The original rocket man himself, Sir Richard Branson is ready to reveal his new spaceship that will take you to outer space and will join us in his options action debut today. What a week its been, the best week for stocks in 2016, in the books. One of our guys says its time to fade the rally in one standout sector and lets get the money and find out what that is. Im going to pick it off with you, dan. Yeah. I have a hunch these guys will agree a little bit. Had a great rally in the market off of very sold condition last week. A lot of risk off, things going on. A little bit of v reversal and the s p failed at kind an important technical level and one of the areas i want to focus on is some of the things that have actually shown really strong relative strength, a year thats been really bad for u. S. Stocks in general and thats in material stocks that got hit so hard last year. They were real, you know, ground zero for what was going on with industrial commodities, and that has a lot to do obviously with the dollar and a lot to do with whats going on with oil and a lot of chemical companies, we know oil is a big input, the strong dollar and exposure overseas offset the benefit, you know, of lower oil so to me i think a lot of the stocks have run, dupont, prax air, air products, run very far very fast, and its set up as a really good tonight to short what is a massive downtrend from the highs a year ago. Looking at the sector, most of the gains that happened in teefrls have happened in the past four weeks, versus year to day so its been a very recent ramp. And the most oversold things get the big bounces and heres the thing as it relates to the market. This sector doesnt matter. Its weight in the s p is 1. 5 so if we continue to weed the loser and the financials keep performing poorly. Its probably run out of room. Dan, i want you i want to get to your train and then mike can critique it. This is an etf, the xlb, and 50 of the weight of that etf is actually in about five or six stocks. A few i just named and i actually think because you have this countertrend rally its back at that downtrend. I think you can simply look out to march expiration when the xlp was 4075, buy the march 40 puts paying 90 cents for those. You have proves below 39. 10. I think this sets up as a good opportunity. The xlb starts going lower here, implied volatility, the price of options will go up, and you have an opportunity to spread the long puts. I would say if youre going to try to press this short, this is probably one way you would want to do it. Theres really a very good chance that it could blow through the strike youre spending by a little more than 2 . Thats why you do it. I myself not be quite as bearish on the space as you. Interesting. Will take a quick timeout. Maybe not from puts and calls, a very special guest making his options action debut. Virgin galactic unveiling a brand new spaceship today that could soon take you into outer space. Joined by the business titan and the entrepreneur behind the product, the rocket man himself, Sir Richard Branson, great to have you on the program. Always good to be on your program, thank you very much. In erms it of the new spaceship, tell us about it and why its a significant improvement over the previous one. Well, 15 months ago i was in the Mojave Desert and obviously myself and everybody else had tears in our eyes. Today, 5 months later having our engineers and technicians work day and night were all here again and have tears in hour eyes and this time its literally tears of joy. The spaceship looks beautiful. Its in the hangar today. Just had a wonderful unveiling. Its called the vss unity. Tooep Stephen Hawkins made a wonderful speech, my granddaughter, 1yearold, broke a bottle of milk on the front. Spaceship so shes been christened and will be ready and rare to go quite soon. How far are we from actually taking people into space, richard . Im not going to give specific dates, but from tomorrow the spaceship goes out of the hangar. It then starts extensive tests which, you know, will be some months, and once they operate and test pilots say that they are ready, ill go up and then well have other people go up, too. Sure. Now it seems like a lot of you billionaire types like to dabble, if i may say that, in space. Weve got elon musk of spacex and jeff bezos of amazon. They both have their own space ventures. Do you guys talk amongst yourselves and compare rockets . Well, im good friends with elon, and i i dont actually know jeff very well at all, but were all dock slightly Different Things. Our spaceships are not rockets. Our spaceships are on wheels and our spaceships have wings which the other two dont have, and and which ear trying to do Different Things in space. I mean, our principal purpose is to try to initially enable thousands of people who never had the chance to go to space to go to space, and then to put a big array of satellites into space so that we can connect up, you know, some of the billions of people that are not connected at the moment to wifi or internet access. Im sort of reading between the lines. I hear from you not just our spaceship has wings and wheels, but our spaceships are better. Am i reading correctly . I think if elon was doing this interview, he would give you lots of good reasons why his approach is a better one. I suppose the main