Where the coffin is. Get ready to risk less and make more options action starts now. That was super spooky lets get right to it starting with a troubling stat for the Housing Market as people flee the cities for the suburbs new data shows millions are behind their mortgage and rent payments and look at the treasuries, yields on the rise if youre looking for a way to play offense and defense we have a call for your portfolio. Carter is laying out a call for your portfolio take it away you bet you dont think of financials as being a safe haven or defensive, but yet given the action of the bond market and what we know is happening to yields and this is a followon really from the tlt trade of a week or so ago we think its very important to have a bet on Regional Banks lets have a look at a few charts the first is a tenyear yield chart. I like to call it a bearish to bullish reversal but forget what i call it. Something that stops going down, starts to base and eventually curls up you can see the moving average is flat and ever so slightly starting to rise that is an Important Development. Take a look at the next chart. This is the kre. Its identical, meaning trend lines, whether you draw them or use an automated trend line, thats all a moving average is a changing trend is important. And more often than not, its the beginning, not the end of something is under way. The next chart is the drawing trend line the moment you break above this average is the moment your moving average flattens. It is a simultaneous thing one is a trend line drawn and one is an automated moving average. The principles are the same, very developmental in terms of price action look at this twopanel chart, the last of the charts then i have a table. This is what we just looked at the kre. You can see the clear move above the down trendline but the bottom panels relevant performance to the s p this is the part thats so interesting. Even though the kre has dipped this week, down, its relative performance to the market is making new intermediate highs, as seen in the bottom panel, and so just in numerical terms the final slide here on a onemonth basis. S p down 2. 6 but on top of that and on top by a lot, Regional Banks up 10. 5 thats a very Important Development and theres every indication that this outperformance is likely to continue carter, thanks for that mike, whats the trade off of this its interesting. I heard b. K. At the tail end of fast talk about the fact he was inclined to get long tlt we talk about what the markets are implying oftentimes we are talking about volatility, how much it is going to move. Not so much the sentiment. But you can get that, too, when you look at the volatility surface and right now the Options Markets arent agreeing with b. K they are definitely seeing some weakness in the entire fixed income if you look at tlt, and others, everything seems to be implying higher rates higher rates are good for financials and the Options Markets are also suggesting, amidst all of the bearishness that weve seen over the last couple of days actually that financials could go higher xlf has a probability of rising over the next two weeks to two months i am inclined to go along with carter on that additionally i would say tha if there is safety in anything, sometimes its safety in value the Regional Banks are relatively cheap theyre trading at about 7. 5 times book, which is inexpensive under any circumstances. Only about 20 above credit crisis lows in terms of valuation. Probably 13 times forward earnings if you look at it that way, maybe thats a good place to take a look as well. Right now also, i would point out that short dated options prices in kr eshlgs ae are just high as they have in quite a while. We have only seen two periods theyve been higher, actually, 2011 and earlier this year before the pandemic trough we saw. I think we want to use a calendar spread, the november january 43 call calendar when i was looking at that earlier, you would have a debit of 1. 10, a small amount of the level of kre think about it this way. We are looking for a move up to the 43 level in the near term but potentially much higher than that longer term after that november call expires in a few weeks. Then we could roll that short position to a high if volatility remains high tony, what do you make of the trade . I like the trade. I think from all of the charts the one that shines for me is the tenyear the fact that it broke out above that 80 basis point level an continued to move higher on the charts carter showed you, he showed you the 150day moving average. Not only has it broken the 150, it has also broken the 200day moving average you see the financials that have been in place about two months or so really start to accelerate as yields start to rise. I like this trade from a fundamental perspective and i specifically like the choice of using kre versus xlf as mike pointed out, because of the fact that you dont have some outside exposure to some single names. You dont have Berkshire Hathaway you dont have american express, some of the names that are not as Interest Rate sensitive you have a collection of Regional Banks i really like that the call calendar here, as mike said, is more of, as mike said for the kre is more of a value play and the calendar is suitable for that. You have a relatively slow grind here to the upside i specifically like mikes strike prices of 43 on his calendar, because you had a recent resistance here at that 43 level and the november 43 calls are offsetting more than half of the costs of the january 43 calls hes only risks about 2. 