Charts thats so disturbed. And i just sold amazon on the call. Mark, mark, we have a way better what i to trade amazon. Well break it down. The action begins right now. Lets get right to it. Crude comeback the commodity rallying 1 to 3 , having the best week since march. It left Energy Stocks in the dust, this leaves us to wonder could oil be a value trap . Mike, what do you say . Its a little of a rebound, but crude prices are obviously still exceptionally weak and you know we also one of the things we we heard a lot of people talking about this week as well are concerns about corporate debt level. This is an industry that has very high debt level. So that obviously is an area of concern. The recount did tick up as well. Domestic demand is not that great. Obviously, all of this rests highly on what opec ultimately is going to do. But our increase in production is probably enough to offset any of the cuts that they have been talking about recently. I mean, so its always about what is the more important data point in terms of price action. We started out saying it rallied 3 . Is that more important or the fact that in the preceding two weeks it dropped 19. Retail. Right. Yeah. So i think thats the primary data point. We have some charts here. Lets go with that. Why not . Lets see that. We will talk to dan after. Crude oil, you know, i thought id start this with where we were a week ago. So friday at the close, roll back the clock one week. We had this circumstance where you had yet a new sort of intermediate low and we closed quite well. We closed at or near the high of the range. In hard times, that means a reversal, which is to say a sharp, a weak decline. On the day in question has yet new shocking lows and you close near the high. Suggesting the selling pressure has abated. Indeed, fast forward this week, thats exactly whats happened. Right . We had a little of a furtherance of that move. The question is, has anything really changed . Is crude simply like every other time in the past year, rebounding after a big selloff . I do think thats what it is. Lets look at charts. Figure it out. Heres a oneyear chart of the front contract on the imax in new york. If you were to draw one line, i think, is incontestable, it would be this line. You have a break in trend thats definitive and all we could do this week is get right back to the scene of the crime. Wait a minute, it stuck there. There is a lot of supply. The question is, is this some great opportunity . I think its a rebound in an ongoing problem. Lets keep going. All right. It really gets down to energy. And what weve got here, two lines. Blue is the market. Oneyear chart, orange, yes, we have an energy sector. I must say, yes, i seen that. I am tempted to play for some kind of convergence, leading the fact that this and this will do that. Look at the next chart. I see that, you got to do it. You got to do it. Look at this, this could be a cure opportunity for some form of convergence. How about if i did the tenyear chart . But, lets put it all in perspective. How would i do the chart, all data . This is the beginning of vix data, s p Industry Groups in 1989. What we really know is that there is no real difference. So from here going forward, betting on energy, versus the blue line, which has all of the leading stocks in the world. I think energy still has plenty down side relative to the market. After all, its kept up with amazon and apple and all the big bank disaster. So, do a few more and im done. This tells you everything. This is the sector of the last five years. We know the sector bounced off the low, a big move up. The reality is its making new 13year lows to the market. There is no alpha being long energy at any point in the last 18 months. So, the here and now on xle. Theres our little bounce on the week. I think this is the only way you can draw the line. It is a well defined trend and probably its just this and we are just in that. I just dont want it. I want to be under way to energy. Its a dismal chart, stan, what do you think . Its interesting, the xle. We know this, 33 or 35 t. Top sholdings, lum berge, theyre down and 15. 5 respectively. Its being dragged down by the three big leaders. And listen, those are cheap stocks with good dividends. They havent been participating. So it comes down to i we heard a lot of stuff this week, Jeffrey Dunlop started out converging markets, more favorable, relative to the u. S. , i we heard that a couple times this week. You would think crude oil would be the beneficiary of that. If thats whats going on here, it seems to be telling us a different story here. If those companies see it, you see exxon replacing their reserves, which they had done consistently up until next year and havent since. If theyre not betting on it and the saudis oornt betti arent betting on it, the largest disintegrated oil and largest producing nation are sellers. Why would you be a trade . Im looking out to september. The 60 foot spread you could spend 3. 15 on the put is what i was looking at earlier, sell the 60s against it for 85 cents, spending 2. 30, the whole purpose here is essentially targeting over the course of the next 90 days or so, the lower portion of that trend line that he identified. Right. And ill have to rely on fundamentals. At some point, presumptively theyll be dividend cuts. When that comes, thats you sound like last year in the growth. See what they have not replaced the reserves in x number of years. Remember, a big poll they didnt cut the dividend when it was back in the 30s. This time its persisted longer in a sense of the bounce. I would look at what be ig coal did in the 40s and 50s when it was big in market cap. Now its nothing. That may be important to know than any other t. Reason, of course, is we are seeing we are not going to be using as much coal for Energy Production and one of the biggest uses for oil, it is, to produce gasoline, 50 of every refined barrel of crude oil, turn it into gasoline. At some point, were not going to be driving those. So. Thanks a lot, boom pickets. Lets talk trade perspective. One of the things up want to say, the idea of using a defined risk put spread makes sense. You have a well defined