difference is with our approach we can do pointtopoint travel using space so, you know, london to australia or new york to tokyo, and if you just have a big rocket you cant do that sort of thing so thats our aims are slightly different than his aim, and theres room for both. Sir richard, ive got to switch gears and ask you about whats going on in silicon valley. The fbi, the department of justice trying to compel apple to assist them in unlocking this cell phone that was used by the bernadeau terrorists. Where do you stand on this . You have a mobile venture. Do you believe that privacy of everyone should be protected . I have enormous respect for apple. I must admit i sometimes wonder whether they couldnt do the unlocking themselves and just hand over the information thats needed and maybe that could solve this particular issue because otherwise i think it could back could haunt them and maybe that would be the right thing to do so so i think, you know, in extreme situations like this, you know, trying to work out some kind of compromise like that might make sense. Sir richard branson, our thanks to you and congratulates on your new spaceship. Thank you very much. Founder of virgin group. Interesting discussion. Would you go into space . I dont think id be one of the first. You know, im very happy to be at the forefront of technology innovation, but maybe not at the front of a rocket. Thats thats a very dangerous game. Best left to the professionals. Investing of catching the falling knife. Right. I thought were you going to say im very happy on earth. You know whats so fascinating when you lock at a guy like richard branson, elon musk and jeff bezos, amassed billions of dollars and bill gates who has chosen to go out and fix very specific problems, dont think that these guys are just toying around with expensive sort of hobbies. Right. They are really trying to do something pretty amazing, and youve got to give it to all of him. He says he doesnt know bezos, elon and bezos have gone back and forth. They are doing great stuff and one way in the future humanity will appreciate it. We promised you some trades and well get to them after this break. If you have some trades, send us a tweet. Check out our website, videos, education material, check it out. Heres whats coming up next. Theres no place like home. Perhaps, but the Housing Market is showing signs of stress, and it could mean trouble for one hot dow stock. Well explain. Plus, talk about a bank job. One of those big until and put as many 100s and 50s and 20s as you can pack into it. Dan made a bearish bet on jpmorgan. Shares are flat, but he still made money. How . Well explain when options action returns. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Does value matter all of a sudden . Value is making a comeback in this market. Theres finally some urgency here. With stocks that have been caveated with, yeah, cheap, but so what. Well, now being placed by yeah, cheap, so get it before its hot. Sup jj, working hard . Working 24 7 on mobile trader, rated 1 trading app on the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of other competitors do on desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivatives pricing model, honey . Td ameritrade. E welcome back to options action. Request the big name for Retail Stocks for names like target, best buy and gap and theres one proven retailer thats caught the eye of the resident chartmaster so carter, what are you looking at . Home depot, not for the feint of heart. Weve tried amazon once and disney and been burned going after very strong stocks. This is one of a kind, and and youll eat well if you get it well and youre going to pay well all pay if we get it wrong. Home depot, now the first chart shows you the past two years and, of course, what it shows, of course, is this incredible performance relative to various things that are comparable. All cars. This is an etf that have general motors, ford, honda, nissan, daimler and all related stocks from Sherwin William paints and massco compared to, and what we know is this sustainable . Heres the really longterm chart and the numbers speak for themselves so whats caught my eye is that just of late the relative strength in home depot has started to falter. Now, the top panel is the absolute chart and the bottom panel is the relative performance to the s p, and one of the things we know is that when you do bounce off, it should be a while before you get back. It should be a while, but weve come back too closely too quickly. To my eye this looks like its losing steam and its about to break on a relative basis. Thats the bet were going to make. Heres the longterm charts since 2011 and heres where i would draw the lines and basically well come back to trend and the implications are that well have something in the order of a 10 move. A couple other things just to keep in mind. Longterm chart going back to 86. Price per share and earnings per share and they are right on track and often the stock will overshoot and will undershoot so right now they are at parity, but you get these overshoots and you get these undershoots, and i think the stock will undershoot just as it has overshot and undershot in the past, and then well end with this. This is your current pe ratio. It is higher than any time in the last ten years and higher than when it was at the