All right, lets get right to it on a friday night. If things continue to get worse, where do you put your money . Lets get in the money and do it right now. I think you want to go for some safety here. The things working all year long have continued to work. Maybe some high growth evaluation and tech names have gotten hit here. That being said i think they will hold between now and the end of the year. If we get a rate increase, i think you want to go defensive. I think you have to go back to that playbook where rates are low and youre looking for yield. That is a reason that well be talking about utilities. I think utilities are the space to go to. You will get the increase most likely but not hawkish talk. Isnt that the contrarian side. When the markets get woolly, and i think it is important to remember that yes, they are a place for yield, but the dividend yield they provide goes up. Index to inflation. So you dont need to sell utilities simply because you think there is a rate hike. And the rates will not move that much. It is about beta at this point. Consumer staples, big ones, anyway, utilities, telephone, verizon will hold up well in the event of something or what about names like johnson and johnson as well . These are the name thats will typically move 60 to 70 . You talk about johnson and johnson and staples. We had a lot of sectors in the market this year that created very poorly. And we have seen some of those things firm up a little bit. Then we have a move in the dollar that surprised a lot of people in the last week and a half. It has gone down, i expect, into the rate hike next week. Well probably have the dollar move back up. Here is the real quicker. It is a really dovish comment. So look at the yield and the ten year treasury. The reason it is not going up is this will be the shallowest series of rate hikes we have ever seen, and it will probably not get back to historic levels. Total aside here, and i will channel larry kudlow. Is it a possibility they could go 12 basis points . Maybe they reverse it. This is uncharted territory. They have never been here and it looks like they dont know what theyre doing. The utf on the sector here. We have a couple charts. Here is the longterm sevenyear chart. It is right on that up turn that is held very low and it is at a very important level here. If you want to make a directional bet, you have to hold here around 42. Then there is the twoyear chart. I want to lay this out. I think you have risk on the downside. I think you have the potential for a move. And it is contrarian relationship. So when the etf was trading at 4180 you could look out to expiration. Profits above 43. The stock was at 46 just a couple months ago. I think you want to be defensive. I think you want to be u. S. Domestic, you will want yield, and investors will come back to the utility sector in the next few months. Make what i think is a pretty high probability bet. I agree. Youre risking very little, as you mentioned. 2. 5 . That is obviously a strength. The other thing is that a lot of the damage in the Utility Space has been done. It has been a weak sector all year relative to the rest of the market. So if you will play for a bounce if we can pull the twoyear chart up again. If this was Something Else and you didnt know what it was, you would probably draw head and shoulders chop on this thing. It is, it has the Great Potential of so many things right now. Good trade there on the xlu. Boring space, but boring can be very sexy. Lost in the oil and Energy Headlines are the financial stock thats are getting almost no attention, but guess what . That group, the second worst performer this week, seema moody back with more on the financials. A tough week for financials, the second worst performing s p 500 sector this week. Some of the big losers include the big banks in is despite rising expectations of a fed rate hike next week. Black rock, kkr as well that completed the acquisition of acps majority stock. Naviant, ventas, and public storage. Let us dive into more of the financials. Why are you taking a closer look at Goldman Sachs . It could be a lot of names. The point being that the banks have not acted well of late, and goldman is under performing. With that i wanted to start with the problem of what wed ugly comes to mind. A train wreck, a disasr, or a crisis. Here is the picture of, again, hjg relative to the s p. The correlation broke down when q 3 started. And hyg has not bought into the extra help from the fed, if you will. I want to look at goldman here relative to the s p. We know that the s p is out performing hyg by a great margin, and goldman is under performing in the s p, so what my eye sees is this. You can draw your lines like that with a breaking trend, by all accounts, no way to characterize it, and a throw back right back to the trend line and starting to struggle. And you can draw it with your head and shoulders top, to my eye, we have a risk of breaking here. We close at 176 and go to about 160. That would imply about a 7 to 9 move depending on where you get your tradeoff. What is your take what is your trade. Looking at it fundamentally if all you did was look at their earnings, it would not look that bad. Something on that order for the year. One times book value that is not historically expensive for the financials but it is more expensive for some of the other stocks that seema was just pointing out. One of the things that everybody say thats is bullish about financials is that the rate hike situation would be bullish for them. Were not expecting really strong rate hikes, right . So all of that net internet margin talk is not good. We have a lot of problems in the car market that could be bad for banking. If im going to make a bet, i think the simple way to do that, it is the january week ending spreads here. There are no february options in Goldman Sachs. You can pay 4 for that spread. That is a little over 25 of the distance. So i think that, you know, listen goldman is down almost 20 from the highs here. I think it feels a little pressed. Things got ugly this week in a lot of risk asset classes. If we continue to go down into it, we are likely to have a sharp snap back. We had a massive 2 rally last friday. It bookended a little with what is going on today. When you see volatility, if youre thinking bearish or neutral, youre risking a little less than 3 any trade that we talk about tonight, wednesday is fed day. Isnt that a overhanging any trade, we dont know what it will say or do. All bets could be off. They could raise rates by 50 . We will be frozen on monday and tuesday. Once you are safely in front of a computer, check out our website for everything options, action that is options action at cnbc. Com. In the meantime, here is what is coming up next. That is what is happening to your portfolio, but fear not, well show you how you can still buy protection, plus that is what some are saying about shares of tesla and the reason could be you. Well explain when options actions returns. Im here at the Td Ameritrade trader offices. Ahh. 