Ingredients. Thats true, but some soup stocks may be setting up for the trade of a lifetime. The action begins right now. Lets get to it and were going to start with the hottest group of stocks and that would be of course, small caps up 2 today. Up around 14 since hitting their lows february 11th. Is this confirmation of the rally . Lets get in and find out. Youre looking at the rest of 2000. We know a lot of the components were exposed for a lot of the same reasons we saw weakness and commodities. Poor Balance Sheets and cap, that sort of thing. The fact is, you look at the rustle 2000 its up 15 from the lows. The s ps up 12 . When i look at the performance its not staring out at me saying you missed something here, stupid. More importantly, the russell 2000 was down 20 1 2 from its highs last spring and the s p was down 15 . Theres more beta in the stocks, and theres more s p off the low. You would expect that from sort of lore quality high beta names. The other thing is on the week, the rustle 2000 was up as much as half of the s p. On this week, its suffered more damage. Its not all that encouraging. Looking at this space, this is one of the areas you were just eluding to it. Theres obviously, a lot more cross over and issuance in this sector of stocks and the highyield marketplace. There is obviously, a lot more risk. It still looks weak. Were probably down 12 over the last 52 weeks if we look at this space. It doesnt look like a lot of strength. The other thing is when you have such a period of strength you start to wonder when its going to start running out of gas and usually its where the high beta is where youll see the gas run out first. Seems like thats whats happening here. Is it possible were in a market environment where investors want to be exposed more to domestically oriented stocks and not multinationals . Therefore small caps may be in favor now . Its been an argument for quite some time that there are things worse, so one might want to be domestically focused. Yet perhaps now if ones really trying to play for beta, theres more beta trying to catch brazil off the bottom for something very progressive like an oil name in turkey, per se. If you want to be progressive, its playing junk off the bottom around the world. Yeah, we have a chart here. Sorry to step on your toes a little bit. This is the eight year chart that tracks the rustle 2000. When you look at this nice uptrend over the last eight years, it came crashing down in the last half of the 2015. Heres the one chart. This is to me im scaring always. Every chart in the market of risk assets, this break of that longterm trend, and its inability to get back up above it, thats the sort of thing i want to reshort when the timing is right. I want to make one point about going out and buying puts in a market thats been volatile over the last couple of months in a period trying to look for further volatility. It will be a tough time do that. The s p is around 2000. Weve rallied into these Central Bank Meetings this week and next week and maybe things calm down for a bit for a while. I think for those of you making long premium directional bets in the options markets, it really makes sense to try and finances the purpose. Whats your call . In the iwm, i believe its going back and retest the prior lows. I need to give myself some time. In order to do that, i need to finance the purchase of longer dated puts. Today when they were trading 107. 5 you could buy the april, september 100 put spread paying 3. 50 buying the puts for 4. 25, 3. 50 is my max risk. What im trying to do here, if the etf comes in out of my short strike t is out of the money. I dont like buying out of the money puts in a market like in. Thats why im selling that april put and giving myself an opportunity to once again turn into a calendar or a vertical put spread. Reduce that cost of that long dated put. The time to buy outright put options is when the price of options is extremely low and we arent there yet. It has come in a lot, but its not low. Probably 22 , normally 16 for this index. The other thing thats interesting is selling the april 1st and its catching the earlier part of earning season. Those are going to be juicier. Still, the jury will be out by the time those things will expire. I think that calender sets up very well if you think you might get another spike in volatility later on. I want to ask carter about that chart. Lets throw out the chart again. At the end it breaks below the line. Its peaking back up. How do we know its not going to go back above and follow the trend. Anything is possible. Things are incontestable. A well defined multiyear trend. Two, a break in trend. And now a throw back to trend trying to repair himself. But the throw back after that much damage typically encounters a lot of overhead supply. Okay. Now lets go to the yield on the tenure. Its soring as investors sell bonds to resume stocks. The deal may be a little overdone. It does seem a little overdone. Almost back to 2 . Lets see if we can put charts up and figure it out. Ive