Next week. Want to know what it is . Heres a hint. Well tell you how to play snap shares into earnings for less ribs the action begins right now. And we start the show with deal chatter in the chip space shares of qualcomm soaring nearly 13 on reports it could be a takeover target of rival broadcomm, marked what could be the biggest merger in the ship space ever, broadcomm ending the day more than 5 some stocks are surging more than 100 . Now were starting to fade the move, why the change of heart . Its interest that a mega deal comes back. A lot of viewers understand that qualcomm is already in agreement to actually purchase nxpi which was another mega deal. So this is broadcomm coming in and kind of shaked that thing up a little bit m a was a big driver this sector, 2015, 2016, there was hundreds of billions of dollars in the Semiconductor Space the rumor of this deal is kind of interesting especially when the sector has massively outperformed technology as a whole, the etf that tracks the Semiconductor Sector is up 43 year to date, the s p is up 15 . To me, i think you really want to look out to some sentiment, guys nvidia reports next week, the implied move is 8 in either direction. Its 10 million on a stock up 100 year to date. Things are getting a little frothy real quickly, weve been talking over the last month, intel is a stock up 30 something percent in two months, this was a stock left for dead, the second Largest Holdings in the smh. Its setting up for a period when were going to get consolidation and possibly giveback intel is still cheap, when Everything Else is going to the moon the nxpi deal, that thing is trading over the deal price. Qualcomm has agreed to acquire them for 110 per share, its trading closer to 120 some people think they have to bid the price up or not enough people will tender, theres a little bit of wonkiness there. What was a blockbuster deal when announced over a year ago, now is not good enough a lot of these stocks, the Options Market would be perfect. Thats exactly it etf, like the smh which is a low vol sort of instrument relative to the underlying, especially in nvidia, look at that breakout, i want to look for a trade back towards that september breakout in the smh which is back towards 90 i want to look at january expiration here. So today when the stock was trading around 102 1 2, at an alltime high, i wanted to buy the january 102 90 put spread paying 3 for that so im buying one of the january 102 puts at 4 declared, selling one of the january 90 puts at a dollar, it breaks down to 99, i can make up, above 102 i lose the three bucks, thats about 3 i have 2 1 2 months for this thing to play out the trade is setting up for a stock like nvidia, just cooling out a little bit, cooling a little bit youre singling out the deepest area as a subset of tech, to your point, this is almost egregious. The one thing weve talked about this, its very hard to you yourself say, hard to its the only aggregate that has yet to make a high the nasdaq long ago competed its 99 we know the tech sector long ago. But the semis are still not there. Markets have a way sometimes of reaching for an alltime high. So were still 5 below. The high was on a friday like this it was the 17th of march 2000. Whether we get a hiccup now or at some point, its every possibility that we make that stretch for the high yeah, i mean, that and one other factor really speaks in favor of this trade. Hold on he said early theres some chance that you are. A market rollover will hurt the segment for sure interesting in smh, not as much as in the broad market etfs. Thats what favors using a put spread in this particular instance more than just an outright which is what we probably favor if you were going to make a bearish bet right now. Timing it is hard i dont know what the input is youre basing it on, maybe its this news. Heres what im thinking about. I see a couple of scenarios with nvidia, the stocks sells off, or a bad quarter and the stock gets killed if they put up a beat and raise and then analysts kind of revise their numbers up, then all bets are off still. But to me i think youre going to have ultimately to get to your 5 back to that 2,000 high, you need to have some buying panic or Something Like that but when it reverts, this thing will be right in the money all right from a hot group of stocks to one thats been in the gutter. A number of retail names report earnings next week and investors will be eyeing the Department Stores which are all down double digits this year the Options Market is discussing huge moves, jcpenney could see a move, macys could swing 9 . Options traders are expecting moves from nordstroms and kohls macys, this is high stakes poker. What if it moves the wrong way what if its up. Im going to make the bet that its down. Lets look at some charts and well figure it out from there this is performance figures for high sort of touch names names that people know look at these numbers. I mean, this is something out of a horror movie, right . These are twoyear declines that are epic i picked out some of the most egregious ones to put this in context, these names relative to retail itself as an aggregate, down. And the market of course up quite a bit. So the issue is, do you short something thats down that much . Often the greatest moves come from things that are already down a lot i think macys is at risk, just as really all these other are. Just to put this in context, these are declines this is what were talking about, were talking about this percentage, these stocks were all down 50 to 60 , wipeout. This is where it all started to separate you have a chart of macys and the xrt. We know 2 1 2, three years ago, whereas there was great correlation, now its starting to come apart, macys specifically here is a long term chart, a testament to being bullish or bearish with the trend we know that in principle, when somethings trending up, you want to be long. When its trending down, you want to be short when its trending up, you want to be long when its trending down, you want to be short like a monkey, stick with trends, charts work. Then what do we have here . Its a down trend. Unless and until were starting to turn, why would we bet . No, stay short, get short. All right. Heres the long term picture we know that it broke this trend. But heres the best part look at the lows it was 5. 