This is an interesting situation. There are important clearance signs flashing in the debt and Short Interest of some retailers. B don its time to risk less and make more options action starts right now. Lets get right to it. Next week kicks off a flood of earnings with financials our chart master carter worth says one name in the space is heading for a big bank breakout. Carter, take it away. Obviously very, very important part of the economy, part of the market a the first is a twopanel chart youre looking at the s p 500 Financial Sector on top and the bottom youre looking at its relative performance to the market what is quite remarkable, of course, is that the bottom panel is right at the 2009 lows. So the question is do we bounce here, do we cut through . Independent of that, there is an opportuni opportunity. This is Morgan Stanley its also a twopanel chart. On the top is Morgan Stanley over the last five or six years. What you see is monobegan strgay is not at an alltime high but relative performance has broken out and is particularly firm over the past several weeks. Just two charts of Morgan Stanley outright this would be a wedge, if you will, a flag it represents an equilibrium phase thats likely to end we think its a powerful setup for a move up and out. Another way, final chart, another way to draw lines, exact same chart what we have here to my eye is a nice setup going into earnings from a marquee financial thats exhibiting impressive performance to its peers mike, whats the trade here its interesting. Youre actually going to get a little bit of readthrough on Morgan Stanleys business because jp morgan and Goldman Sachs are both going to be reporting two and one days ahead of time respectively weve had a market condition here thats probably going to be supportive of their trading revenues they actually have more revenues from fixed income trading and equity trading than they do from their other key businesses like Wealth Management and Investment Management but they get more profits from those latter two categories that makes them a stable business theyre not really expensive, trading at about 11 times forward earnings of course thats true for most of the financials but i do like it options prices are also a little bit elevated i think the way to play this is just with a simple calendar. I was looking at july september. The stock closed at a relatively good level on the day. Its going to cost about 1. 85 for that spread. If the stock goes to 50 bucks, thats the best situation when that july option rolls up. Thats going to expire a week from today of course you can sell additional calls against it overtime if thats your choosing otherwise youve basically lowered the cost of owning that call that of course is a way you can take a longer term bullish view. What do you think of this trade . Out of all the stocks reporting earnings next week, i like Morgan Stanley the most because of what carter said about the strong relative strength of the underlying stock but also revisions over the past few weeks on this stock has been particularly strong. Those are some things i look for going into a bullish earnings event. If those july calls roll off worthless, then you can sell more calls against that and further reduce risk. The one question i do have for mike is the fact that Morgan Stanley moved up 5 here today so im curious if mike would adjust his strikes a little higher if Morgan Stanley opens around 50 on monday. Its interesting that you mention that of course the stock was trading around 48 when i was first looking at that. This was really my goal here with a look for a strike that was 45 out of the money basically to the upside. Your prices will vary when you look at the market on monday thats something we contend with when were dealing with a show on friday. Were looking to do a call calendar to target a slight upside move. Mike alluded to this at the beginning when he was talking about this trade but Morgan Stanley is the last of the big six banks to report next week. What weve seen in the past is you get some of the big ones in the beginning and you have the whole group move as a monolith right off the bat. Would you think that holds true . Typically thats the case look most recently the good news out of fedex and ups popped. Its not always the case but with this group in particular all in the same lines of business, you might have an idiosyncratic run or two that is not in line. We actually have some breaking news on atlantas reopening plans. Lets get to josh lipton for more theres real tension breaking out here between the mayor of atlanta and the governor of georgia. So the mayor of that night is preparing to roll back the citys reopening plans as coronavirus cases surge, that the city will go back to phase one. Thats where all residents are ordered to stay home except for essential trips. Atlanta entered phase two at the end of may however the governor of georgia firing back saying that her action is nonbinding and legally uninforciunenforceable. Saying she should start enforcing state restrictions tough words being exchanged between the mayor of atlanta and the governor of georgia trying to deal with these surging coronavirus cases there. The Atlanta Mayor notable in recent days because she tested positive for coronavirus herself. Psychologically for the markets, weve seen this sort of rollback of reopening plans at this point. Does this put a damper on the market or do you think the market has come to accept that there will be ebbs and flows in the fight against coronavirus . I think it has kind of accepted that fact i will say obviously if we do see significant rollbacks in several quarters and you combine that with a rolloff of some of the benefits that were