But in a good way. Plus, even when other battles end, you still cant fight the fed. So professor coe has another shield to protect yourself with. Options action starts right now. Lets make more lets get right to it. Despite everything that has been happening, what a week it has been health care has been flat lining for much of the year but carter thinks its time to yell clear carter, you are a doctor your prognosis lets see what it is. A couple of tables and charts. The first. What we know is sometimes one day says a lot what was the best performing sector the day after election day . Health care. Are there reasons for that sure maybe because obama care is less under pressure maybe there will be less regulatory pressures for drug stocks but this week its the second best performing sector only to tech take a look at the next table. Is it a good sector . Of all sectors, it has the strongest top line growth of all sectors in the past three years. How about valuation . Look at the next table health care right now is its cheapest valuation to the s p in five years in fact the trailing pe, can you see it on the screen what you have before you is a twopanel chart. This is data going back to 1989. That is the Health Care Sector on the top on the bottom is the sectors relative performance to the s p. You can see that the sector has been underperforming since about 2015 hence the fiveyear cheapness on the pe but most important, every time we have come down to that trend line, it has bounced to the penny. We are bouncing literally this week off that line and finally, the etf we could use to trade, this is the simple chart of the xlv it has the classic breakout candidates you can see it is making new 52week highs where the s p is not. This is the second biggest sector in the market by weight at 14 and its diverse with biotech. You have devices, managed care, life sciences, tools its a good place to be. Its an offensedefense trade. Xlv. You make a compelling case for it how would you put those facts to work, professor . I think a lot of the things carter was pointing out was important considerations a lot of times in a sector you feel like you dont have sufficient diversecation you have Growth Opportunity in the area of biotech. We were talking about biogen in the last half hour and it was disappointing news, but this is only about 1 1 2 of xlv, but you have diversecation you dont have head winds that could affect other areas of the market one of the things i was taking a look at, options price have come in considerably since election day, but they still remain elevated in many cases they are elevated in xlv i think this is a case where its well justified. What we have seen since the election is that sharp move. Even though options prices arent as cheap as i would like, i would like to be net long options. I was looking to january sometimes due to various actions with skurts you will get an odd looking strike, but that is a strike that expires in january when i was looking at it earlier today it was trading about 2. 10, may be a little lower so 2 bucks. Here is the thing, the idea is if you get the move in your favorite direction, then we may sell an outside call or a nearer dated call against it. Thats one way we should be taking advantage of the momentum we are seeing in the sector right now. Tony, when i see the phrase as i did just there, profit potential unlimited, i like it do you like it, tony i quite like this trade first of all, if you look at the Health Care Sector, it was one of the strongest off the march lows, but it lost steam about mid april because it has underperformed but as carter showed, since the election, we have seen this break out on an absolute basis i do think its constructive specifically when you look at the valuations, that is from my perspective, quite attractive. Mike has chosen to go out to january. The first out of the money strike price is quite far out of the money, about a 35 delta. For me i usually wouldnt pick something that far out of the money but that was the first strike price he could choose he is only risking a little under 2 to take this bullish bet. What you have is a relative low probability of trade you have a low risk and extremely attractive reward if you get the breakout on xlv. Carter, what do you think on what you just heard . I like it all 30, all on board. One, two, three lets move on to another sector of the market. Usually thought of as more boring, among them a large volume of rushing water, and the fed, but tony has a way to keep you flowing with both. You have some water for us utility is usually considered a boring sector. But we have seen a bit of slow rotation into utilities. I want to use American Water works as a way to potentially play for the upside into utilities. If we look at xlu which is the etf that tracks the utility sector, we had a range bound between april and october but broke out above the 63 level. If you look at xlu on a relative basis to the s p 500, it has been underperforming the recent breakout is coupled with outperformance. I like this. Xlu has been outperforming the market during an environment where Interest Rates have been rising i am fairly constructive here on the rotation we are seeing into utilities. Now if we look at American Water works which is one of the stronger names in this sector, this stock also broke out above that level at the same time when xlu broke out above that range not only do you have a breakout on an absolute basis, you have American Water works continuing to outperform the sector itself. So the stock is outperforming the sector which is bullish in any trade i look for the trade setup is taking advantage of the facts of implied volatility on American Water works is quite cheap currently trading about 13 of its rank over the past two weeks. So the trade im using is going out to january i am paying about 6. 40, collecting about 1. 