If you thought your timing wasnt quite that good some updated intel on intel. Plus, what is it the kids say again . We could netflix and grill not quite. But mike is going to grill you on a way to chill around netflix earnings. Its time to risk less and make more options actions starts now welcome back. Lets get down to it we begin with the transports like the markets hitting new highs Companies LikeUnion Pacific leading the group as the earnings season is about to kick off. One of thesenames is likely to report more. Who is that name carter the dow jones is making 52 week highs but railroads, its a big part of the transz port index. Names leukofed ex and ups but its only four stocks. Names you know, lets draw some lines. Is it this it has all the elements of that, but lets the it a few other ways so we plunge 17 . We recover 23 and over the past 8 months what weve really done is only gone up two and a half percent in eight months. It couldnt be suspended if you made no progress its very symmetrical. The time spent down, the time spent back up put a line on the top and has all the elements of a very well defined level and breakout call it a wedge, call it a triangle, its breaking oults and its made no progress in almost a year. Look at Union Pacific. Its the exact same setup. Here is a longterm chart, no lines or annotations by me and here is how one would draw the lines and what we know to the penny and we have been coiling and we are just now breaking out. Union pacific on the long side whats the trade here this is an interesting situation. We had csx report this week. The group has performed very well unp is up over 4 3k9 this week alone and when we see situations like that, you might use like a risk reversal. Youre not caught chasing by purchasing the stock at these levels we want to take an implied move. They average closer to three that suggests that the weekly options might be a little higher priced thaj they might otherwise be the trade quite simply if it seems simple is three legs to it but selling next weeks 177 and a half put and the 190 call so thats a strangle. Well collect 2. 95 for that. The may 1. 90 call. The interesting thing of course is by selling that 177 put i could potentially put the stock thats essentially where it began the week so this is how were mitigating where the stock rallied this week. That strangle is going to decay away and well get to finance the longer dated call. Give ourselves a nice setup to take a bullish bet with mitigate k the downside its a fairly complex trade s selling and buying a call oepgs but i think the best way is selling a put and buying a call calendar. Allowing you to buy the stock around a lower price if the stock does trade lower which is well below that 180 support lefrl and if the stock does rally you get to participate with the call calendar i really like this and one of the things is isnt it identical to formel and what does spin have to do with railroads . Do they work always . Of course not but we repeat the setups agnostic as they say. Mikes trade which tony, one thing i will say which you side was complicated. Those are trades that we talk about all the time but we think about buying a call, thats when it can seem complex. Basically i was taking a look at a couple of things. Where did the stock move up from the beginning of the week, so would i be happy to buy the stock there . Yes. But i dont like chasing it up 4. 1578 . When you see nearer dated options overbriced you want to sell those of course buying longer dated options is a very good to hedge that risk. So being willing to own the stock at 1. 77 is part of it and going into challenges is another part of that lets turn now from transport to tech. Intel reporting earnings next week stock has been iced out of the red hot rally in tech. The stock is up over the year but its lower this year and its underperforming the Semiconductor Index by half. Tony zhang has a play on intc. I like the intel. This stock finally broke out in october and has traded higher now and consolidated just below the 60 resistance level and i see next Earnings Release to get above that threshold this stock has underperformed the market and the Semiconductor Group but that has stabilized over the last couple of months and its typically what i like to see going into an Earnings Release. I think the bar has been set relatively low on this particular earnings cycle and if you look at the analyst revisions going into this particular week things have started to look a little stronger so i do this think is pointing to a moderate beat on intel. The way im looking to play this here is to sell a short term put credit spread here on this particular name. Im going out to february 28 which is a option to sell the put credit pred. Im selling the 69. 5 and paying about a dollar for that 66 and a half put collecting 1. 15. So im getting more than one third of the width and the break even price is 5835 so as long as the stock stays above that level im profitable i get to take profit on this time next week i like this trade for several reasons. One is what tony joust outlined. Take a look at basically what the analysts are saying about intel right now. You have as many holds as you have buys. You also have nine sells on the stock. That is unusually bar wish for intel. Analysts ratings tend to skew but its not what we have here its trading about 13 times forward earnings so it about about half the valuation of the s and p. So a lot of bad news has been priced there the option strategy itself, we like to spread credit sales when we can its rare that you get to sell a downside put spread and collect more than a third of the distance between the strikes hes gotting 1. 50 on a 3 wide put spread so that stacks up very flavor mynd youre selling a put spread rather than out right puts because there are right to the stock and youve limited your risk that way. One thing that is very positive is that the stock gapped nicely on its last quarter and gaps typically come in twos or threes and i would expect this to gap again it would clear the highs and much better long why do the gaps come in twos add threes the results are so much better or worse. Or theres some other news. Fda approval for a drug will do it too. It means that the consensus estimate was much too low or too high when the street is behind something they typically stay dehind for a while you can only do that about three times. At some point people move their estimates up so much they figure you out i love the show because i learn. There you go. For everything options action im going to do it tonight look on the website. By the way, while youre there sign up for the newsletter heres whats coming up next coming up, some Stranger Thing it is are happening with netflix options. What mike is about to explain could turn your world upside down 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 air. O when option action returns. Oh no, here comes gthe neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. 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. Another big week for streaming media. And lets get to julia with all the details. Thats right. Nbc universals peacock is looking to be a new version of broadcast tv but peacock looking to differentiate from the crowded landscape of on demand subskripg services but also with early access to late night shows, live olympics coverage and live breaking news and exclusive access to universal films analysts are largely bullish on growing depanhandle mand for digital sid owe ads and offering an alturn never to subscription overload. We believe given the massive con tebts Library Sports properties and distribution food print that these subscription numbers gugen heim points out that the product could have a negative impact on the linear video business or its tv subscriptions between 30,000,035 million active peacock accounts by 2024. Thats less than hbos forecast and disney pluses of at least 60 million subscribers worldwide by then netflix has over 165 million global subscribers well have to see when they make that move overseas netflix will report its earnings tuesday afternoon after the bell the company is expected to grow its revenue 30 and its earnings per share by 74 what are some of the other key numbers we want to watch from netflix next week were always watching subscriber growth and the key number is that growing subscriber number, it will add 7. 