down trend. The xle is down 13 from those december highs. Thats one of the reasons why i like the trade structure. If you agree with your fundamental and technical take. I like the risk more than the put spread. You are targeting at a technical level, too. Snap shares cratering after abysmal earnings report. Moments aforks we learned that hedge funds, heavy weight dan lowe bought over 2 million shares of the social giant. He lost money on the name. How can you do that for less . Dan has some ideas. Yes, this is one thats really interesting. Its a controversial name on valuation. I think obviously competition. I think its important to remember, we talked about this a number of tiles since the ipo and the leadup to i9. This is a pretty scarce property as you think of the scale they have and the niche audience they have. So you saw that gap there, it went down 21 yesterday, noling that quarter. To my mind, i dont think what they reported was too different than what they were saying in the i po o road show in late or early march. There was fast money in the name. The ipo was priced march 1st at 17 buck. It when as high as 29. It was trading 2324 prior to the results. You have that gap down here. One of the things i find is interesting. Two of the main interesting uses for options in my opinion is to either add yield by selling a call against a long stock position or add leverage to existing long stock position in the strategy that i want to detail right here. That es are pretty safe trades as you think about them. So to me, lets just say you bought snap after the ipo at some point. Have you this big gap now. You are willing to be patient. You know the next identifiable catalyst will be the q2 earnings the first or second week of august. We know there is a big hockup. We talked to mark cuban on fast money. Hes intrigued by the name. What did he say . He wanted the wait for that lockup. Lets say you own this stock at 1830. That is the price that they trade up today. Thats what you on it at even if you have lost it. You could think of adding a 1 by 2 long call spread. Thets say you owned 130. You look out targeting those two and say i think the stock is going to pop, get back towards 24 at the level it broke down from. That should be some resistance. I know there is not a whole heck of a lot of you know history to this thing. I want to target it and move back to the highs. One of the august calls and sell two of the august 27 calls for 30 cents each. Cost you 60 cents. Have you this one by two call sprod, no cost. How do you make money on this thing . You own 100 shares up to 27. You can make all the money on that 100 shares. Between 24 and 27, can you make up to 3 on that call spread. So you are basically doing a leverage override here. You will be adding more than 10 yield. One of the things when you see stocks with high implied volatility t. Price is tempting to sell options, do things like buy rights. This has some sim all rights wi similarities, you bought it when it was above 24. You dont want to sell calls against it when umm own it at 19, because if it does happen to ramally back, this is a way you can self premium, get some leverage in the middle. So it has the benefits of doing a buy right without clipping the gain if the upside of the stock should rebound. We already identified why you would be willing to do that. There is that lockup. So presumably getting through that 27 trade. Obviously, we are finding things to make money long or short. What does it say about this wanty or this prospects as investments the hopes and dreams of those involved with this kind of start . This is a pretty auspicious start. You come out of the game. You have one day wonder and you are down on the floor like this. Meaning there is no one happy, unless you are an early investor. Anyones whose call space by definition is higher, which means the gap is as far as it can go. Once you drop like that, thats where all the dead bodies are. It is finesse. You wouldnt even bother. I wouldnt bother. But the straight, some call this stock repair sort of thing. Its like, lets just say this, we have been doing this a long time. If you think the high print in snap came on the second day after its ipo. I just dont buy it. I dont buy the high is in. You are talking about what im saying, lets say there is interquarter data points that are decent, they manage that lockup pretty well. Do a secondary, active users greater tan expected. Lets say all that happened in august. Will you feel that gap in. Lets say you will not sell the stock. You dont want to commit additional money it to. You hope to get money back and make a nearterm rebound. Thats what this trade will do. We have a trade for everything options action. Check out objections apapg opt cnbc. Com. I saw puts on amazon. Look who is suddenly a fan of options action. Guess what, mark, we have an even better what i to trade amazon, well break it down. Plus, calling all options action fans, reach in your pockets, grab your phone and tweet us your question at options action. If its nice, well answer it on air when options action returns. Logical. 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. What . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at Td Ameritrade. No, theyre under valued. Theyre all valued . The Biggest Company right now . Theyre under valued . Yes, i sold puts on amazon. Theyre so under valued. You dont understand, however big you think people are and Neural Networks, however you want to call it. Yeah. It will be bigger. That was billionaire mark cuban revealing yesterday he sold puts on amazon. Sounds like he has been watching the show. We love you, selling 100 stock is hard for most retailers. We have this call to action on amazon. Mark, rewould have to have you on the show. We can discuss bullish strategies. As we were talking about selling puts on the 900 stock, that will be risky. Maybe we can do this a different way. We can look at selling a put spread, which will have less risk than selling those puts outright. This is a strategy that can generate income. The other nice thing about this, this is a trade that has a relatively high probability of profit relative to either buying