Earnings next week well break it down. And heres what shares of roku are doing but if you missed the move, well tell you how to get long for less the action begins right now. Lets get right to it because we are heading into another busy week for retail earnings target, best buy, home depot, gap and walmart all out with reports but the big moves could come from the big box names. The Options Market implying the 4 move in either direction for target and walmart a 6 move for target how do you play these names into it walmart hit an alltime high today. Take a look at walmart number one because it hit an alltime high number two, because its trading 20 times earnings. This is the haves and have notes. The high implied move. Implying a move under 4 normally a good deal lower than that 2. 3, 2. 4 . I think we can take advantage of people do feel like there can be more of a move i dont think its going to be a huge surprise most likely. Well sell some of that near dated premium. I think the best way we can do this is look at a calendar spread i was looking at the novemberjanuary call spread sell those novembers at 1. 10 against it youll spend 1. 40 to do that trade. This is going to make some money if the stock does drift a little higher or even a little bit through it otherwise, that shorter dated call will roll off and youll own that other call for a relatively low price thats a nice way to maintain a long position in a name thats had really quite a run. Yeah, it has quite a run really in the last month or so if you think about it. It was consolidating pretty well definitely outperforming the rest of retail my view is into an event like this when you have a stock trading at an alltime high after such a sharp rally in such a short period of time, it makes sense to define your risk. I like the idea of a call spread your risk gaining a little more than 1 of the stock price a lot of retail acted very poorly youre choosing one that actually is a leader x amazon. Ones that have done better lately target bad on the year but better lately trades at a big discount to where walmart is theyre getting a lot of credit basically, you know, for trying to go into the online space despite the fact the Company Still has a big bricks and mortar presence. They still have the legacy problem. I tried to remove you forcibly from the set but the chair wouldnt roll. Your loss or my gain or something look, were talking about walmart real quick yes it also traded up to levels that it failed at the end of 2014, the beginning of 2015. If you recall, because i do, you saw a pretty precipitous drop. Were on the precipice of that why do i mention it . Because walmart does trade at a premium. Walmarts had a huge move over the last six weeks target trades at a discount. I would submit, weve said this on july 13th, when, when you were sitting in the middle at 6 32 in the morning, i was on your right you came out and printed to the up side. At 52 bucks theres something going on here. I think that stock goes higher trading 61 you stay with target, take money off the table with walmart. I have a question letting it go through january do you have any indication on holiday sales that could be another opportunity for the stock to move. Are we going to get an example from walmart or retail yes, you do get clues whats going on in retail before the january expiration date. We will see retail Sales Numbers a couple of times before then. Obviously well get a lot of boots on the ground analysis. Just one thing on the actual trade structure. The idea of a call calendar, hes selling the near dated premium and long the jan, then he ends up financing owning that jan call which actually may be a great time to own it, especially after this big run if its going to consolidate a little bit. This is a Smart Options trade. There are two things you could do after this november expiration rolls off if it goes up enough, you can sell a higher strike january call against it. If it does trade sideways or slightly lower, you can look at some december is against it to continue to try to finance that trade until january. Lets broaden this out. Since youre here, guy, youre the straddle between options action and fast money. This is my seventh or eighth time in my mind, im a regular. Hes savvy. Yeah, i am. Anyway, of these big box retailers. Yes. Which one would you like most interearnings target, tgt i think they told you something in july. They were clearly behind the 8 ball for i would say eight to 12 months behind walmart. I think they got their act together we talked about jwn on the show fast money. Nordstrom. Dan stop making faces at me we talked about how potential for a double bottom, huge Short Interest looked for a pop. You got a 5 pop i think theres more room for the up side there. Do you like target, too i do. Its trading 13. 