Lets get right to it because after a volatile week for the markets, the fed looking to pull the trigger on a june hike, whats the safe place for investors to hide from even more volatility . Lets get in the money right now. Dan, what do you think . Heres the thing. We had a lot going on here. Weve got those april minutes. I think what happened is, the fed really effectively thought that or relayed the thought that Market Participants were mispricing the june rates. Lets remember that that would be the second increase in ten years, since june of 2006. The last one came obviously in december. Theres been an interesting debate going on. A lot of fed watchers, folks i like a lot, muhammad and mark, these guys saying theyre not looking for excuses not to raise. Theyre actually looking for cover to raise. They want to normalize policy here. But when you look at what went on this week, yeah, the s p eeked out a little bit of gain. We saw rates go up a little bit. The twoyear treasury yield is up like what, ten basis points or something. Well below the 1. 1 it was after the first rate increase. Im not so certain any rates are going anywhere anytime soon. Thats exactly the point, actually. That increase in rates we saw is essentially the market saying, aye, we dont believe theres going to be an increase coming up in june, and if thats true, then on justly youd have to say, okay, well, for financials to rally, based on the expectation, you can have an increase in rates, and the other areas to get hurt, you have an expectation of increase in rates and markets saying you shouldnt expect an increase in rates. The banks, after that initial pop, not that robust. I think theyre desperate to get another one on the board so they can start pulling them back. Theyve got one hike. They want to do another so they can quickly get back to zero. So is the underlying thesis here that the economy isnt as strong as people might think . I think if you look at the u. S. Economy, obviously last weeks inflation data is ticking up. Its still well below the feds own target they set. The april nonfarm payrolls, unemployment at the prior target. It seems to be weakening. April was a disappointment. When you think about a june increase, weve had fed fund futures went from pricing a 4 chance of a june hike last friday to about 30 now. You know, you say to yourself, that nonfarm payroll number is going to be really important in june. I do expect we will get an increase. I also dont think its really that meaningful, though. What were talking about is 25 basis points at the outside. Thats not really getting us back to normalization as far as rates are concerned. And you can take a look at what happened the last time we did this. It really was, you know, sort of a little tempest in a teapot. I expect thats whats going to happen. I do think the probability that were going to get a rate increase in june is greater than what the markets currently pricing. Its a fight, right, in the sense that not that the fed really cares about the market, but they do. I think they want to show the market that actually they have something, its not just talk. Also because once they get two hikes, they start unwinding them. They do care about the markets. In the minutes they did talk about easing economic conditions. Thats one of the reasons. Hey, listen. Quickly, were going to look at the 20year treasury bond, etf. We have a chart of the tenyear treasury yield. Just look at that. Look at it over the last ten years. It tells you something structurally has changed here. If we get a 25basis point raise, whether in june or july or september, i dont think this economy can handle meaningfully higher rates at this point. And that chart is telling you everything all about it. To me, the trade sets up kind of interesting in the tlt. That is the 20year. Its not that chart, but we also have the tlt in a massive uptrend, off of the lows here. I think thats going to continue. So when i look at the options trade in tlt, it sets up pretty good looking out in my mind to september to do reversals here. I think there could be room to the downside. Maybe the mid120s here. Maybe its a one and done, maybe they just get dovish again because of global conditions. So to me, i look at the tlt when it was trading at 130 today. The trade is a risk reversal. I want to sell the september 126 put at 2. 50 and ill use the proceeds to buy one of the september 133 calls for 2. 50. It cost me nothing. I make money on expiration above 133. Thats up 2. 2 from current levels. Worst case is i get put down at 126 here. And heres the thing on a markettomarket basis, as the e etf goes to the short put strike, ill have losses and gains as it goes up to the 133 call strike. Create a bit of a band here where im not long at 130. It could go down a few bucks here and there. I want to play the leveraged move to the upside. One of the things i already said is i expect a rate increase maybe a little bit more rapidly. One of the things i do like about the trade, actually if we get the rate increase, which is, you know, right now were saying theres a 30 probability, so if you factor that in and say, look at the duration of tlt, which is the 20year treasuries, folks, that takes you as you point out to about 125, 126. If we get the rate increase. At which point youre effectively in a buy on tlt. Nothing is going to happen between june and the end of the year if we do get the rate increase is my expectation. So even though im actually more inclined to fade tlt, the trade still sets up nicely because of the breakout either lower for longer, the rate environment globally is going to say somehow this is the low and rates are moving higher. If you look at the spreads for germany and japan, and everything else, i want to be buying bonds. So just to underscore, if the fed lets say the may jobs report comes in great. The fed raises in june. This trade still works in your opinion . Listen, its not going to work right then. Full disclosure. Its not going to work out great. Weve had two downward volatility spikes in the last two years. August, september, january, february. What did investors do . They made new highs. To me, this is a bit of a safety trade. I think you have the potential for flight to safety. But i also think you have a scenario where mike said make its one and donish or maybe the market doesnt price it in. I think theres a lot of ways to win it. The