call, call spreads or defining the stock. So specifically, taking a look at amazon, were going to look at selling something a little out of the money. This is a threemonth trade. Im looking at this level and here, 900. We can see it made a nice move. Specifically, im taking a lookout. Im going to sell the 910, 900 put spread. Im collecting 320 cents for that. Thats a nice what i, below this, for me to see any losses and actually even if it goes below 900, it wont go to the full 900 unless it go es to expiration. This is a situation where you collect 320 if it stays here or rises or falls. The maximum risk you are taking is a lot. Lot lower. What do you think of this . Its. Its defining the risk. I think its important to remember when you share the reasons why mark is really bullish on amazon. It sounds like its his biggest position. He is averaging a yield, he is thinking in a longterm thieves, when he talks about the Neural Networks and how they use it. To me, if you are one of these people at home, you have to think about defining a risk and think about the fact in the last three years amazon is a stock. Its also had two 30 percent peaktotrough declines. If you make short puts and you catch one of those sort of declines, that can be a very uncomfortable position. Mikes a trade. Its all about the draw downs. We know that up trends are characterized and down trends are throwbacks. You cited them. We know preelection, before their election bounces down 17 , it was down 30 t. Lows of january 16 and 15 had a 17, 18 . That kind of thing is around the corner t. Question is on the 900 level, does that give you enough wiggle room, do you think . Well, i think clearly if its going to break 900, it can go well below it. Its the reason you want to own that with the 900 strike. We are basically saying if the trend is higher, above 9 cents, we will get paid, because it will break, 900 we are concerned about. Thats why we are buying protection. Amazon is as low as its been in a very long time. Heres the other thing, when you get that give back, you are bullish. You understand that stocks can go down, that can be the better opportunity to sell puts, keep your powder dry, wait until options prices pick umm, the stock comes in and you sell the puts. Facebook trading on the social media giant is still winning. How is that . Well explain when options well explain when options action returns. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Welcome back to options action. Its time to look back at our open trades, two weeks ago, Cullen Carter was bullish on facebook. Heres what they said. We have been at this low at this high, at this low, at this high so to speak. Are we getting close . I think we have a little more to go. We will stick with the bullish bet on facebook we are working on a month or two ago. I was looking at the mayseptember 155 call spread, basically the options market. This is a bet that will make that 4 move to the upside. Facebook retreated since then, mikes trade, still intact. What are you doing . There is basically the perfect setup where the stock is treading water. That near dated option we sold is going to decay more rapidly than the one we won. In this case, its worth 12 cents now. You can cover that, you can sell a june call against it and roll out our calendar, i think thats the way you play it. We have an earnings related pop. You pla i that back. You have support on a minor basis and short term and set potential . From a trade potential, this is what you want to be doing, option prices were elevated in the print. You guys were not playing for explosion near dated. You are set up to own a longer dated call, that will purchase, which you did, i love the idea of continuing to roll this thing. At some point, obviously the stock will sell near 150. It can continue to do that for a while. It has exposure to potential catalyst the june probably doesnt. What do you think about the notion of all those big internet stocks are under valued . Mark cuban said, i fell off my chair when he said it, listen, i think mark is one of these thinkers, he is thinking out down the road. I think he thinks there will be a 5 million market cap companies. If you hear him, we we heard him throughout the day, hes not going to be able to tell you that that will be a 2018 or 19 thing. I think he is thinking out and will continue to think that way. Thats why hes selling puts at amazon. Up next your tweets and if final calls from the options pits. Welcome to holiday inn thank you wait, i have something for you making every stay a special stay. Holiday inn, smiles ahead. Whether for big meetings or little getaways, member always save more at holidayinn. Com 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. Time for your tweets, our first fan asks what december call should i buy on apple . Mike. With the stock trading around 155 perhaps the 160s or 165s. I might consider selling neardated premium against it. I think their ascent may follow the path we had which is slow and steady. What do you think of the Church Raffle . Nothing lasts forever. We know its steep on corrections. According to some we we heard, its cheap. Our next fan asks, how can you buy American Airlines with options if you want to own it long term . Its a tough one. You got to remember, when you are buying options, you are not buying equity. You buy the right to own stocks. We have a correction. What apple call should i buy . If you want to invest, trade apgss, lets use technical levels, that stuff. Its a much more in depth conversation. Last time on the options pit. Carter. Final call, energy, value trap stay away. I think the only way you can press that short is buying a put spread. Dan. Snap, if you are long the stock and optimism. I like the one by two call spreads. It adds potential levers. Its looks like our time is expired. Check out options action on my mission is simple, to make you money. Im here to level the Playing Field for all investors. Theres always a bull market somewhere. And 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 make you some money. My job is not just to entertain you but to educate and teach you. 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