Dont. Because we have a really cheap way to profit from the tech giants earnings. Well explain. A and, something very strange is happening with the dollar and it could spell trouble for stocks. The action begins right now. Sweet dreams on a friday evening. Lets get right to it because crude oil fell 4 this week. Even the stocks continue to make record gains. Could this crude conundrum trickle into other areas of the market . Lets get in the money. Dan. Well, it could. Weve seen this over the last year, really seen it over the last two years since the fed hinted that they were going to start to taper bond purchases in the qe and last year when they were going to end zerp. What happened there we saw the dollar rally and saw commodities get hit very hard, crude in particular. The knockon effects were pretty obvious. We saw people start to be concerned about the potential for some sort of credit contagion associated with the crude oil pat, that sort of stuff. Were at a place right now, the s p is making alltime high, the spot vix is at twoweek lows. I like to look for trades where people arent too focused where theres a potential big bang for your buck. Thats one of the reasons when i look at high yield but right now its a weird setup here with the dollar. At one point, oh, the higher crude goes, the better this is, the better maybe the recovery is. Its going to keep the energy jobs and all of a sudden, no, crude is going down, thats good for the consumer. But what we know is this, the bottom in crude is very analogous to what happened in 0809. If you were to look at the bottom in crude oil, it has a very distinct pattern, which is to say it moves up aggressively off of a triple bottom and you see there then after about 27 sessions, it pulls back hard 20 and then goes again. After 81 sessions pulls back hard 20 . Compare that to what happened here in 1516. You have the exact same pattern. You move off the low, have a pull back of 15 , 27, 29 sessions, then 81. Almost like on auto pilot, pulls back again. I think the analog breaks down here. To my eye crude is going to go lower. I think well go as low as 40 or even worse. Why make the historical comparison . Where does that take us . Meaning they say it is analogy is a weak form of argument but sometimes things are analogous. But from this point if the analog were to continue, crude would have to go up 20, 30 almost immediately and it doesnt look like thats going to happen. Mike is also with us. Join us in this conversation if you would, mike. My view on oil, though, is that the last time we saw significantly lower prices, we also had fundamentals that were keeping a lid on it. Obviously if we saw an increase in u. S. Rates, that would lower crude. What else could lower crude . Obviously fundamentals. But u. S. Production, when was the leading cause of the surplus and the excess inventory that we have has dropped off and it has continued to drop off and it will continue to drop off until you see prices stabilize at a level that makes it worthwhile for u. S. Fracking companies and producers to be involved. So i dont really see us until we start seeing inventories get back to those prior highs, i dont see us retesting any lows. The fact of the matter, though, is crude has been going down over the last few weeks and the dollar has been going up. The way i see it is im looking for cheap vol, im looking for cheap opportunities where i can make directional bets. Thats a great chart right there. That shows that relationship between the dollar and crude oil. So i think if crude has a three handle on it over the next few months, i think you have an opportunity to look back at high yield credit, thats the etf, hyg has traded very well. We have a twoyear chart. Its come all the way back and just defied a lot of logic when you consider some of the things its related to and how it acted earlier in the year. I think its hit the breakdown level from september, could see some resistance here. So to me i want to make a bet if crude is going lower, its going to have a three handle over the next three mts missouri, i thon cheap but i want to look to finance it and yoz a put calendar. I want to sell some short data premium to finance some longer data premium. Today when the hyg was trading just about 86, you could buy the augustoctober put calendar paying 25 minutes. Buying october at 1. 45. 1. 20 is your max risk. I want the hyg to move closer to 84 between now and the next month on august expiration. I want those puts that im short in august to expire worth its and then i own october and i think thats where youll get the bang for your buck over the next three months, not one month. But even if it moves lower, this trade sets up really well to spread these october puts and get a put spread on and reduce the premium at risk. Mike, do you like the trade . I do like the trade. I like these types of structures generally and not simply because crude prices might be going lower but also if you look at credit spreads, were maybe 100 basis points off the bottom. Weve seen them sharply higher when people got concerned about increasing default raltes. That could hurt hyg. But i dont see a whole lot happening between now and labor day which is why this calendar trade that dan outlined makes a lot of sense to me. Lets change gears and move to know biotech. Well hear from gileasd on monday, amgen on wednesday and biogen on thursday. Im looking at amgen. Its obviously one