Party lets get to it. Despite the fed rate hike and talk of deregulation financials were down about 1 . Morgan stanley, goldman sachs, bank of america saw red. Is this the beginning of a Bank Breakdown . Lets get in the money right now. Im going to piggy back something off fast money earlier in the week, carter worth had this Tour De Force about the relative performance of bank stocks versus the broad market and it got me thinking and jeffrey gundlach, a big fan too. Total shoutout there. Total shoutout. Heres the thing. This group has paused. We obviously know the reasons why they ran up. Obviously the hope of deregulation and higher Interest Rates. Ill let mike talk about net interest. Ill let you talk about the relative performance. One of the issues i think is first and foremost, especially as the new administration is bogged down with obamacare, is the potential for doddfrank to really change meaningfully over the next few months, is not particularly great. I do think there may be some move towards midsize and Smaller Banks to get things going again in that capacity. The month center banks, the big ones, jpmorgan, bank of america, citibank, they may have a lot of the good news in the near term. I want to look at citigroup. Those are the year to date, citi is only up about 2 , jpmorgan up 12 . Its really lagging. Thats the one i want to focus on. For this week, we cant ignore the fact that there was a real bid higher in bonds, sending rates lower. Well, i mean, as dan was pointing out, one of the issues of course for a bank is how they make their money. What rate do you lend at, what rate do you borrow at . Thats what the Net Interest Margin basically is trying to figure out. The yield curve has flattened since december. From june to december of last year, the yield curve had steepened, thats good for banks. Lately it has flattened, not so good for banks. The st. Louis fed isnt coming out with lending data and we arent seeing significant commercial lending growth. Were obviously seeing some distress in the auto lending space. The one bright spot for citi has been costco. Because American Express lost their exclusive with costco and they got a million new customers from that. But there are plenty of things that can create pressure for the financials here. I mean, all of the things that weve just sort of covered are kind of the problem. In the sense that you the first thing is expectations were too high. Coming into the beginningful the year, two things were guaranteed. Crude was going higher, banks were going higher because Interest Rates were going higher. Neither has happened. Interest rates have gone nowhere. It puts these numbers into perspective. S p 500 up 6. 5 . Financial sectors up 5. 5 . Regional banks up 2 . This is an area thats a higher bidder area than market. Its not doing well. Whats going to change that . Youve got a trade on citi . Because of the underperformance to the other big money centers. Also the fact that they report april 13th before the open. The Options Market, its a ways out, but a 4. 5 move in either direction. That doesnt mean a heck of a lot about the i want to target a oneyear chart, 60 has been a kind of support level here. I suspect as carters call makes it around the street, i think youll see downside here, maybe testing that 2016 low in february, near 55. 5. So today i want to look out to april expiration where the stock was trading 60, 70. You could buy the april 60. 55 put spread, paying 1, buying one of the april 60 puts for 1. 15, selling one for 50 cents. Your risk that is dollar, breaking it down 59, make up on to 4 between 59 and 55. 55 may be aggressive between now and then. But my play here is simple. That when these banks go to guide for q, 2 theyre not going to have a heck of a lot of color as far as deregulation is concerned and theyre not going to have too much more color about whats going on with the Net Interest Margins. When you think about it, we havent had a heck of a lot happen. Especially after that fed meeting where you had a pretty dovish raise. For all intents and purposes. To me i like the risk award. Also the problem that its been the laggard. Also it has the problem that it has the biggest global footprint in the sense its in a lot of areas which are really struggling and or areas that are being closed down in a lot of big banks. So not great. Mike, do you like the trade . Yeah, i do like the trade. Dans point about regulation is a very good one. Doddfrank, which is where theyre stuck right now, everything that trumps been doing is basically being pushed out. It looks like deregulation and Financial Services is going to get pushed out. Fit happens at all. Obviously if people were banking in that good news, now theyre not going to get it, that limits the potential upside. If the market rolls over thats potential weakness for financials as well. One outlier is the ceos go on a conference call, say they meet estimates, they can talk about all the animal spirits that are happening within businesses that are creating more business. Im a bit skeptical of that. I dont really see this administration, progrowth, that they ran on in the campaign, they dont look that way by their actions. If they cant get some policy instituted