07 were trading at 18, 19. Why cant it go there . So heres the chart. Here and now here are the lines i think were just coming out of this formation here. Not interested dont want it. You own it, get out. I mean what do you think, mike do you put on a trade that helps to go short . Were definitely going to do that it behaved terribly today, the market responded pretty positively overall, especially towards the end of the day macys tailed off towards the end of the day i was looking out to the 18 and a half, 16 and a half put spread you can spend 75 cent for the 18 1 2 and selling. What we have is a situation where the stock is probably going to move very sharply one way or the other it has a 5. 5 billion market capitalization and 5. 5 billion in debt. Youre getting a lot of leverage in that equity when the stock prices go down, debt levels do not, the equity level becomes very volatile. Thats why we use options. I like the fact that youll target this event. At the end of the day you wouldnt want to listen, your charts make total sense. The fundamentals, we all know, are really bad the lower the stock goes the more that we hear about what are the asset values and that sort of thing that was one of the reasons why activists have been involved in the summer i tried to get long, i had a little bounce, i got out, at some point i got back in, i saw everything you guys see and i dont want to do it this stock is down 60 from its 52week high mikes trade is targeting the event. If they dont like what they hear, its going to the 16 1 2 level in the short strike. The risk for snapback is always there on a week over week basis, the stock is not down that much. Its down considerably from its high its consolidated its low for a while. Just now, as seen in the chart, its starting to take out those lows that should gather momentum. Okay. We have much more options action still ahead. Heres what else is coming up on the show quick profits. Because weve got a way to make money on snap ahead of earnings next week. Well break it down. Plus calling all options action fans reach into your pocket, grab your phone, and tweet us your question optionsaction. If its ce, lniwel answer it on air, when options action returns. Logical 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. 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 snap, surging 5 today the stock could see another big move when it reports earnings on tuesday. Dom chu is in the newsroom with more, hey, dom reporter michelle, get ready for a heck of a roller coaster ride thats what traders are bracing for when it comes to snap earnings the Options Market is pricing in an up or down move of 14 , which kind of makes sense seeing as how snap has only had two prior Earnings Reports and the stock fell on both those days by 21 after its first Earnings Report and then by 14 after its last quarter Earnings Report. How does that look compared to other social Media Companies and their early public life reports . Well, for twitter, for instance, the story is somewhat similar. After its first Earnings Report in february of 2014, the stock dropped by 24 the day after earnings and then dropped by 9 in its next Earnings Report after that things werent quite so dramatic when it came to facebook, which dropped around 12 after its first Earnings Release but then surged 19 after its second one. Now, for context, twitters stock had risen sharply after its ipo so maybe a bigger downside move wasnt that farfetched early on after a run like that. Meanwhile woe all remember on facebooks fateful ipo day when the stock dropped in the weeks that followed. Michelle, there is limited history for snap stock but it wont be surprising to see a bigger swing to earnings especially if its like some of its social media predecessors. Good rundown, thank you, come to how should you play snap into earnings mike is at the plasma with a call to action we do have a limited history to compare the options value to how much its moved. As dom pointed out, we have a 14 average expected by the Options Market right now we have high levels of uncertainty, not just in the Options Market, but just fundamentally on this company. As we pointed out, options are expensive, so just buying those front dated options is really kind of a challenge. Lets look at how this stock has performed. You consider how this year has gone for almost everything this is not a very good looking picture to me. I think one of the fundamental reasons for that is that theyre competing with facebook. Facebook was one of the names that actually did well as the earnings progressed because the company was doing well i think theyre going to have a much harder time what im looking to do is sell those very expensive november 10 weekly 14 puts, collect about 65 cents for those, and then use those proceeds to help finance the purchase of the same strike, the january 14 puts for 1. 10. That whole thing is going to cost me 45 cents if the stock basically lingers in here, drips down to that 14 strike, im going to be a winner and this is really the way to use those very high premiums that we see in the weekly options going into earnings to finance a longer term bearish belt dan its interesting, this is a company i want to be really constructive about, theyre so early in their infancy, you know i think being a publicly traded stock is another story i think twitter has told us that and even facebook right out of the gate, sometimes it takes some time for investors to get their arms around the story. Why is option prices so high and why is mike trying to do this trade because of all this uncertainty . Every quarter these guys put up, the less uncertainty there should be as investors get comfortable. I like the idea of a put calendar the only question, is 14 strike a little tight because when i look at that chart, if they were really to do a bad job on that earnings call, just communicating with investors, it could go back to that 13 level where it was in august that is a very good point the question you should ask yourself, what then becomes of that weekly put option all of the extrinsic value in that option is going to go away. That 14 strike put is going to be worth 1 