said if you had to dip your toe in the markets and this is how you would do it, would you . Yes, actually, i were, schlumberger, the only place i would and a trade i was looking at doing today myself. I think this is one of those situations where theres so much panic, im trying to take advantage of that, sell some of the insurance that other people want to buy. Up next, a heap of selling this year has traders running for cover in gold and bonds and could the safety trade be overdone. Well explain after the break. Here at Td Ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Steve, other than making im here atme move stuff,rade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. And were back, and its time for the upside call. Take a look back at the open trades. Dan thought things were going to get volatile in the market and he made a bullish bet on treasuries. Take a listen. I think you can look to sell puts. The april 120 put at 1. 70 when the etf was at 125 and use the proceeds to buy the april 130 call for 1. 70. That costs you nothing between 1. 20 and 1. 30 on april expiration you dont make oil lose and you have an asymmetric playout to the upside. Well, he was right and the tenyear fell to its lowest level since 2012. This week, dan, you stuck with the trade . No, i didnt. I took it off. Minimum waged the trade and took off a put and the thing was a nice winner with. We had that winner. Mel, you just said the tenyear yield went down to 155. It just felt a bit panicky to me. Took it off yesterday and its reversed. Ill look for an entry back into the tlt towards 130. Now i think the direction remains up. Where do you think the yield goes . To catch a move to the 1. 5 on the tenyear. A little steep, a little overdone. Bad day today and on any further pullback its time to reup because it looks like it goes lower, all the things in play. Well breech the 2012 july lows. Think were possibly going down as low as 1. 25. Somethings wrong. 1. 25. Why not. If you can drop i guess if you marry up his view on the s p 500 that makes sense. And the utilities act and gold act and credit spreads. And youll want to be long coke. By the way. Last month cohen carter said general motor shares were about to stall. Take a listen. I think youll go as low as 20 on General Motors, im a seller. Selling the 29 per dollar 40, buying the ones for 55 cents, collecting 85 cents which is a little bit more than 40 of the difference between the strikes. Shares are down more than 4 since then, so carter is the breakdown still in the charts . This is a very heavy stock, right. Its not acting well. Didnt get a bounce when the market was bouncing. A little bit today. Theres something wrong here. I think low, i dont know about the trade. Well have to roll it out. We probably want to this is Proof Positive that you cant drive by looking in the rearview mirror. If youre trying to figure out where General Motors should have been priced and take a look at what they have done rather than what they will do which is obviously pricing the stock right now you would have said this is ludicrously cheap. Turns out not so much. The thing is weve actually made most of the money that you can make on this spread. You can buy it back for less than half of what we collected essentially so my view here is try to catch another catalyst where maybe we see a little bit more bad news on the horizon. Id probably roll it out to june, but im going to wait a little bit before i do that. Thoughts on gm. I dont like it and havent liked it a while and now were hearing about subprime auto loans so to me it feels like the autos, you had peak autos last year. I dont really see the uptick in demand overseas. I liked the trade. Your tweets and the final call from the options pit. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Im spending too muchs for time hiringnter. And not enough time in my kitchen. announcer need to hire fast . Go to ziprecruiter. Com and post your job to over 100 of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. announcer over 400,000 businesses have already used ziprecruiter. And now you can use ziprecruiter for free. Go to ziprecruiter. Com offer2 welcome back to options action. Time to take some of your tweets. The first one is from parth patel. What do you guys think of sprint . Sprint looks pretty bad to me, i have to say. Really does. I mean, sure, it got a pop here, but the stock itself is an option and thats how bad it actually is. You know, if i was going to make a play in this thing, maybe i would buy some calls in it, try to sell some near dated ones if i could find some premium, but this is kind of a no touch as far as im concerned. Next up, this one from jeff irwin, thank you for writing in. How will risk reversal, that will be dan, play the visa trade with the square news . Favorite show of the week. Dan . I think carter picked a great one here. In a downtrend and actually coming up against that massive uptrend thats been in for years. The trade is right where you want it. Down a little bit on the week. Had a bounceback today. It was the june 75. 50 put spread. I think you stick with it. Throwing back a little bit, but the crack is the primary data point, the throwback being the secondary. Okay. Got your answers out there. Time now for the final call. The last word from the options pits ahead of the threeday weeker. Carter . What do you say . Understanding a lot of people have to be long or want to be long, i think cokes as good a place to do it as anywhere. Mike . If youre going to try to catch the falling knife in oil, the only way to do it is to get paid so thats why i was looking at the march 67. 5 puts. Dan . I think for traders who want to make a defined risk bet, i like the put calendar out into april. Looks like our time has expired. Im melissa lee. Thanks so much for watching. For more options action, optionsaction. Cnbc. Com. Have the a great threeday weekend. Happy president s day. Stay tuned. Mad money is up next. Announcer the following is a paid presentation for cize, brought to you by beachbody. This is the end of exercise. Get ready to cize it up. 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