5 of the etf to take this bet i like this on all accounts. Lets turn from banks to beds and couches and dining tables and book shelves wayfair reports earnings this coming tuesday if you are looking to get into the action, pull up a chair because tony is ready to assemble a way to play it. Tony, take it away we have talked about Home Builders over the past couple of months here but i really like wayfair going into earnings next week it sits at the intersection of the shift weve seen in Consumer Spending toward ecommerce and the shift weve seen in terms of spending home improvement. Wayfair will report strong earnings numbers next week i think. If you look at the chart itself, it has been between 240 and 320 to the upside since the beginning of august. Were trading now at the bottom of that range. I see earnings as the catalyst that needs to bounce off this support level. We already saw some of that here intraday as wayfair tested that 240 low and bounced back higher towards that 250 level here if we look at Consumer Spending on home improvement, we saw some deceleration toward the end of august analysts were concerned for names like wayfair, but we have seen this category of spending, if you look at the credit card data polled steady in the gains of last year through september and october, so i expect wayfair to report a strong number here the markets imply a 16. 4 move due to the implied move here from earnings, but the stock has actually moved a substantial amount, about 13. 1 over the last eight quarters so the stock can move quite a bit, but we have seen names that beat on earnings not move substantially higher here, so the trade structure i am using reflects not only the high implied volatility here but also the fact that i do expect the 240 support level to hold. I am going to december and selling the 240, 210 put vertical collecting about 12. 32 for the put and paying 14. 08 for the december 210 puts and this will collect roughl 5 through the credit spread but it collects a little over 41 of the width of the credit spread those are the types of gains that im typically looking for when im selling a credit spread going into an earnings spread like this. Carter, what do you think about tonys wayfair level the level is key. Its the intermediate low of september. The important thing is and the chart is on the screen you can see it wayfairs selloff from its 350 high back in august is a 30 decline. Thats a function of how strong it was before it sold off. A huge winner that has given back a certain percentage of those fwanz, but the key here is its relative performance is not all that inspiring it will need a catalyst obviously to get it going. This is where its important to use an options trade getting long the stock outright not play out mike, what do you think of tonys trade theres a couple of things to like about it. First of all, the implied moves. Its very high at 16 plus percent. We like to take opportunities to sell options premium when they are elevated as here i also like the spread he used to spread the risk in an otherwise volatile market condition. There is one other thing i would add. We also say when everybody is looking up, look down and when everybody is looking down, look up such is the case with wayfair. It has 14 buys it has 13 holds and 6 sells. In wall street terms, essentially everybody is throwing the thing out when everybody is looking that way at the stock, maybe it is an opportunity to make a foolish bet. I think it is a risk mitigated way of elevated options to do that last word to you, tony, on this trade perspective, especially with the i would say from my perspective, especially with the rising covid cases, there is continuing focus to work from home i think going back to work in the office is unlikely to happen this year or any time next year. So i think home improvements, setting up your office, thats the strength i see in wayfair. Check out our website optionsaction. Cnbc. Com and sign up for our newsletter. Here is what is coming up next this halloween, the markets are horrible any way you turn, but quick, over here, professor coe has another hiding spot. Plus, calling all options action fans reach into your pocket, grab your phone and tweet us your question at options action. If its nice well answer it on here when options action returns. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. But you can work out anything wowith comcast business. W. Get fast, reliable, and secure internet on the nations largest gig speed network. Flexible tools like wifi you control. Voice solutions that connect you from anywhere. And expert advice here, here, or even here. Be fast. Be flexible. Bounce forward with comcast business. Get started with a powerful internet and voice solution for just 64. 90 a month. Plus, for a limited time, ask how to get a 300 prepaid card. Call or go online today. Welcome back to options action. Right before the break, carter laid out a way to protect your Bank Portfolio if banks arent in your bag, you might look for another way to do the same thing you are in luck. Because the chartmaster and the professor are teaming up again for a solid gold trade with their call to action carter, kick it off. You bet gold treasuries are not providing safety here during the equity route, going down substantially this week in chicago. Gold and gold miners is the place to be. Lets look at a few charts here is the gdx and etf. Go all gold miners rather than idiosyncratic risk by picking one. No annotations no judgments made. Next chart i want to point out this sequencing next chart we know it bottomed in march at 16 a share and peaked in august and made a low recently at 36. Think about those numbers, 16 to 46 and back to 36. Take a look at the next chart. What we have here is an orderly circumstance move from the march low to the august high is a 30 move, 30 per share. The give back is 10. Thats 1 3 giveback. Often after giving back a certain percentage, 1 3, find support. Lets look at that next chart we are down to an important level of support last chart we are consolidating biding time. We know that on the week of august 7, gold had gone up