if it goes to 13 bucks. The difference between the 14 strike and the 13. Youll only have lost 35 cents on that one option were is that january 14 put going to be . The stock will have to move much lower for that trade not to work out to the downside. To the upside, if it really takes off, thats where this trade could end up losing. Talk about high stakes poker, this is full on gambling thats not about your picks. No one knows what a stock is when it drops 50 from its ipo and its trending lower on a relative basis its still worth a lot of money. I dont want anything to do with it if i had to be directional, im biased to the downside youre spending 45 cents in premium on a 15 stock but heres the beauty of the calendar, by selling that short, even if it just goes up a little bit, its going to hold its value. At the end of the day, mike owns a jan thats valuable. If its twitter, theres plenty more to go. Twitters been even worse. All right still ahead, our very own mike khouw tripled his money in baba this week and hes got a way to make even more cash. Hes going to explain. Plus dont call it a comeback but starbucks shares closing the day higher by more than 2 , good news for draans bullish trade the coffee giant, when options action returns. 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. 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. Certainly over this last year its fair to say that the overall u. S. Retail Restaurant Industry has been very flat on sales and actually negative on transactions the fact that we were able to build over 2,000 Starbucks Stores globally that are perfect at higher annual unit volumes than prior generations in an era where retailers are Closing Stores at a record pace, gives us confidence theres affinity for the brand. That was starbucks ceo on squawk on the street earlier today. It ended the day higher by 2 . Dan made a bullish bet on the stock next week. What do you do with that trade now . I said you really want to look out to december, i didnt want to play the event because it was very binary at the end of the day you had this reversal, i think it reversed 10 after market lows it had been down four bucks crazy move. I would love to hear what carter has to say about it. This trade looks out to december its at break even its up a little bit i want to stick with this thing and see if we get a gap. Clearly reversal, you have a moment where something is very weak and people are selling based on news. And then within moments, maybe, because of the cost, they start to revise that, and think maybe its not as bad. The reversal would be perfect if it had closed on the high. The fact that it gave back so much and closed in the middle of the range leaves some of the torque off it. Based on that, my trade management, if you do have the stock go back towards like 55 1 2 or something, you get out, maybe you try to get out for even, that sort of thing keep an eye on the ability for it to hang in there. And keep an eye on asia, that will be a big play alibaba, shares up more than 100 this year last year mike made a bullish bet on the stock into earnings basically what im trying to take a look at here, if its going to move 6 to the downside, thats the risk essentially im trying to avoid. If it moves 6 to the upside, thats what im trying to capture. Looking at the weekly options, i could buy the 175 calls that expire on friday, sell the 180, 2 1 2s for 270, and sell the 160 1 2 puts for 165 shares have pulled back slightly great call, mike, the trade expired at 4 00 p. M. Today how do you manage the trade into exploration . We posted an update on this trade this week, we took that off early. The reason we did that, i saw some early selling pressure as became of the news came out, the first moments of the trading day. We ended up tripling the investment we made despite the weakness that we saw today, i think call spreads might be a way to make a play into next january. I mean, its a Phenomenal Growth story. It was then, still is. And that initial pop is whats key you did get those new high the pullback was on light volume, it was controlled. I think higher okay. Up next, tweets and the final call from the options pits dont move 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. Thats it. Im calling kohler about their walkin bath. Nah. Not gonna happen. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] mmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. For a free kohler nightlight toilet seat with consultation or visit kohlerwalkinbath. Com for more info. 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. Its time to take your tweets. Our first fan says, hey guys, how can i best protect shares of square ahead of earnings next week love the show, thanks. Dan, what do you think heres a stock up 170 on the year it sounds like youre long, you want to protect profits into a potentially volatile event i would look to a zero cost collar, against 100 shares of stock you sell one of the november 40 calls at 80 cents and use that to buy puts, it costs you nothing, you have gains up to 40, but youre protecting below 34, obviously you have losses in the stock down to 34 options premiums are really high in square youve got to do some offset, that makes a lot of sense. The fact that this person is asking a cautious question, that being said, every single stock in this position, meaning excessive winner, has gone higher, without exception. Okay. Our next fan has another question, david says, i have nice profit in microsoft january 80 calls do i take the money and run or roll up and out . In the money options, youre still getting the decay but none of the benefit of the stock comes in four bucks youre going to pay for it. Go 85 in january you have the cap up in january. No comment. No comment. Time for the final call, the last word from the options pits. Carter macys. Im a seller put spreads, 18 1 2, 16 1 2 for that i like looking out to january, i like put spreads. A very hot sector right now, weapon all the m a news that weve beening, the on. All right. Looks like our time has expired. I 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 cram america. My jobs not just to entertain but also to teach and educate. Call me at 1800734cnbc or tweet me jim cramer you can find a good no