5 earnings. Your room for error in that name is obviously a lot better. They do occupy a similar space the issue, walmart is getting a lot of credit for doing things although i dont know that thats translating in terms of magnitu magnitude. Its a big shift so they have to do a lot of things right i do think target is compelling it. Now lets move on to General Electric the stock getting a boost ahead of the Investor Group monday shares are down 35 this year shedding 99 billion of market cap and that has put the state of the stocks dividend into question will they announce a cut Morgan Brennans in the newsroom with a look at what we can expect morgan melissa, that is the biggest question on wall street. Thats the one they want the answer will ge cut the dividend they called the cash flow, quote, horrible. The expectation increasingly that it will put the potential scenario in perspective. The last time ge cut was 2009. That was during the recession. The only other time since 1899 when it started paying out a dividend, 1939 the Great Depression this would be a big deal the other big topics, theres a number of them that everyones looking for answers to flannerys looking to cut 3 billion in costs through 2018. Will that target get more aggressive especially as more layoffs seem to be coming . For example, according to reuters, now layoffs in ge comprise flannery pledged 20 billion in divestiture transportation, health care, lighting, baker hughes, these are some of the companies that have been tossed around in speculation especially since ge does have a hefty debt load to counter. Lastly, in light of all of this, whats the new Profit Guidance ge still technically has a 2 per share target for 2018. Its outdated. Analysts have disregarded that for months now the current consensus on the street, 1. 14 per share for 2018 there is a lot on tap from flannery as well as the new cfo, jamie miller and the ceos of aviation and power all of this is going to start at 9 00 a. M. Eastern on monday. Meantime, if you take a look at shares of ge they did close this week higher. They rallied today they are still down about 20 since flannery announced this event back in late july. That was right before he took the helm as ceo. Melissa . Morgan, thank you in the newsroom. Dan is actually making a call on ge into the event. Why dont you head over to the plasma. I will head over to the plasma Morgan Brennan did a nice job describing what went on or what has been going on. You okay, guy im all right. Massively under performed its industrial peers then all of a sudden things have gotten confused. Theres been a lot of uncertainty about what that earnings power is going to be. What this company is this big conglomerate. How do you value all of these different pieces of it to me, november 13th, thats monday you have this event. John flannery seems to be the right guy to kind of reright this ship here it could be a little messy in the near term. Thats why i think it makes sense to be contrarian using options to finding the risk. Heres a fiveyear risk. Its pretty much a disaster here one thing i think is pretty interesting. This is the flash fast crash in august of 2015 look where the stock seemed to have stopped for now consolidated as investors think about what could come out at this meeting next week i want to Flash Forward to the one year chart, okay so this is that 35 drop that weve kind of described. This is in a year when the s p 500 is up 15 . This is what i want to focus on right here, when all of the earnings were coming out in q3, the stock was about 24, it went right down to 20 its consolidated a little bit to me, i think it makes sense to target looking out a couple of months but target some sort of bottom coming in this stock and getting back to that 24 level where it just broke down heres one point though. This is applied volatility, the price of options its been moving higher. Theres a lot of uncertainty here heres the thing buying premium long premium buying calls is an expensive way to do it i think you want to sell something against it today when the stock was trading at 20. 50 i wanted to look out to january expiration and i wanted to buy a vertical call spread today when the stock was 20. 50 you could buy the january 20. 24 call spread paying 1. 10 buying one of the january 20 calls for 1 im selling one at 15 cents. My max risk is 1. 10. I start making money at 21. 10 one other reason why im looking at the january expiration, its going to be messy between now and the end of the year as far as what investors get comfortable about with this company and the future direction of it. Its down 35 of the year. Worst performing stock in the dow. Maybe we see new year action so to me i like the risk reward. Its already 50 cents in the money. Then i basically have the potential to make close to three times what im risking. Mike, there are a couple of questions to ask do you like dans trade in light of what he says that its near bottom and do you believe that the stock is near bottom i definitelythink the new Management Team and the changes theyre making is part of the right track. This is one of those situations though where this comes down to making a lot of changes, right so these problems are not going to be easy to fix. Its not going to be quick to fix them some of the businesses are talking about selling and spinning off basically like the locomotive business. Its one example its not that easy if you are inclient to make a contrarian bet, this is definitely the way to do it. Youre risking less than 5 of the stock price. It could easily move that much morgan was talking about the high debt level the company has just shy of 40 billion. The higher the debt level, the more volatility it becomes all things being equal as the stock prices drop options prices havent come down enough to go along with that. I think this is the way to play it. Guy game on on monday monday is the 13th monday is General Electric investor meeting were going to learn a lot more, i think. Weve seen in the last couple of Months Company reports earnings, two weeks later they speak at a meeting and they Say Something totally out of the blue. We can rattle off the companies. Maybe