nine weeks in a row that has only happened four times in the history of the data what follows is pause or fresh giveback the giveback is three months long and is over the next direction for gold and gold miners is up and not down mike, whats the trade off of this i am beginning to sound like a broken record, but short dated options premiums are extremely elevated longer dated premiums are much lower. We are seeing this on the put side the important thing to remember is that a stock can only be at one price at any given time. Why do i say this . I think the way to play this is to sell the november 3640 strangle and use the proceeds to help with a january 38 call. What is going on we get to own that call, help offset the decay and look at the support levels in gdx. Thats the put were selling and we are selling an upside call you can think of this as a call diagonal risk reversal we are trying to take advantage as much as we can of the fact that november premiums are still elevated you can do this in this security but others tony, what are your thoughts on this trade . This trade can be quite intimidating, even for someone experienced, but this is a good way to utilize and take advantage of options of the short term implied volatility that is relative elevated and buy a longer term option thats relatively cheaper to purchase. If we look at this from the perspective of youre selling a short strangle to finance a longer term option from that perspective if you look at the short strangle separately, i do think that depending o where gdx opens on monday you might want to adjust the strikes a little bit i might use 35. 5 to 39. 5 so i might have a delta strangle on it and buy the calls as mike suggested here the main concern with selling strangles is you hav a fair amount of risk here to put that into perspective if gdx was to decline 10 , down to 33. 50, this is only 240 of loss per contract which is a far cry from the 3600 max you could have with this so investors that are concerned, think of different ways to break it up. Thats a good tip should we make much of the fact that gold the metal didnt do anything in a week where the markets were down decisively i dont think so. I think the important thing in a rout today again, gold stocks, equities were up mike, the last word on this trade . One of the reasons perhaps gold didnt do quite so well was one of the things we saw was some fed bond buying on the long end. If they depress those rates, that obviously has an impact as well i think what you are looking at here is a situation where you would potentially be putting gdx at a lower level, trying to take as much an options trade with Everything Else going on it is a little more complicated, but for those ready to dig into gold, this is a way to look at it you asked, well answer the options action guys are standing by to take your tweets on air dont go anywhere. Much more options action next. Oh yeah, we gotta take off. You downloaded the Td Ameritrade mobile app so you can quickly check the markets . Yeah, actually im taking one last look at my dashboard before we board. Excellent. And you have thinkorswim mobile so i can finish analyzing the risk on this position. You two are all set. Have a great flight. Thanks. Well see ya. Ah, theyre getting so smart. Choose the app that fits your investing style. Its got all my favorite shows turn oright there. Boom, i wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Welcome back time to take your tweets michael from virginia is looking for an election trade. Thanks for taking my question i love the show and listen to your podcast every night my question is how would you trade spy as an options trader thank you. Carter, any thoughts here for michael . The question is priced is a biden win good or bad for the market there are all sorts of things put out how a trump win is good and a blue wave is good. There will be tax cuts or no tax hikes if trump wins, but if biden wins, more spending the market is not priced for a contested election the vix is still very elevated my inclination is to read it with caution id rather be sport the spys o buy puts on spys than long out west, matt from san diego is watching one top streaming stock. Netflix is currently trading on the bottom of a seventh month range. With covid numbers running up and restrictions being put back in place all around the world, do you think netflix can make a push to all time highs again . Mike, what do you tell matt i dont know if it will result in new subs for netflix, but it has the same volatility dynamic as so many other places and yet theres no catalyst which is very odd. You would have to go out to february to buy your call options because that captures the next earnings. Which is january 22nd. And then sell some november calls against it and keep doing it i think thats the way if youre inclined to make bullish bets on netflix to do it here. Tony, your thoughts on netflix . Subscriber growth has slowed down if you saw the Earnings AnnouncementInternational Subscribers down quite a bit. Im not as bullish here. If you are looking for a longer term grind, mikes calendar makes a lot of sense i am no chartist, but that chart doesnt look that great. It is churning. Lets say that we know that its high volatility, but range bound, and the risk here is that it breaks the downside from the range which it has been in not bad for first time out. Up next, the final call. Im searching for info on options trading, and look, it feels like im just wasting time. Thats why Td Ameritrade designed a firstofitskind, personalized education center. Oh. Their awardwinning content is tailored to fit your investing goals and interests. And it learns with you, so as you become smarter, so do its recommendations. So its like my streaming service. Well except now youre binge learning. See how you can become a smarter investor with a pers