of the bigger one the. Im going to put it in the context of the performance relative to other biotech. So heres a longterm chart and were going to draw some lines. The first thing i would call your attention to, a twopanel chart. The stock itself. The bottom panel is relative performance of amgen to its peer group. Even as basically we have stalled here, theres no progress, your relative performance, which is very, very important, has been consistently good. Outperforming the ibb. And i think thats the beginning of your setup. Now lets draw some lines. Heres the longterm chart again. Heres your wedge. It is this, it represents a debate, right, a series of lower highs, higher lows. You get into the apex, a wedge, and at some point the gavel comes down, the debate is won by the bearer of the bull and it looks like were heading up and out here. So what i want to play for is the following. Heres now lets zero into the immediate. This is the alltime high, 181. 81, kind of a nice even number there. Now here are the lines. Theres our high. Here are our lines. I think youre going to punch out right here, come out through these tops and youre going to make a run for the high. Amgen, like it long. Wow, mike. What do you think of that . I mean amgen is not the most exciting in the biotech space but it is reasonably priced. Its trading at about 14 times forward earnings. Not a huge top line grower but probably a safe place to be. It has had a decent run off of the mid140s recently. If i was going to make a play the next few months, the simple way one could take advantage of this setup is to sell the october puts and collect 6. 70 for that. You might be asking yourself if the thing is going to make a run for 181, why am i only trying to collect 6. 70. Heres my answer to that. The probability of profit with a trade like this is a whole lot better because im going to make that money if the stock stays here. If it goes up, ill get about half of what i would have gone if i bought the stock. Better than 4 yield over three months, much higher probability of profit and im still going to get half the upside even if i just bought the stock, which is probably what carter might suggest. This is a pretty good risk reward trade. Hes playing for the breakout, youre playing for at the very least just a consolidation near these prior highs. Oftentimes when i see carters charts i get excited and think long premium, long premium, mike thinks short premium and he wants to collect. One strategy is maybe look further out of the money. Your put that youre selling is very close to the money. I would maybe look a little further out of the money, sell a downside put and then maybe use the proceeds to buy an upside call to play for his technical breakout. And i think whats important here also, we know that health care has both an offensive and a defensive aspect to it as a sector. And i think amgen because of its size and because it hasnt had the volatility of some other names, that this is a particularly good name in an area, health care, and biotech thats coming to life. Final word, mike. Well, this is a defensive place to be. Its also a defensive sort of neutral to mildly bullish type of a trade to make that pays nice premiums over time and has been proven to outperform the market over time as well. I like the put sale here, but i also like amgen. I think its a good buy. If youve got a question at home, sending us a tweet optionsaction. Check out the shows website, optionsaction. Cnbc. Com. Its basically like options heaven. What more can i say than that . In the meantime, heres what else is coming up this evening. Heres what the dollar has been doing and heres what it could mean for stocks. Well tell you how to profit. Plus, how would you like to make money if apple shares go up, down or nowhere at all . Its not only possible, its one of the easiest options trades out there. And well explain when options action returns. Im here at Td Ameritrade tradffes. Steve, oth than mamang me move stuff, what arelet me show you. Im here at Td Ameritrade tradffes. Okay. Our thinkowim tring platform aggregates allhe options data yoyoneedn one place and lets you vialize that informatn for any options ries. Okay, cool. Hang on nd you caexpecting earnings. Angof k sive. Ats up, tim. Meritrade. Ohoh john, im connecting our bin so we can share our amazi thats a gatdea, but why dont yoju go to thinkorswimat roo where you can share strategies,d ous of oth traders . I knowur brain tolmy b reou told mymye. Mmm,lueberry . Tap into thewledge of other trads thinkorswim. Onlyt Td Ameritrade. Welcome back to options action. Traders are eyeing the big tech results next week with a number of mega cap stocks clearly reporting. Sima is at hq with a little more with what we can expect. Next week marks the busiest week for earnings but all eyes will be on tech with some of the biggest names like apple, facebook, alphabet and amazon reporting. Traders are expecting some sharp moves. The Options Market is implying a 4 move for apple in either direction. Facebook is on wednesday, traders are expecting that stock to see a nearly 7 move up or down. Alphabet and amazon report on thursday after the bell. Alphabet could move nearly 5 in either direction. Amazon technically not a tech stock but still a mega cap. It could see an 8 move in either direction. Together these four stocks make up 30 of the nasdaq 100. If all these implied moves were to come true, simon, that represents a 96 billion shift in market cap, so we could be in for a very volatile week depending on how earnings pan out. But all of those figures look about right if you look at whats happened recently. Thank you very much. Dan, youre looking at apple in particular, correct . This is the big one. This is the biggest market cap in the world. Its 4 in either direction. Whats really interesting about apple and why were talking about it right now, the stock on average over the last four quarters has moved 5. 