over the next few months i think some of these Business Leaders which have gone and kissed the ring may start thinking twice about how theyre going to deploy their resources if they dont see any results. Lets go to a stock thats gone from worst to first. Nike surging 13 this year. Making it one of the bestperforming stocks of 2017. This after shares of Sports Apparel retailer dropped nearly 20 in 2016, making it the worst in the dow last year. Earnings are next week, chart master said there could be more gain arizona head. Carter . Health care was so bad, then its good this year. Energy, so good last year, now its so bad. Often there is something to say for mean reversion versus momentum. Definite strategies. Nike sets up well to my eyes. Lets just see at least if i can draw the lines that my eye sees. So heres what, 2011, 2017 . The first that comes to mind is this. And the second thing that comes to mind is this. Guess what . Were popping out of the top of that formation. Thats a nice setup. Its a period of massive underperformance for a largecap asset. A maurer Growth Company but still a Growth Company. So lets drill in on this, whats gone on here. Heres the day to day. And theres the line. Meaning whats gone on here, weve moved above an important downtrend line. So the here and now chart shows that. Now, the question is, of course, where to, how much higher . I think ultimately you have the prospects of moving up towards 65, were about 56 now. A few other things might be worth looking at. One of the things, opportunity, just what melissa was saying, how bad this was. This tells the story. This is the Consumer Discretionary sector of which nike is a big part and this is nike. Thats a massive spread. Youre talking about 1,100 basis points up and 900 basis points. 2,000 basis points a spread. Youd say, how do we know youre going to catch up . Its already started. Heres the proof. Lets take those two areas. One week nike versus its better. One month. Two months. Three months. Meaning youve got a situation that, yeah, it was a laggard, thats the opportunity. Now this part here is better than this part here. So youre starting to get the very thing you want. Which is outperformance. I like nike higher, i want to be on the long side. Mike, youve got a simple trade tonight on nike . Yeah, i mean, heres the thing. Options are exceptionally cheap on nike right now. I was looking out to june. You could buy the 57. 5 calls. Thats when the stock was trading 57. 80. These are in the money. For just 2. 45. Spending 2. 15 in extrinsic premium. Under 4 of the current stock price. Thats with them announcing earnings next week. This is a stock that typically moves about 5 on earnings. Right now the Options Market is implying a move of 3. 7 . And this is a situation where youre buying a stock thats trading at a market multiple, thats had very good topline growth. They are facing a little bit of margin pressure in competition in the shoe business basically in north america. We are anticipating some margin impression. Probably 6 Topline Revenue growth year on year, thats faster than s p earnings are growing. For me i think this is a way to make a cautious but optimistic bullish bet on nike. The ceo of adidas on cnbc earlier this week made it clear he was going to go very aggre aggressively after the north American Market and compete against the likes of nike around the world. Are you worried or do you think this at least for a trade works . Adidas is clearly on fire. I would say the bigger issue is tax reform and the border adjustment tax. When i look at that technical setup i see what carter sees and mikes trade makes a lot of sense. When you think of the Options Market, implying a 4 move in either direction, how much those at the money calls are out to june, that makes a lot of sense to define your risk. If the earnings disappoint or the guidance disappoints the stocks not breaking 50. It may get back to 54. 5. If youre looking at this trade and see what he sees, you want to back and fill a little bit, dont do a full position maybe if you really see it. Thats right, the adidas thing, the key is adidas has been a great performer. Up several hundred percent. But thats not so much new news anymore. Theyve come and gotten their share back so to speak. I think nikes just fine. Last word, mike. Very quickly, the street is expecting a small earnings decline sequentially versus last year. So even a match at this point would probably be viewed very favorably. Got a question, send us a tweet, for everything options action check out optionsaction. Cnbc. Com. Check out our newsletter. More than 100,000 of you have. So dont be the last one. In the meantime, heres what else is coming up. When you want to make a call, always be sure you have the right number. When youre playing sprint for a sale, be sure not to spend any money. Well show you how. When the moneys coming your way you dont ask any questions. But there is one question we want to ask. How is dan planning to make money on his netflix long trade . Hell explain when options action returns. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at Td Ameritrade. President trumps push to tee regulate Corporate America could hed to a spree of dealmaking in the telecom inty. Julia bore sens in los angeles with the story. The new fcr chair is much more relaxed toward mma than his predecessor. The first sign, he decided not to review the at t time warner merger. Now theres plenty of reasons we could see other telco deals. We could see consolidation as Wireless Companies struggle with limited growth, price wars, and rising costs. We could see more media deals as streaming video provides valuable differentiation. The marketplace right now is extremely competitive, is delivering unparalleled value to american consumers. If you look at the last couple of weeks, some of the National Carriers are vigorously competing against each other to give new or expanded unlimited data plans, thats something thats good for consumers. Whats next . Verizons Lowell Mac Adam is looking for deals saying the ubs media and communications conference, well look for opportunities and put the money into an area where we think we can scale because in our business your cost structure is absolutely critical to longterm success. Mac adam has talked about the value his telco can see in combining verizon with charter. We could see tmobile look at a potential deal with dish again. We could see the longdiscussed tmobile sprint merger emerge as an option again. Telco analyst Craig Moffitt says, the fcc will not me pretend to know more than the market, will take a much more handsoff role as a result. That potential merger between tmobile and sprint has been a hot topic and has sent shares of both stocks surging. If the deal goes through how should you play it . Dans call to action. Both of these like you said, a lot of rumors and the stocks have performed very well over the last year because of the thought that maybe they could merge or maybe be acquire paid different sort of maybe a cable company, that sort of thing. So clearly these stocks are in play at the moment. Im not so certain, lets look at sprint, that you want to chase a stock up 170 from its 52week lows. But we could use options to maybe construct a trade strategy that would let you participate on a move to the upside and give you a little room on the downside if your long entry isnt great. I want to talk about using a call spread risk reversal. What that means is selling a put to help finance the purchase of a call or a call spread, in this case buy a call spread and sell a put. Why would you do that . Youre looking to basically have an alternative to stock thats really for a Risk Management sort of purpose. The other reason i would say is that this finance of the put sale, really what im trying to do is create a scenario im not paying premium out right now so i have a scenario where if the stock goes lower towards the short put sale, then im going to have market to market losses. If the stock rallies closer to the long calls, im going to have gains on a market to market basis. But im not paying anything for the i. The last one is to really get leverage for a sharp upside move. So that put sale is helping me buy these calls, not do it for a big premium outlay, giving me leverage to the upside. I want to give an example with sprint. The stock today was trading about i think about 8. 60 or so. You could sell a downside put. What i want to do is look at this 7 level. This was the breakout level from november. The stock had a big turnaround right after the election as obviously i think a lot of traders thought this thing was in play. Its also support level, thats the 200day moving average where they meet. Sprint was trading 8. 60. Look down to january. 2018 expiration. Sell the 7 put at about 80 cents. Then you could its that 80 cents to buy the january 10, 15 call spread for 80 cents. Like i said, costs you nothing. You have the scenario the stock is above 10 and between 15 you can make up to 5. Your max gain 5 over 15. Worst case scenario, the stock is 7 or below and you put the stock there, 100 shares per one contract sold short, then you would have losses. I like the fact that im giving myself wiggle room from 8. 60 to 70, i have a ton of leverage to the upside, 5 wide, a huge percentage of where the stock is. That would only make sense if there was a deal and the stock exploded higher. Mike what do you think of the trade . It makes a lot of sense. Right now we have a situation where generally speaking, options are very cheap. We want to be better buyers of them. But at sprint thats not the case. Sprint options are actually fairly expensive. So if you were going to try to make a bet buying premium, youre going to pay a hot by selling two options hes taking care of it. The other thing, the 7 strike, if it does decline, represents a 20 discount to the current price. Hes giving himself a lot of room. Its actually true that a lot of risk arb guys like to be short upside calls when they think that there might an deal in the works. So this is actually a play thats consistent with that as well. How does the sprint chart . It looks good. First of all, one of the these things was left for dead, 2 in january 16. Things that are thought to be zero, end up not being zeros, often some of your greatest winners. Everyone has gotten out. Is it overdone, having gone 2 to 9 . Its been backing and filling for so long, it looks quite rested to my eye. I would say that ultimately theres more upside. Then this, things like tmobile act well. Then in general, in a consumertype area and where everythings bad, think how well media acts. Whether viacom, disney. Media, this kind of thing, is a good area to be in. Shares of boeing slipping more than 3 from its alltime high. Theres something in the charts that point to more pain ahead when options action returns. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade i just had to push one button wto join. S thing is crazy. Its like im in the office with you, even though im here. Its almost like the Virtual Reality of business communications. No, its reality. Introducing intuitive, one touch video calling from vonage. Call now and get amazon chime at no additional cost. Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. Time for the upside call where we take a look back on some of our winning trades. Just two weeks ago carter made a bearish bet on boeing as the stock surged to alltime highs. Now it labs like mikes trade is about to pay off. On options, its how we play offense and defense. Risk less to make more. Thats what cole and carter did with their bearish bet on boeing. Carter thought shares had run too far, too fast. To my eye too far, too fast. Do something. Sell boeing. Mm, mike thought. Maybe carters on to something but shorting the stock, that could lead to infinite losses. To make a bearish bet mike sold the april 180 strike calls for 630. Now to keep all that money, mike needs boeing shares to stay below that 180 strike price. Above that profits will trail off. Mike wont see losses until boeing rises above that call strike by more than the 630 he collected. Or above 186. 30 by april expiration. Remember there is a tradeoff. Because above 186. 30, mike could see infinite losses. Surely you cant be serious. We are serious and dont call me shirley. To define his risk, mike then bought the april 190 call for 2 and created his bear call spread. Now between the 630 he collected by selling that lower strike call and the 2 he spent buying that higher strike call, mike still pocket the 4. 30. That 4. 30 is the most mike can make on the trade. And to keep all of it, mike needs shares of bowing to stay below 184. 30. Above 184. 30, he starts to see losses but they are limited to the difference between the strike or the call that he sold and the strike or the call that he bought minus the credit. Everybody getting this so far . Let me make it really simple here. Mike can now make money whether boeing drops, stays flat, or even goes slightly higher. And since the time of the trade, boeing shares have fallen 2 , meaning this trade is right in the sweet spot. Now options action fans all over the world just want to know one thing. What will cole and carter do now . All right, lets find out. Mike, what do you do . Yeah, i mean, this is actually working out just fine. I mean, as long as carters along with me on this one. These are going to expire before earnings. Basically, were continuing to collect premiums. I think we should continue to collect premium. I dont, despite todays strength, really see the stock going significantly higher from here. Lower, not much has happened, really. The stock hit a low of 177, back to 180. Should be just the beginning of more trouble. Up next, your tweets and the final call from the options pits. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at Td Ameritrade. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade welcome back to options action. The first tweet from our very own brian kelly, b. K. , who asks mike, is dans hair real . And is it as spectacular in real life as it looks on tv . Mike what do you say . It is real. And it is spectacular. Im very enviouenvious. Really spectacular. Are you serious . This is your opportunity to rag on him. All right. I understand. You know, this is coming from a guy who probably needs implants himself and he doesnt, so, you know. Your hairs spectacular too, mike. Our next tweet from our old friend from france. Longtime viewer. Happy quadruple witching day, with ackman exiting valiant, how do you play it . Sell verticals or buy put spreads . Id prefer to be short premium. Its tough. The Short Interest so is high that basically elevates the price of puts, decreases the value of calls. I almost feel like its a no touch to be honest, as much as i dont like the stock. All right. Thank you. Time for the final call. Last word from the options pits. I want to get long nike or add to it if youre already long. June, 57 1 2 calls nike, a way to play ahead of earnings. Citi bank, pick on the weakest one, april put spreads. Thanks so much for watching. Check out the website optionaction. Cnbc. Com. Announcer the following is a paid presentation for the nutribullet, brought to you by nutribullet llc. Hi. Im david wolfe. And for 25 years, ive been teaching people, to get the most out of your life, you need to get the most out of your food. All this food is loaded with nutrition, and you dont just need some of it. You need all of it. And the nutribullet is the machine that can get all of it. For a limited time, nutribullet has an incredible offer. When you order today, we will upgrade you to the 900watt