got were going to look at tlt as the trade. This is tenyear yields, basically over the past year. We know for the most part we were basing this range of 2 to 250. And the plunging of this socalled maybe the china syndrome, if you will, or whatever it was. Recession fears. And now when you throw back like this, you start to get back to where all of the memory is. So were back to a fairly difficult level. Sorry, theres that chart. Now this. So heres our range and what we know is this point here, from our low of 152, our high started the year at 233, weve thrown back almost to the Halfway Point at 198. Thats a very difficult juncture. Its where the overhead supply is and is also a huge move. 152 to 2 . Heres what im going to make a bet on. Tlt is a reciprocal. Weve checked back here to the point at which we broke out and you can draw the lines this way and play for a rebound or draw them this way. This is a big stand off. Its back to the top from which we broke out and my thinking is here this is going to get resolved up which is to say that yields having moved almost at 2 are going to fall back down. So, mike, whats your take on this . You know, we have a little bit of a situation here. Theres really a bifurcation of whats going on here and whats going on in europe. It seems right now the market is not pricing in any kind of a rate increase. That would be consistent with his point of view. The flip side of that is the labor markets are extremely strong. For those of who have exposure essentially here and you might be inclined to basically bet on falling yields, rising tlt, i think what you want do is hedge that position. The way i would do that is by buying a put spread on the tlt to maintain that long position. Specifically the may 127, 120 put spread. You can buy the 127s for 310 and sell the 120s at 70 cents. Youll notice that lower level we saw in tlt, in case we see rates go higher. I think it could break either way frankly. And the u. S. Market, i know everybody on this desk maybe and the desk here before have had a lot of fairly skeptical things to say about the market but if youre wrong about that, rates are actually going to go higher. So walk us through. So again, the may 127, 120 put spread. By those 120st for 310. Sell the 120s for 70 cents. This is a way to protect yourself on the down side in case it goes to other way. Its interesting, the estimates for fed funds have gone all over the place. Theres probably low probability trades with high potent initial payouts if the fed were to surprise, be more hawkish next week. Your trade covers that. Youll see the tlt flatten. It will go to the low 120s so quickly if they basically intimate that they are going to go in april. Now fed fund futures are pricing about a 50 chance of june. Thats kind of the consensus for the move. Still only 50 . To me, this trade has the potential to work quickly if you have more hawkish talk. You have the paradigm of the spread with the other rates. It supports this general premise, that the move to 2 , things are not quite as good as that would argue for. Okay. What happens to the utility and telecom trade . I thought what was interesting today, we soared on the s p 500 and still had new 52week highs in telecom and utility. Does this put a floor under those trades and help support it. The thing about those trades, if you look at tmvz, they have und underperformed for four, five weeks in a row. This ricochet from the violent move is out performing. They are steep. Not all reits and utilities, but many are. The other thing i would say about that particular space, first of all, i think a lot of the yielding trades have been looking fairly stretched for a while. While i have not been that skeptical about the market as some have been this is an area that i have been skeptical. We continue to see moves to the upside. One of the republicans is people buying into that are betting this is more of an inflation adjusted yield trade rather than a fixed yield trade. That makes it more appealing. All right. Got a question out there, send us a tweet. Check out our website auctionactionscnbc. Com. We have the hottest options news, videos throughout the week, exclusive trades. While youre there sign up for our newsletter. It makes for a great weekend read. Heres whats coming up next. Hes alive in the name of god, i know how it feels. Youre going to feel a lot better when we teach you how to revive dead stocks in your portfolio. Plus one group of stocks may have come too far too fast. Heres a hint. Well tell you the names and how you can profit when options action returns. 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. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. 