5 . So this implied move is actually pretty light and thats really interesting given how poor Investors Sentiment is on the stock. Lets remember, this stock is down 6 on the year, down 27 from its alltime highs made in the spring of 2015. And we know its a name that investors really are going to have to pull it out of their cold, dead hands and we know that there is a catalyst coming up. This is a really, really important quarter, the guidance that theyre going to give. We know people do not like to upgrade iphones before the september release of the next one, but the issue here is that all reports for the most part, all rumor, is that this phone will be very evolutionary for the third year in a row. Lets look at whats going on here. The implied move is 4 . Thats about 4 in either direction. How would we figure this out . We take the weekly straddle that expires next week, the call premium and put premium. Theyre each with 2 with the stock at 98. 50. You would need to move up 4 or down 4. If you were willing to pick a direction and say i think the stock will rally and fill in that earnings gap, you would just buy the call, okay, lets say and thats only a 2 move. That seems really cheap for a stock that is very likely to move. Heres one of the reasons why i think the stock can move. Look at this, im going to put my carter hat on here. Its a very well defined downtrend. We know down here at 91, 90 bucks, theres a lot of support. Thats where it rallied from. Postbrexit the thing has rallied 8 or 9 in a Straight Line but its kind of lost some juice here. This is the longterm chart off the 2008 lows. Look at this downtrend, look at this support. It gets you somewhere in the 80s. So heres the thing. If you want to make a directional bet into earnings and you think this is a sufficient catalyst here, the at the money calls or the at the money puts in the weekly options are very cheap on a historical basis or you can use them to buy protection for your long stock that youre not going to sell or leverage up an existing long position. I just want to bring it up because i think its unusually cheap. Your reading of the charts would be presumably the same, carter, pretty straightforward. Good lines drawn and reference points are there. Its an inflection point. The rally of late leaves it back up against the difficult level. Sometimes youre in a position to sort of do nothing. But i think more important maybe than apple is going to be what google and facebook and amazon say. Why do you say that . We know the market cap is bigger but in a way i think people im not saying giving up on it but it doesnt matter as much as it would matter if you got a surprise out of a big name like amazon or google or facebook. People have said, all right, apple has been disappointing for a while. But a big beat or miss out of some of those other three actually weve seen the rockets if you think back previous quarters on alphabet and amazon. Mike, what do you think . Well, first of all, certainly if you had the stock you were concerned about a potential down move, owning the calls make accepts. One thing thats low vix, the low volatility that the market has disguised is individual stocks have actually moved quite a lot this earnings season. So what dan is highlighting in a couple of those places and some big names, when stocks are moving, you actually have an opportunity to own some premium before the catalyst that could propel them one way or the other. This is one of those cases where being long premium, either buying calls or buying puts against shares you already own could make sense going into earnings. I want to add one other point. This is about sent meant. When you think about apple, obviously Investor Sentiment is poor because it has not kept pace with the s p. One thing that is not poor is wall street analyst sent meant. Theres still 43 buys, and develop sel2 sells on it. If they were to guide down in a meaningful fashion, this is expected to be the first year negative earnings over sales growth year over year and wall street analysts abandon the thing, that may be the last thing you need from a sentiment standpoint, but again, i dont think options pricings are basically on a near term basis pricing the potential risk. Final word, carter. Your longer term trend line is lower than that but i dont think this is quite as important in terms of what would really shake people as facebook, amazon and google. Up next on the program, the u. S. Dollar index surging to its highest level since march this week, and thats great news for our own dan nathan. Hell explain why, after this break. Ste,ther than making me move stuff, at are you workingn . Me move stuff, t me show you. Okay. Our thinkorswim trading platfora you need in one e and lets you visualize at information r any options series. Okaycool. Hangn a second you can even see the anticipated of a stock pecting earnings. Impressive. Whats up, t. Td aritrad thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 59. 