being offered to people in need, you can imagine thats obviously going to create some problems. Right now i think what its going to depend on is the response from washington weve seen the democratic side suggesting really very strong responses, much bigger than a trillion dollars then of course those led by mcconnell saying maybe not quite so much. I think thats really going to be the story weve seen a big response. Its been good for the market. No response wont be. Check out shares of Johnson Johnson hitting a bit of a dead end after rebounding off march ows. Tony, what are you seeing . Johnson johnson is actually a stock that i currently have a authority position in that im looking to reverse into a alolog part of the reason i have a short position is because the chart doesnt look particularly constructive not only on an absolute basis but also the relative basis compared to the health care space. Its actually underperforming. If you look at the revisions going into earnings, theyre particularly strong. I see the recent decline in this underlying stock as an opportunity to get into a long position going into earnings next week. The stock itself doesnt move very much on earnings, only averaging about a 2. 1 move after earnings for the past four quarters the Options Market has been 3. 6 the markets are implying a significant move and im expects that move to be to the upside. Theyve been extremely strong over the past couple of weeks which has been a good indicator of outperforming going into an earnings event im looking to buy the 1. 431. 50 call spread. Net net share paying about 2. 25 which is only 1. 5 of the underlying stock price to take this bullish bet normally i wouldnt buy a call option that expires just three weeks from today usually ill go a little further out. Because im playing earnings here, im looking for a binary event. Im not looking to hold this going into the expiration. Thats something i want to make viewers aware of, this is the type of trade you want to hold onto relatively shortly right after earnings and probably close out next friday or the following monday. Mike, what do you think of this i mean, i think that you definitely are going to make a bullish bet here the stock obviously hasnt performed that welcoming into this event but it could be the catalyst another way one could potentially play it if youre just looking to do the binary is trade about 2 then of course whether you won or lost, you would know by the end of next week i can understand why given the slightly elevated options premium that tony is now looking at using a call spread if youre going to look at that longer date of expiration of july 31st. What does that chart look like, carter youve touched on so many key points tony saying its an uninspiring chart. We also know the implied move is very low you have to do a call spread to try to get some juice out of it. Its a dullard its also a Sleeping Giant we know amgen has come to life in a big way Johnson Johnson is essentially the same price it was in autumn of 2017. Its one of the lowest Beta Health Care stocks i think its a low risk long employing an Options Strategy gives you juice. I bet carter got an 800 on the verbal section of the s. A. T. S. Thats my guess. Tony, you made it very clear this is a shortterm play. Longer term would you still be inclined to be short not necessarily i think the Pharma Business is particularly strong. The medical devices business which took a shortterm loss as a result of covid19, i expect that recover fairly quickly and the consumer business is holding up fairly well i like this longterm. I was only short for a fairly short amount of time. Check out our website opti s optionsaction. Cnbc. Com gimme one minute. And ill tell you some important things to know about medicare. First, it doesnt pay for everything. Say this pizza is your part b medical expenses. This much about 80 medicare will pay for. Whats left is on you. Thats where an aarp Medicare Supplement insurance plan, insured by Unitedhealthcare Insurance Company comes in. This type of plan helps pay some of what medicare doesnt. These are the only plans to carry the aarp endorsement for meeting their high standards of quality and service. So call Unitedhealthcare Insurance Company today and ask for your free decision guide. With this type of plan, youll have the freedom to choose any doctor who accepts medicare patients. And when you travel, your plan will go with you anywhere in the country. Whew call unitedhealthcare today and ask for your free decision guide. Retail one of the hardest hit groups during the pandemic with some of the most recognizable names filing for bankruptcy and others on the verge of it. Are there any deals here should buyers beware weve all done it you try to get a good deal you look for discounts you look for coupons obviously the market has had quite a rally off of the bottom. People might start screaming for stocks that look like the price has declined considerably. I think it is really important that people exercise some caution. Right now if you take a look at the russell 3,000, there might be about 20 Retail Stocks that have implied volatility over 100. Should you look to buy those stocks and sell calls against them i would exercise some caution. Lets take a look at a stock like Bed Bath Beyond heres a stock down about 50 over the last year but the stock actually doesnt make that company cheap. Why . Because theyve taken on about 2. 