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. Lets look at the markets, because despite all the volatility were seeing, the s p 500 is basically stuck between its may high and february low. Thats left a number of stocks lost in no mans land. Breaking down as a man once lost but now found, cnbcs done chu. I dont know about lost and found. I may be a little bit of both. We wanted to take a look at the stocks lost and found or not yet lost, not yet found all at the same time. Pretty much, its been a no mans land for the stock market. Lets take a look at the dow. If you look at where the 52week high was, the high over the past year versus the low for the past year, right now were smack dab in the middle of it. If you take a look at the dow components, its more so. This is what i mean. Check out whats happening with shares that say visa. If you look at visa stock its trading around 71, 72 a share. Thats right there in between its 52week high and low. Between 60 and 80some dollars a share. Then theres merck. Also 53 bucks a share. Now were talking 52 range and maybe 45 talking 61 and change. Again, right there in the middle. Caterpillar, a stock thats been beaten up in all kinds of ways here in the global Macro Economic sense. That stock again, 72, 73 a share. Right in the middle of the range. Jpmorgan on the big banks of things. 59 a share. That stock stuck in the middle of its 52week highs and lows. It becomes a question about whether or not traders and investors take a look at these stocks and see more down side or upside. Right now the glass can be half full or empty, lost or found. It depends on how you want to play them. Thanks so much. Have a great weekend. With many stocks treading water, mike has a clever strategy. They might be able to revive them. Do tell. Actually, im going to look at a stock there. Here it says how to use a strangle. Specifically what we will talk about is how to sell a strangle against a stock you already have. First of all, were looking for stocks that are range bound most likely. The other thing is because were selling options, were looking to do that relatively short time frames. Usually, i like to look for options that expire 90 days or less. The other thing, we want to collect yields thats going to pay us for the risk were taking. In this case were going to be selling a call and a put, we want to make sure we collect at least 1. 5 or more a month. Thats going to depend on how volatile we think the underlying stock is. Caterpillar has had a sharp rebound along with a lot of other commodity associated names. The thing is Commodity Markets have come a little too far too fast and not far enough to revive that super commodity cycle stock like caterpillar. This is one of those names where i think you should feel comfortable if you own it, selling it at a higher level. The other thing is it has fallen very sharply over the last couple of years. Buying at a lower level might make a lot of sense. What were looking to do specifically here, if we can get over to the next screen, here we go. We are going to look to sell the april 77. 5 calls. You can collect 70 cents for those and sell the 67. 5 puts. Collect 85 cents for those. This creates our stranglehol. Essentially, whats going to happen is if the stock rallies through the 77. 5 stock price of the call we sold robbys going to have it called away but we collected 1. 55 for selling that strangle, to the effective price will be north of 79 bucks. Contra we collected a dollar and a half premium to do that so our effective Purchase Price adding to the 66 level. This is the kind of trade you want to do when you really feel like were probably going to be capped out a little bit on the upside but i would be interested purchasing more at lower levels. If it stays right in here, just collect that premium. This is a play book for stocks stuck in the middle. Not just for caterpillar. What do you make of this sort of trade . I like it. If you own it and youre a longterm holder and youre looking to add yield and would buy lower, thats the most important point. You can always cover that call to the upside if youre called away. The main point i would make is mike is using april. I wouldnt use this strategy looking out months and months. Especially in a market thats following this and a stock this volatile and a stock tied to the Global Growth story we know can change quickly. It is exceptional volatility. If you think about it, this was trading at 75 on november 1st. Plunges at 55. Back to 75 last week, now back at 72. You get more of that volatility and blow outside the bands youre talking about. If you get a v and return right back to the point in which you plunge, you typically for a while will go back did orment and back and fill. Depends how much time you can put on the trade. For those thats mentioned in no mans land, is that the ones you mentioned something should happen . Its about the precondition. Lets say you started with visa. Theyve gone out five or six years and rolled a little bit. Caterpillar has come down from 120 to 50 and just bounced a bit. So their circumstance and their precondition is completely different. Its not just because youre between the 52week high and 52week low. Its where you came from. Theres also material differences between the fundamentals between those two businesses. Visa has been growing their business demonstrating the success theyre going to have in