top of the housing bubble peak. Were trading about 23 times. Theres a lot of room for drawdown there. Wow. 10 . . The last point that he made i think is the most important one because going back to the housing pe, actually this was the first time they saw revenues that exceeded what we saw at the top of the housing bubble. Margins are approximately the same now and a little bit bert this. Last year is the first time we saw that so youre talking about a high multiple and steering in a peak environment so where do you expect home depots activity to go from here . Take that plus a high multiple and creates the risk to the downside and better than that the Options Market isnt pricing in as much risk as you have here. Youll announce earnings and the implied move is 3 and thats the same as the historical move and yet in this kind of environment thats when you could see a bigger than expected move so all im doing is something very simple. April 115 puts, spend 3. 15. Thats your maximum risk and i think its very easy to see a situation where the stock takes even a minor dip off earnings and can you double your money. Does seem like the environment in 2016 where some of the blue chip winners from last year are really in question at this point. What are we paying for, and will it keep going . A year ago right now if you had said that apple, disney, you know, amazon could have you know, that sort of thing, i think youd say oh, youre crazy and heres the thing. This stock has already had two 10 plus draw dawns, in january and then also in february so to me i like what these guys are targeting. You know, going out of the money into an earnings event youre going yourself a little time here. Thats the only thing. The structure is hard, right . Think about it. If youre wrong and the stock goes up only a few percent, the april puts are going to lose some value and then you have a well out of the money put. This is why were looking to spend maybe 3 of the current stock price and slightly less than that and give ourselves a little bit of time. The market could take the stock in that direction even if the news does not. It cant just be we had great earnings. The takeaway from the Earnings Call has got to be what weve seen over the course of the last couple of years is going to continue. Not completely tied to home builders, obviously. Home builders have really come apart so theres little hope here that that will be part what have we get the draw down on based on an earnings beat. As of retailers falling apart. Up next, our traders say one dow stock is about to retest its flash crash lows. Which one. Well reveal when options action returns. Here at Td Ameritrade, they work hard. Wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry every third tuesday. We have Pattern Recognition Technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. Td ameritrade. Watching tvs get sharper, youve had it tough. Bigger, smugger. And you . Rubbery buttons. Enter the x1 voice remote. Now when someone says. Show me funny movies. Watch discovery. Record this. Voila. Remotes, come out from the cushions, you are back. The x1 voice remote is here. Steve, other than making im here atme move stuff,rade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Weve got some breaking news on a. Lets get to eamon javers in d. C. Reporter fairly Significant Development here on capitol hill in the apple versus fbi situation. House energy and commerce committee, the Top Democrats wa and republicans on that committee have issued letters to apple and the fbi inviting them both to testify at a hearing explaining their positions in this fight over encryption and whether or not the fbi can require apple to help out in its investigation of the San Bernardino terrorism attacks. Now, a couple things to say about this letter. They say we anticipate this hearing will occur at the committees earliest opportunity and were grateful for your cooperation. The committee here is anticipating that the principals will be the ones to testify, that is the director of the fbi himself and the ceo of apple himself. The question is when would this happen . Its at least a week away at this point before they could actually convene this kind of a hearing, but it it feels like the expectation right now on capitol hill is this may actually happen. This may be the situation where the director of the fbi and the ceo of apple sit side by side on National Television in front of cameras and congress and explain their positions here in this fight which expect is going to go as long as march 22nd at the late, because thats when the next hearing is scheduled in the overall legal battle here. Congress is now inviting the director of the fbi and ceo of apple to testify on capitol hill. And we just got comments from apple questioning why the u. S. Government wants, to you know, try to force them two times ahead of any sort of formal legal proceeding which would be that march 22nd court date. It seems like they are really pushing for this to be tried in the court of public upon before getting to court. Youre saying they could be invited to testify next week, thats well before the first hearing date. At least now and a week before they would have the hearing on capitol hill, before the court day. The fbi and doj being very aggressive in their filing earlier today, and now congress is weighing