5 billion worth of debt in the meantime the value is 50 higher than it was a year ago even though the stock is lower so its not really a bargain you want to sell puts on those or sell calls against the stock you own . Take a look at the debt as a warning sign if you take a look at the debt that matures in about four years, thats trading about 80 cents on the dollar. Their longterm debt, 50 cents on the dhaollar. Thats telling you Bond Investors dont really believe theres much of a future for these companies. I would urge people if youre looking for expensive options you could sell, looking for cheap stocks to buy, that might be illusory. Those options as expensive as they appear to be, are insurance against that equity. Its quite a risky place to play. Is there a trade you would put on in retail, mike yeah. So heres the thing. You probably want to avoid those hard beaten stocks and take a look at the ones doing well. Home depot is one of the better performing Retail Stocks in the Home Improvement space the thing is going into earnings which theyre going to be reporting just into the third week of august youre going to see elevated options premium there is you could sell for example the august 265 calls those were trading about 4, 4. 5. Relative to the stock price today, you still have 8 worth f of upside. If you own that stock, that call has over time been a winning trade over 80 of the time its about a 5 boost to your annual return. Is that going to knock the cover off the ball no, but it is a much safer play on a much safer company. Thoughts on home depot, carter youre seeing best in class and also within the entire Consumer Discretionary sector, Home Builders and related stocks are acting very well im all for home depot tony . Thanch im a little conflicted because you have Consumer Spending strong on Home Improvement but you have home depot stock that has found a bit of equilibrium around this 250 air that its closing almost 2 of the underlying stock price in 45 days if you own home depot stock youre collecting about 2. 3 for the year on dividends. The yield here looks very attractive especially with home depot finds a temporary top around 250260. Because the stock has performed so well, because so many people hold it, because thyo have this catalyst, youre basically looking to enhance your returns thats why were going to look at selling an upside call against it its not a bullish bet were trying to get a single he here 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. Come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. Wyou say that customers a waymaklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g, everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. 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 take a look back at some of our open trades just last month mike said one consumer stock was about to rack up some big gains. The stock continues to bump up against the 33. 5034 level and a breakout here would be in principle clear sailing all the way up to the mid to low 40s i think its a tremendous opportunity. I was looking at the august 32. 5 puts. You could collect 1. 90. The Downside Risk is you would own it at 32. 50. Of course youre also going to still have that 1. 90 you collected. Since then shares of kraft heinz have rallied what do you do weve got the stock pretty much right on that strike that we sold. One of the reasons you do trades like this as an investment strategy, youre basically saying im comfortable buying the stock here or maybe at a bit of a discount. Im comfortable staying with this position. We have about 40 days to go. Our first viewer asking lockheed martin, how much will the upcoming election affect the stocks next move . In 20 obviously depending on how we think this election is going to turn out, is it good for defense stocks or not. That 50 retracement is a little bit trouble. I might look to sell some covered calls. Otherwise i might exit my position and look for a better entry point. Is that retracement troubling to you, carter its especially poor. The group is poor. I do not like this area of the market. Our next viewer asks what is the best tragic for amd at these levels i really like amd especially compared to intel. It has recent outperformance it did have a pretty big move this week. It pulled back about 2. 5 today and i like that pullback as a potential entry for long the strategy i like is going out to august and selling a put spread here, maybe the 55. 50 put spread that type of possibility or edge that im looking for in options is the type of trade i would do. Our next viewer has a question on facebook hes holding facebooks september 270 calls. Sold one at 8 to cover costs. Should he hold the other with all the popular tech names, this is the hes extelea extended i would stay mike, what would you say . I think so. This is something you can stick with. Time for the final call carter buy it. Tony . I like pharma going into earnings, long Johnson Johnson through a call spread. Mike . Home depot earnings coming up in august. That does it for us well see you back here next friday at 5 30 meantime, very special bonus rhtft ts. Fast money coming upig aerhi 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 woi felt completely helpless. Hed online. Visit tdameritrade. Com learn my entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. What do you look for when i want free access to research. Yep, Td Ameritrades got that. Free access to every platform. Mhm, yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. A bonus hour of fast money starts right now im melissa lee. Jim cramer is off this week. Were answering the questions about the stocks trading now we want to hear from you tweet us cnbcfastmoney. Coming up, were headed to vegas, baby as the casey knows make a big bet on reopening and one viewer asks if he should strike while its hot for this cybersecurity name but first, a quick check how we end the day on wall street tech, standout winner of the nasdaq hitting fresh alltime highs ending the wee