downside scenario where you get creamed is a low probability. Lets move from the big picture to the little picture. Shares in foot locker plummeting today. According to superstar carmelo anthony, it should not have come as a surprise to investors. Take a listen to what he said moments ago on the closing bell. The shoe game is a little bit different. You know, theres a lot of direct to consumer platforms right now. I dont think people are going into stores and buying shoes anymore. I think everything is online, websites, apps. If melo, as hes known. Is correct, what could that mean for nike . The chart master. Were going to look at charts to put this in perspective. Footlocker sales, nike products account for 60 of their sales. It also goes the other way. Footlocker is generating 20 of the sales for nike out of their stores. The relationship between the two stocks is pretty straightforward. So here you see those numbers. That is, you knonoknow, frick a frac. They are together. Whats going to happen here is going to happen together. You see the stocks ive just referred to. Lets look at some charts. This is the chart of foot locker. If an uptrend looks like something thats going up, and once your trend line rolls over, youre going down. This awfully similar to nike. Nikes moving average has turned, just as footlockers has turned. Now i warrant to show you the relationship between the two. Footlocker starts to stall before nike. Nike is following. Footlockers had earnings, nikes earnings are coming. Lets look at a few charts. Now, this is important. This is relative to the s p. Even as nike was trying to rally with the market, its still making relative lows to the s p. In fact, the stock itself is still above its own february low. But this relative performance is at 7 and 10month relative lows. Thats not good. Not only is it related to footlocker, its related to other equities. Heres the picture. You can draw your lines any way you want. What im just expecting is that were going to reapproach these prior lows, if not more. Around 56 and change. I think we can get 52. I want to sell nike. Not a good setup. Mike, same camp . Heres the situation. Nike doesnt seem like a super expensive stock, but they do have some problems. The names are lebron james, michael jordan, kobe bryant. Look at under armour, steph curry, jordan spieth, and so on and so forth. Weve got 15 to 20 of their revenues coming from their sales of these type of products. You can sell the july 57 1 2 call for 1. 95. Buy the july 60s to cover the upside for 1. 00. 40 of the distance between the strikes. Youre going to make money basically if it stays right here. Even if it rallies slightly, much like doing a buy right type of strategy, you dont have the down side risk of put the stock. This is one of those situations where you can look to collect some premium. I think thats the way to play nike here. What do you think . I dont think its a bad way to do it especially you consider the stock is down 9 on the year. So you can say its kind of like entering slightly oversold camp in a way. The olympics are coming up this summer. And the whatever else. The olympics, i guess. In rio, yeah. Investors get geeked up about that stuff. If you go back and look back, its not a huge catalyst for nike over time. I actually think theres a good way to disparage that. Lo footlocker and nike both prominently talk about basketball shoe sales in their annual reports and quarterly earnings. Whether it is direct to consumer sales or whether its in the footlocker stores, these are the products that need to be selling well for them to start beating earnings. If there is a potential source of weakness, this is it. Isnt there a bigger problem, carter . Heres another prior leader. Think about it. Disney, starbucks, home depot, the list goes on and on. Mcdonalds is starting to crack a little. Growth stocks are under duress. Thats the way to go forward. The big names are all rolling over. It doesnt get any bigger than nike, footlocker, costco, so forth. Yeah. All right. Got a question out there, send us a tweet to optionsaction. If its nice, we might read it later on in the show. And for everything options action, check out our website at optionsaction. Cnbc. Com. Sign up for the newsletter. Over 100,000 of you on the list. If youre not, what are you waiting for. Heres whats coming up next. Money will always be paper, but gold will always be gold. Right now, golds doing something very interesting. And it could lead to a killer trade. Well explain. Plus, its a contrary indicator that might be signaling a top to the market. Well tell you what it is and how you can profit when options action returns. Im here at the Td Ameritrade trader offices. 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 and 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. Td ameritrade. Herthey work hard. Ade, wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry 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. Td ameritrade. More than 3 today, posting their best week since february. But chart master says that could be signaling some trouble for the broader market. What do you mean, carter . Well, sure. Big day for plant materials. It brought semis up. Not so much about today. Structurally semis have always been considered a leading indicator for economic activity. And over the past many years, they have both bottomed first and topped first before important market tops and bottoms. I just thought i would create this table to put this in context. If you could picture, of course, the 2000 peek, the sox peaked on the 14 tl, the s p about nine, ten days later. The sox led, stopped going up first. At the bottom, in 02, the same phenomenon. The 8th, just two days later, they led, bottomed first. In 07 in the peak, a lead time. Think about in the 09. And even in 2011. The market didnt bottom until 09. In 2011. This time, the semis went on. And they topped actually on june 1st. Breaking this sort of almost perfect trend. But what im seeing in terms of the actual structure of the semi index itself is something not good. So we know it is a leading indicator. And heres some of those inflection points. But just to show you, in 07, heres the top, right, which happens in the semys went down first, but the s p kept going. Same thing here. The top, the semis go down, the s p kept going. What were having is the same thing, the general stall in deterioration. We think thats a problem. So were going to do a trade on intel here. Draw your lines. Heres your trend line. What im thinking is were going to revisit the bottom of the trend line. Weve been off of this. Its a minor way down, but its still down and were going to make a bet here this is closed at 30. I think its 16 cents today. Id make a bet were going to be down around 127. We want to be short intel but put in the con text of what it implies for the market. You dont believe what Applied Materials said . Thats what really kicked off the rally in todays session. Talking about orders at 15year highs. Applied materials is not a company that typically comes out with really good news. They basically sit there and bat singles all the time. One of their biggest customers is intel. Intel is fundamentally quite cheap. Trading probably 12. 