25 for that sell call. So thats all i am risking looking for the upside in the january expiration what do you think of that trade . How would you trade it i think i would use the same structure. A couple of things i like about it oftentimes in utilities we are talking about fairly safe and stable stocks. We dont mind being long in a stock. This is a stock that has moved sharply off the marked lows. Its up over 65 off those marked lows and has Good Movement as tony is eluding to he also implied volatility is low. Thats why he was probably willing to use a debit spread. If you see low volatility thats a reason to buy, and if you see it lower, as in this case, you might look for situations where you can spread because we have relatively low realized volatility, he has given himself sufficient time. Thats a good setup if you are playing a bullish bet on this particular name. Carter, do you like this or would you do Something Different . Its a great chart. In my case its less about the sector utilities made a tenyear relative low to the s p. American water works is in a way not a utility. What is the best performing utility this week . American water works how about the last year, two years awk i think it continues but thats about the sector. Less about the sector and more about the company as you call it. Kind of an idiosyncratic play within the sector. Thank you. You can check out our website. While you are there sign up for our newsletter here is what is coming up next announcer only one is allpowellful another bunker when you cant fight the fed plus, calling op options action. Grab your phone and tweet us your question. If its nice, we will answer it on air when options action returns. Welcome back good to be with you on a friday evening at the end of a busy week silver is not just for 25th anniversaries and dinnerware, it can be a great shield against rates. Carter, lets start with you talk us through some silver. You bet a couple charts. The first one is the past year on the pandemic low, the slv was down at 11, 11 an ounce it comes to life with equities and you can see the huge run with the august high about 27, about 150 advance the giveback annotated on the chart, down to 21. Thats a 25 selloff. So up 150, down 25 . Now its starting to come to life one way to show that coming to life lock look at the next chart whether you call this a wedge or a triangle, it doesnt matter what you call it, equilibrium, a standoff, a debate being resolved to the upside these are converging trendlines and we are breaking out to the upside where could we go . Toms lunch way out there in the future going back to the 2011 high at 50 you can see in context the longer term, we have this powerful move. We were as low as 10 or 11 an ounce in silver come surging to life and we are in this consolidation phase which looks like it will be resolved to the upside and i think dramatically so how would you hammer out a trade . I am looking forward and backwards two or three months. Looking backwards two months, we saw slv just above the 26 level, around 27, the highs we saw in late august since that point it fell where did is it go roughly 22. Where are we now in the middle. Just about 24. I would be looking at selling the january put. You could collect 2. 10. I am comfortable only it i do own it myself if it goes below that, you are going to own it. But where are you going to own it just below 22. Even if it trades sideways, 9 ish, and it might bump into, in the near term, resistance again we will be collecting about as much by selling the puts i think we can take advantage of the elevated options premium and sell some options. I am comfortable owning slv if it does drop tony . I think gold and silver are two metals i have been paying attention to a lot of investors are paying attention to this week i think this is another way to get into gold and silver we recently had this breakout and thats constructive for continuation higher. Gold and silver are correlated the correlation is about 93 the difference between gld and slv is the fact that gld trades about 7 times the price as slv if you are selling a put option, your margin requirement or cash requirement is only about 2200 per contract but to do the same thing on gld would cost you 17,000 so for those investors who have a smaller account or want the ability to be more flexible on sizing, slv could be a better opportunity. And the upside of slv is more than double gld. So you are collecting almost 9 of the value on slv, where if you did the same on gld, you are only collecting 3 so down the line you could purchase call options if you saw acceleration to the upside i like the thesis. I think slv will break out above this level i like mike being aggressive thanks. Up next, check out shares of w wayfair. How this work from home winner is paying off. And send us your tweets and we will answeso othr mef em its a thirteenhour flight, thats not a weekend trip. Fifteen minutes until we board. 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. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save hundreds on your wireless bill. Plus, get 300 off when you buy the Samsung Galaxy note20 ultra 5g. Learn more at your local xfinity store today. 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 look back at some of our open trades. Last week tony said wayfair was set to be a good work from home winner i like wayfair because i think it sits at the intersection of ecommerce and the shift in terms of spending for home inprochlt i am going out to december and collecting about 12. 50 in credit boy, was tony right wayfair taking off since the time of that trade tony, a great call what do you do now so wayfair reported fairly strong earnings across the board. Gross margins came in better than expected about 30 . When you have a put spread like this, earlier today you could buy it back for about 2. 90. With 42 days to go, this is time to take profit and move onto the next trade mike, what do you think absolutely. When you have taken most of the reward relative to the risk, that becomes asymmetric against you if you dont i agree with tony. You should take the money and move on. Take the money and run. Thanks, guys 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 personalized education from Td Ameritrade. Visit tdameritrade. Com learn visit tand sweetie can learn coloryou just be. Gentle with the pens. Okey. Okey. I know. Gentle. Gentle new projects means new project managers. You need to hire. I need indeed. Indeed you do. The moment you sponsor a job on indeed you get a short list of quality candidates from our resume database so you can start hiring right away. Claim your seventy five dollar credit, when you post your first job at indeed. Com home. And welcome back to options action. Time to take your tweets the first question mike, explain it to us when you are talking about the vix index, what you are looking at is the implied volatility over the next 30 days, very near term when you look at leaps, those are longterm options. The volatility of volatility is relatively low so short volatility doesnt have a big impact on long volatility. Lets go onto the final call about 30 seconds Carter Health care long and silver long for Silver Bullion use slv tony, you next. Playing the rotation into my mission is simple to make you money, i am here to level the plain field for all investors. There is always a bull market some where i promise to help you find it. Mad money starts now hey, i am cramer. Welcome to mad money, welcome to cramer america. I am trying to