celgene being one but i digre digress. Youll know more at this time on monday i hear what dan is saying. You have to ask the right questions. What is the right multiple for a company like ge as opposed to honeywell that will grow 12, 13 . You see the outperformance of honeywell. At a certain point youll find equilibrium at ge. I dont think its 20 bucks. I think dan is giving himself time which makes sense in the here and now as dan said and mike said, theres going to be some murky waters. Yeah, just real quickly on the event, youre either going to get a capitulation. Everything sounds nasty and youll see a stock in the high teens or the thing will continue to solidify and youll see trade structures playing for a move back to the mid 20s. For everything options action check out our web site optionsaction. Cnbc. Com while youre there you can see our newsletter what are you waiting for heres whats coming up next. Roku shares are running wild, but if you missed the move, well show you how to get long for next plus, calling all options action fans reach into your pocket, grab your phone and tweet your question options action. If its nice, well answer it on air when options action returns. Logical rific. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Welcome back to options action. Check out shares of roku skyrocketing this week after blowout earnings the stock is up nearly 150 since its public debut in september making it one of the best performing tech ipos of the year if you want to get in on the rally, how can you do it for less mike is at the board. It can be awfully challenging to buy a stock after its had such a sharp rise like this one has. Well take a look at a way to do it sell a put the stock has risen sharply. Wed like to buy it at a price lower than that. Secondly, because the stock is moving around so sharply and its a recent ipo, the options are extremely expensive. Take vac of that the other thing we want to do is were going to try to avoid the next earnings because were probably going to see another big, sharp move. Here we can take a look at how big this move was. We may get a move as large as this one when we look at the next earnings. What are we looking at for this . Look out to january. When i was looking at this today, you can sell the january 35 put for 6. In fact, it closes with a 7 bid. You can sell that for 7 at this point. What does that mean . It means that you could be forced to buy the stock at 35 but net of the 7 you collected your Purchase Price is going to be just 28 which happens to correspond with the not updated analyst target prices for the stock. This is a way that you can try to get in at slightly lower levels than the way its currently trading. What do you think of mikes trade . Do i get to comment on roku yes the trade makes total sense when we look at the situations when we have these small floats, Short Interest, you have an opportunity to sell a put to effectively get involved much lower levels worst case scenario, between now and january is the stock will go through the difference of the strike and the premium that you sold i dont think thats likely to happen the next opportunity for that to happen would be some competitive announcement, thats where i want to talk about roku, or some types of earnings missed or Something Like that which is going to happen after january. This seems like a good way to take in some premium over the next couple of months. The worst thing that can happen to you if you take the trade, you will own the stock at 28. Lower than where it closed today, 34 people are looking at this, one of the things the company said, i happen to agree, were all going to be streaming. They have a huge secular tail wind. Let me remind you of theyre all high. Fitbit and go pro came public the ceos told me everybody is going to be using health bands, everyone is going to be go proing seems similar. Seems similar. Where are your go pros and fitbits. And wheres your roku. Active accounts for roku, 16. 7 billion they were 11. 3 million last year at the same time thats pretty Significant Growth i get it theyre doing something right. This is the deep end of the pool trade, folks all of the people who watch oa understand to mikes point, everybody that came out on the analysts front initiated on october 22nd with 22, 28 price target mahanes, he was 28, all going to have to rachet it up the level that youre going to wind up being long this stock, worst case, is not the worst thing in the world. Do you subscribe to roku . No. I just subscribed im telling you, i will bet you that six months from now you probably will be. Oh, with a lot more people. What do you mean . All right still ahead, shares of General Motors have been in reverse falling 9 thats good news for our friend dan. He will explain why. If you have a question, send us a tweet, if its nice one of the traders will answer it later on the show. Much more options action after this i think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. From godaddy in fact, 68 of people who have built their. Website using gocentral, did it in under an hour, and you can too. Build a better website in under an hour. With gocentral from godaddy. Well, itsonce again. Eason yeah. Lot of Tech Companies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from td ameritrade. Welcome back to options action. Time to take a look back on some of our open trades last week mike made a bearish bet into snap into earnings. This is not a very good picture for me one of the r