in, wanting to hold public hearings, viewing this has a significant Public Policy matter and an issue that cook needs to weigh in. Youre getting republicans and democrats on this committee to sign a joint let we are all four congressional leaders on that letter. Thats just something you dont see all that often in washington. Used to see it a lot. These days with how strained things are, democrats and republicans, at least on this committee, united in their desire for director comey and ceo cook to come before the committee and explain themselves. Eamon, thank you. Eamon javers in d. C. This is getting uglier and uglier it seems by the minute for apple. This thing has been handled, first of all, i think in an enormously clumsy way by the fbi, to basically take this into the court of Public Opinion is a dangerous exercise. I dont see a lot of winners here and apple really doesnt have a good way to come out of this shining, right, because either they have to roll over, or they are going to look back in many peoples eyes, and thats a very bad position to be in. Why im not for tim cook testifying, dont necessarily think that thats going to be a positive thing but why would apple be perceived poorly if they are out there defending to the limits the privacy of their customer and say, you know, we did comply with the government in the end. They helped the government and also defended their customers. If they can ultimately find a way to get the information that the government needs to them while somehow preserving peoples privacy, then obviously thats a win but that should have been done behind closed doors. They have to play this part and role initially and event lit government will get their way in some form. You cant roll over right away. Isnt it interesting. If this was a small ining is company that had this valuable piece of information, they would immediately go and get it. If they were a Small Company you wouldnt have to worry about people in other countries. If facebook decided to do that, we wouldnt know. Lets talk about the stock for a little bit. Yes, please. The stock has been rangebound. Whats unfortunate for apple here depending on no matter what side youre on here is they have a product event coming up in march here. They will release a new 4inch phone. I think they are calling it the 7se and then they will update the watch. Nothing particularly exciting but the stock should trade normally into these types of events. Stock is dead money in the mid90s and if i was long the stock i might look out to march expiration and look at the 100 strike with the stock around 96. You could sell that call against your stock for about 1. Thats 1 of the underlying stock price, and if you think that this stock is going to be range bound. It will be range bound. This is going to create a head wind. No reason for the stock to go significantly higher and there is reason for these to be elevated and it is elevated and what you want to do. You can sell puts and if you dont own it sell calls against your long position and even sell both. Strangle it is what we called. This has moved into an issue of headwind for the stock. Yes. Up next, the final call from the options pit. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Fitbit, macys, even home depot, a huge list of Companies Reporting next woke and some could have a critical impact on the whole market. Ive got the cheat sheet you need and breaking out the heavy machinery with Briggs Briggs stratton. Mad money is next. Theres a robbery. Why monitor a problem if you dont fix it . Thats why lifelock does more than free credit monitoring to protect you from identity theft. We not only alert you to identity threats, if you have a problem, well spend up to a Million Dollars on lawyers and experts to fix it. Lifelock. Join starting at 9. 99 a month. Steve, other than making im here atme move stuff,rade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. Td ameritrade. Weve got some time for a tweet. This one is from option action fan paul. He asked after this weeks rally how does the panel feel about gdx . Carter . Its great. Gold is up 20 off its low and if you want gearing and leverage for the gold trade, this is the way to do it. Not a lot of money here in the sense that gold miners are small. Theres only one stock in the s p, newmount and a lot more to run. Time for the final call. Carter in. Long home depot, made a fortune and take some off the table. Sell short. Mike coh . Results were dose ent and look forward and not back and right now home depot is trading rich. Id be a buyer of those puts. Dan nathan . A lot of gold miners in the xlb that i just described, seld the gdx and the xlp. What a show with Sir Richard Branson. Our time has expired. Im melissa lee. For more options action check out our website my mission is simple. To make you money. Im here to level the Playing Field for all investors. Theres always a bull market somewhere. I promise to help you find it. Mad money starts now. Hey, im cramer. Welcome to mad money. Welcome to cramerica. Other people want to make friends. Im just trying to save you some money. My job isnt just to entertain but to educate and teach you. And put it in perspective. Call me at 1800743cnbc. Or tweet me jimcramer. Ill say this. Its better than its been. How about that for a way to view a market thats no longer quite so