95 a month. Comcast business. Built for business. Oh heyn, i connecting our bras you doing . W wcan share ou amazing trg owledge. Thats a greatdea, but why nt you just go to thkorswims chat rms where you can are stratees, ideas, eveacal trades with mkeesals and but why nt you just go to thsands of oer tra . Rms i know. Your bin told my brain before you told my face. Mmm, blueberry . Tap into the knoedge of other traders thinkorswim. Only at td ameriade. This is options action. We have a news alert on hershey, seema. Dow jones is reporting that Hershey Trust has reached a settlement with pennsylvanias attorney general over a Corporate Governance probe which included allegations of unfair compensation of specific Board Members. The settlement would reportedly lead to resignations of some trust Board Members from the Hershey Trust which is not only a 12 billion charity but also the largest shareholder of hershey at 34 . This settlement could potentially raise the likelihood of a deal with the chocolate maker. We know hershey rejected a 23 billion takeover. Well see if this leads to a emotional m a in the cards. Thank you very much, seema. Its a difficult call whether it would actually follow through. I cant speak to what the settlement means but one thing is very important, we know that the rumor of the bid came out or the stock went from the mid90s to 115 or Something Like that. The fact that the stock has remained around 110 leads you to believe that people think theres still a chance so maybe this helps that process. Mike, would you agree with that . One thing i would say is that the valuation here is pretty heady, although unlike some other staples areas, they dont have any exposure outside the united states, which makes it favorable, especially for people who are concerned about the effects of a strengthening dollar. One other point i would make, though, is theres been a lot of scrutiny of the board of directors of this trust for some time. But even once you get rid of a couple problematic participants on the board, you still have the state to contend with because the trust is supposed to benefit the school that hershey was intending to endow there. I dont know that this will clear the way and the board will suddenly give rubber stamp approval to the bid or anybody elses because they have also said no to some prior bids they received. One thing i will point out is that the implied volatility in hersheys is still a little elevated after that bid was announced and that might provide some opportunity to sell some puts in this one too. The chances are impressive that were seeing. Now its time for the upside call where we look back on some of the shows winning trades. We start with the dollar. Last week dan thought it could be set to break out. Take a listen. I think its really important going back to the dollar when a lot of companies gave q2 guidance the dollar was 2 to 3 lower. Now its higher and so that could be something that supresses Forward Guidance as we get into the meat of q2 earnings next week. Dan recommended buying the september 2526 call spread for 25 cents. What do you do with this trade . I think you hold on to it. We have this fed meeting next week. If they speak to or people start pricing a better chance of a september rate increase, youll see the dollar go higher. I wasnt trying to be greedy, i was trying to target a move back to the 52week highs. Up next on the program, the final call from the options pit. Stay with us. Im here at the Td Ameritrade trader offices me move stuff, steve, otg what are you working on . Let mehow you. Okay. Our inkorswitrading platform aggregat all the options data you need in one place lets you visualizthat informatn for any hang on a second. S. You can even see the anticipated range of a stock expecting eain. Impresve. Whs up, tim. Td d oh hey john, im connecting our brains so we can sharour azintrinknowe. Thats a gat idea, but why dont just go to thinkorswis chat rooms where you caare strategies, idea evetual tde with market professionals and thousands ofther trars . Kn. Your bra told my brain before y told my face. Mmm, blueberry . Tap into t knowledge of other traders on thinkorim. On at Td Ameritrade. Lets take a tweet. The first one from scott rogers, one of our biggest fans on this show. He asks do you expect market volatility to expand as we get closer to the president ial election . Mike . I absolutely do, and im not alone either. The Options Market is implying that we are going to see probably fairly sharply higher volatility. The way to identify that yourself if you ever want to look is look at the vix futures curve. Theyre steep out further. Lets get the final call then and squeeze them in from the options pit, carter. Buy amgen long, play it higher. Mike. Sell the october 165 puts in amgen. Youre both on the same one. Yeah. Okay. Okay. No pressure to be different then. Dan. Hyg. It sets up for a good risk reward. On the basis that . That options are my mission is simple. To make you money. Im here to level the Playing Field for all investors. Theres always a bull market somewhere, and i promise to help you find it. Mad money starts now hey, im cramer. Welcome to mad money. My job is not just to entertain you but to educate and teach you, so call me at 1800743cnbc or tweet me jimcramer. Ahoh, this is it. The week i am truly dreading is upon us. The one where youre up all