the payment space and meanwhile connected caterpillar has seen their revenues plummet. Were selling a short dated strangle here this is going out a little over a month. Shorter than usual you would be looking for to make a move. In general, in a market like this, would you look to make a play on one of these stocks stuck in the middle or do you go break . I think after the moves they had i think they set up soon for descent shorts. I would be careful on the short strike on the down side. Again, i think youre fine for april. This is in the calender spread youre doing, youre doing this selling that. If you want to buy longer data premium, it might make sense. Coming up next, one hot soup trade. Shares of Campbell Soup at an alltime high. But is the stock a nochart . Well tell you what has a chart master so worried. 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. Yeah ahh. You probably say it a million times a day. Ahh. Ahh ahh. Ahh but at cigna, we want to help everyone say it once a year. Say ahh. Ahh. Cigna medical plans cover one hundred percent of your innetwork annual checkup. So america, lets go. Know. Ahh and take control of your health. Cigna. Together, all the way. Welcome back to options action. Time for a call out where you take a look back at trades that werent doing so hot. Last one dan thought it was time to short the transit ports. Take a listen. This is a trade were looking at early next week. I think it sets upwell. I was looking out at april exploration when the etf was 133. 50. You can buy the april 130. 15 put spread paying 2. 50 for a 15 wide put spread. Since the time of the trade, transports have rallied more than 3 . Dan what do you do now . So the stock was up 3 bucks today. The stock in general is up as much as the s p was when the trade was put on. To me, that doesnt concern me so much. I think its had a massive rally. Heres the problem with the trade. I was early and that makes me wrong. Long premium directional trades especially as the clock is ticking and you got to use a stop at some point. I use a 50 premium stop. Its there. I will look to roll this view out early next week. This is one where i have to cut my losses. Dan, just a little encouragement. How many times has the dow jones transportation been up eight weeks in a row which its just done . Exceedingly rare. Youll be fine. I have to roll the view out. I need to give myself more time here. Also last month, carter thought the run in campbells soup would cool off. Take a listen. Look where its struggling. Its gotten right back to its alltime high of 1998. Touched there and closed down on the day. We think thats exactly where it stops. You got a situation of a whole bunch of this or that. The third opportunity or prospect of this higher we would say is 1 . Simple thing to do here, look out to may and buy the 60 strike put. This will only cost you about 1. 60. The stock hit a new high today. Carter, you stick by the view. Well, in this case, yeah. If you have a v bottom and its going against you, those can accelerate. If you have something getting increasingly extended, its bayically end stage kind of behavior this has gotten steeper and we think more vulnerable. Looking at this thing fundamentally, i dont see how there could be more upside. This thing is very rich here. Theres a lot of air underneath it. Im flummoxed how the stock is trading. I would tell you if i was going to be short anything this is one of places i would want to be. Coming up next, the final call. Stay tuned. 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 hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. 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. Time for a tweet. This is a common one we get. Looking to learn how to trade options. Can anyone recommend a good book . Thanks. So, mining, maybe you can take this question. Im happy to take this question. Coincidentally, this week the options edge was released written by yours truly, myself and longtime colleague mark w. W. Guthner. That is on sell now. This is suitable for both noviss and people with a lot of experience. Who knew. Final call time. Carter. I want to fade the bump and yields from 15 back to two. Stay short campbells. Its interesting, i got in the mail last night the options edge and looked all over for my name and mels name. Weve been doing this for seven years. Nada. Max and diaz up in i thank all of you. Fair enough. Put calendars. Have a great weekend. Our time expired. Stay tuned. Mad money is up next. Announcer the following is a paid advertisement for the back2life 12minute back pain solution, brought to you by back in five, llc. Pain pills, hot and cold packs, endless doctor visits, injections, even surgery. If you or anyone you know have tried these or any other ways to relieve yourself of back discomfort, only to find you still suffer from debilitating back pain, then stay tuned, because your life is about to change forever. Introducing back2life, the 12minute solution to a lifetime of back pain. 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