6 milli 7. 6 million subscribe ers and remember a couple of quarters ago it showed declining subscribers in the u. S that number will very much be in focus. Thank you very much well f you think that netflix is going to move higher on those results mike has a way to play it with his call to action take it away from san francisco. So looking at in the netflix. Sf you own netflix something you might also consider substituting heres why we see that options are much cheaper than they are usually going into options theres only two times weve soon options as cheap as they are right now. That was in 2014 and last year reporting their Second Quarter results. Both instances saw steep drawdowns in the stock 10 when they reported their Second Quarter results late last year so when you take a look at it its obviously a risk that you have weve seen an increase in the price of about 30 plus percent and finally when we take a look at earnings moves of less than 3 or so is quite uncommon so lets take a look at distribution of results. This basically shows the kind of price action that weve seen over the course of the last decade increases of close to 20 . When you see that kind of movement thats when optionalty really kicks in. So specifically the trade i was looking at was just going out and buying the weekly 340 calls. This isnt the strategy we look to because that is kind of expensive in most cases and these options arent cheap theyre 11. 35. And also the types of movers that weve seen. Its rare that you get on opportunity to mitigate your rh risk if you making a bullish bet and they have the highest content spin so if you consider it the news could be good. It could also be bad we could see some big moves this is a way to make a bullish bet a big mover there on netflix. So im surprised that options are this cheap on netflix going into earnings. We talked at concerns about netflix forwards the end of last year, they really sold off but thats resolved itself after disney launched and netflix having this type over the last few weeks. I think this can fill that gap up to 3. 06 and with a call option, easy way to play that. News related and often gaps are filled what we do know is theres considerable overhead supply bovr so that youve got almost six months of trading where people who bought poorly who then sustained losses, if given the chance to be made whole would like to take their money back youll encounter considerable overhead supply but you dont have to get there. It can start here so the burden of proof for now is on the ball. Something thats been a relative dog for a while. Coming up, one stock surging this week and making one of our traders very happy we ool tell you about it and do you have an options question youre dieing to ask tweet us and you might get your answer on the air. Were back right after this. And welcome back to options action it is time now to look back at one of our open trades last week both mike and carter says that shares of American Express were likely to move higher listen we also have this working into and quite perfectly, right . It stops to the penny. It 120stops to the penny and he we are so many stocks have already broken out what i was taking a look at is an upside calendar spread, the february, april 130 call calendar well, they nailed it. Shares of American Express jumping nearly 3 since that call so mike and carter congratulations so what are you doing with the trade now yeah, so obviously have to defer to carter for his technical view this has been a meltup in the stock that weve seen and the fact it still remains relatively cheap. Trading at less than 15 times full year estimated earnings one of the things that we wanted was to drift up to 1 prn 30 and it has already done that in the short time i might be interested in buying back that february call. Its not going to cost us to do that and hanging on to the longer dated call at this point. The thesis is looking good so far and this is a way that we can hold a bullish bet for or longer period of time. Its still early in the going. If you think about the stock being at 1. 31 where it was in july, it hasnt moved much and part of the premise was this was a catchup trade with the market in general and its a dow jones 30 if its going to play catchup its going to play catchup and it will offer some defensive characterers i like buying back this short call and holding on for the long haul for American Express. I like the payment space if you look at other Payment Providers amex is similar to that unlike visa and master where they make money on interest American Express makes their money on payments so American Express could trade at significantly higher multiple. Final comment to you. Yeah, the other thing i would also point out, mastercard and visa are trading at much richer multipl multiples. They have much better credit worthy borrowers i like buying stocks that are cheaper than the market overall and youre trying to catch up to a market that just wont stop to owning that longer dated call is a way to hold a bullish bet here. Up next, your tweets and the final call this piece is talking to me. Yeah . So what do you see . I see an unbelievable opportunity. I see bestinclass platforms and education. I see awardwinning service, and a trade desk full of experts, available to answer your toughest questions. And i see it with zero commissions on online trades. I like what youre seeing. Its beautiful, isnt it . Yeah. Td ameritrade now offers zero commissions on online trades. Im not really a, i thought wall street guy. Ns. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade all right. Welcome back last week tony laid out a trade on delta what is the best way to manage a call calendar when the call underlines your strikes . Earlier this week what i did is i bought back my short call because i have an extended view on delta if you expect that move to happen over a longer period of time you might want to roll that out to march or april. All right time now for the final call. Lits start with you out west, mike netflix options are cheap going into earnings. Thats a way to risk less. American express, stick with it Union Pacific, get with it a new position u and p. Bullish, optimistic. Intel looking to sell some preem youm going into earnings look for a breakout. And if it gaps, i learn something. If it gaps once you might get a second or often do might get a third thank you for watching here today. Well see you next week. [announcer] the following program is a paid advertisement for the nuwave bravo xl, sponsored by nuwave. Live well for less. [announcer] is all the clutter in your kitchen starting to look like an old junk yard . Sick of spending hours cooking, only to serve mediocre meals, lacking in flavor . Wish your family would spend less time whining and more time dining . Well, now they can with the new bravo xl. The worlds First Digital smart oven with flavor infusion technology. Its a breakthrough in culinary creations. Coming up next, youll see how bravos compact design cooks large family meals in record time. How . With just a touch it can bake, roast, grill,