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 that 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 . For all the confidence you need. Td ameritrade. You got this. Here at Td Ameritrade, they work wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens 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. For all the confidence you need. Td ameritrade. You got this. That was supposed to be David Rosenburg warning that the market volatility might continue through all of next year. The bix hitting 25 today for the first time in months. So if you are looking for a little monetary protection for your portfolio, what should you do . Mike will break it down on the smart board. We look as what was going on right here. Up around 25, this is well above the historic levels for the vix. It is probably closer to 20 and much recently was even closer to 15. Were trying to look at a spread, a way to mitigate the highest cost of options. When you think about your portfolio insurance, you have to think about number one, how long do i want that insurance to last. Number two, how much protection do i need . Will it go down 15 or 20 like it did in the credit crisis. Taking a look at that, one way is to look at a quick spread. Im looking a little over 90 days here. It gives us about a quarter to digest rate news. The rate money right here, and i guess were spending about 5 to do this, which is about 25 of the distance between the strikes. An important point as well, if we look at how they have behaved, we will find that really big declines are relatively rare. We have one in the credit crisis, we have one in fact bare market in the 1970s. Most declines are closer to 10 which happens to correspond to that 180 strike put that we sold. Dan, do you have an opinion on this trade . I think you want to be tactical. It gives you three months of protection. He is talking about the s p 500. They should move on their earnings. They are expected to like 4. 5 year over year. That would be the quarterly decline. We have not done that since 2009, but that is an earnings reception, people. On august 19th, the s p 500 on the same day closed between the 50 and 200 day moving average. It did it again on wednesday. In august we dropped in a Straight Line and it happened again this week. And this is practically the best large aggregate. The question is how bad will the downside get. The upside is that it is limited to zero. When you see the vix spike like this, the important thing to remember is that were not that far off of the highs. Its not like youre coming in and hedging after the bomb has gone off. Can i Say Something controversial and possibly offensive . The more offensive the better. Does the vix matter anymore . Guys i talk to say listen, the way the Options Market is priced, the options volatility and the vix index is not what it was. It is not just looking it looks at out of the money prices. It is what they think the credit risk is. One of the first things you need to talk about the is business. What it is telling you is option Market Participants are concerned about credit. What is everybody else concerned about right now . Credit. If you want to know who looks down and see what the market faces, dont look at the guys that are bullish on google. Look at those worried about the high yield space and worried about the downside. And we learned from the financial crisis that there was a lot of Market Participants that were looking at credit spreads to mikes point. There is a lot of other vehicles i think that you can look under the hood and seen where the risk is and where it is pricing. The vix was at 42 back in 2011 and were well up in the stock market since then. On deck, tesla stock fell more than 4 today and there is an unusual trend that might spell more trouble. Well explain when options action returns. Im here at the Td Ameritrade trader offices. Ahh. 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 that 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 . For all the confidence you need. Td ameritrade. You got this. Here at Td Ameritrade, they work wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens 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. For all the confidence you need. Td ameritrade. You got this. It is time now for total recall. We look back at some of our open trades. Last month, dan made a bearish bet on tesla and this is how he did it. Risk less and make more, that is what dan tried to do with his bearish bet on tesla. He thought shares were about to stall out, but just shorting the stock . You get the idea. So he bought the march 200 strike put. To make money, he needs them to fall below the strike that he put, or below the cost of the trade by march expiration, but selling out 13. 50 just to bet against tesla. Thats a big one. Yes it is, so he sold it for 4. 50 and created his put calendar. Between the 13. 50 he spent on the longer dated put, and the money from the shorter dated put, he cut the cost of his trade down to just 9. Now he needs the stock to drop more than 9 below that strike price or below 191 by march expiration. Thanks for the advice. But it gets even better. Because the put that dan sold will decrease in value faster than the put that he bought. That means he can do something even elon musk cant do, turn time into money. That cant be true. Because he sold that put, dan needs tesla shares to stay above 200 through december 31st, but below that level by the second expiration. Since the time of the trade, shares have sped up and his trade still looks promising. Now options action fans around the world want to know one thing, what will dan do now . I should correct myself, if musk does pull off a hyper loop thing, he may turn time into money. Dan, the first leg of your trade expires in two weeks. What do you see . I think i prefaced this trade saying no one will make a lot of money by betting against musk. I think the stock will continue to trade around here and it will expire december 31st and i will have to make a decision whether it is lower and you take a profit, or you put it in a vertical put spread. I think you will see 200 in the offing. I have been tracking google trends a little bit here. I think we have a chart of that, we saw a huge spike of interest in the fall when this thing came out, and it came off really hard. The red is the model s. I think when we start getting q4 deliveries, people may be disappointed. The trade is working out fine. Exactly what you want to have happen is going on right here. If the stock drifts to 200 by december expiration, that is what you want to have happen. They will expire worthless. You can also roll that december out to january and create another calendar. And you have your eye on those minor lows, and that is a reasonable downside objective, but it doesnt like like it is much more into that. Yes, they know the model x that there would be limited deliveries, it could blow up and be a massive thing in the new year, this is why this is a tactical trade using options to target trades. Something to keep in mind, guys, tesla, there is now a used market, if you want a tesla, you dont necessarily have to buy a new one, which before you did. Next, final call on options picks. Im here at the Td Ameritrade trader offices. Ahh. 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 that 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 . For all the confidence you need. Td ameritrade. You got this. You guys did that in ten seconds, what will we do with the last eight seconds . Now five seconds. Im brian sullivan, have a spectacular weekend, everybody. Announcer the following is a paid program for the new tfal optigrill plus, brought to you by groupe seb usa innovative ideas you cant live without. 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