5 times former earnings. So fundamentally, you know, i actually kind of like this stock here. But technically, thats really what were contending with. We do have the potential overhang going into june. Even though on the longterm basis, i actually think were going to see a product recycle, you know, cyclical refresh for intel, i like the stock. I like the valuation. Im going to stick with carters take on it, though. Basically going out through basically the june fed announcement. What im looking to do is sell the july 30, 31 call spread. For some reasons, you can sell the july calls for 1. 15, pay 65 cents for the 31st. Collect 51 cents on a widespread. This is a trade that essentially pays you if the stock sits right here or drops. Your upside risk is 50 cents. So basically if youre going to take the coin toss in the direction of the stocks right here, basically the probabilities line up fairly nicely on this particular trade. The other thing i would say about intel, im not sure you have to jump in tomorrow, monday, or anything like that. One reason is jump in and shorshort it. One way or another, here we are. At the midpoint of the quarter. These guys used to give mid quarter updates. They dont anymore. In a couple of weeks there was call buying today for qualcomm, the 55 strike, which i thought was interesting. Looking at catalysts, ceo speaking on may 24th. Maybe they guide it up. I dont know. Some of this stuff could happen to kind of snowball a little bit. Thats a pattern thats bottoming. Also this, if you were to look at the 30 components of the Philadelphia Semiconductor index, guess whos bringing up the rear . Today bottom four, intel. Intel seems specifically not as good. Heres the thing. We know this. The pc supply chain and smartphone supply chain is a disaster. But to your point, though, its priced in already. This is not an expensive stock. Trading at probably 40 discount to the rest of the market. Theres a lot of bad news baked into the cake. And thats why if you are going to make a bearish bet, do it with a trade like this. You wouldnt do it per se. But what do you think of the trade . I like the trade. I have a put spread in the smh right now. Im looking out a bit longer dated. To me, this is something where i think if we have two disappointing quarters, listen to the look at everything. Its really bad here. Microsoft results just a month ago were not particularly good either. So i think this is a 2016 thing. I think if you get a pop, i think youll want to give it some time and look out to september. Thats my view on intel. Up next, retail getting a boost and breaking a fourweek losing streak. Have we seen a bottom, or is more pain ahead . Well explain. Im here at the Td Ameritrade trader offices. 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 and 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. Td ameritrade. Herthey work hard. Ade, wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry 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. Td ameritrade. Welcome back to options action. Time for the upside call. We take a look back at some of our winning trades. Last month colin thought the gold miners were about to roll over. Take a listen. You had your head and shoulders bottom. We think its going to stop here. So if ones long and we capture these gains, i would grab some. If not, we think you can catch this as a short. Its likely to fall back here. So we want to sell gdx. What im looking to do is try to help a longer dated bearish purchase by selling a near dated option. Specifically what i was looking at was the mayjuly 25 put spread. Spend 1. Pay 2 for the july 25 put, sell the may 25 puts for 1. Basically cut that cost in half. The gdx is down 7 . So, carter, what do you see at this point . The premise being that something that doubles off of its low, 12 to essentially 25, cant work off the overbought condition this quickly. So its gone sideways essentially. It continues to churn sideways in this range. You want to be underweight, short, take your profits, however you want to characterize it. Short, but the first leg of the trade expires. It actually expired today. Actually, i know, and dan probably knows also, some of the folks actually in this trade covered the short leg on the middle of the week. But if you did not and you didnt even close by the end of the trade today, you were up about 50 of the trade. Youll have that stock put to you. You want to unwind that. Youre long that longer dated put. You know, up 50 in the trade. You want to get rid of the stock if you have it put to you on the short leg. But, you know, that was essentially our intent of the maybe it fell a little bit further and faster than we expected. Next up, its been a brutal month for the retailers. The xrt falling 9 . Thats great news for dan. Take a listen. I want to look at june put spreads. I want to isolate these earnings events over the next few weeks. And very simply, you know, you can buy a put spread. When the xrt was 43, you could buy the june 4238 put spread paying 75 cents for that. That is your max risk. The xrt snapped a fourweek losing streak today. So, dan, have we seen a bottom . You might have, a shortterm one. We took it off this put spread for a nice gain, probably a double on the morning that target was down 10 . When you have those sorts of moves, target down 20 for the last month. Xrt, equally weighted etf for retailers. Down 13 in the month. You dont get piggish here. Take your profits. Expect a bounce. I think you want to see this back toward 42, 43 before you get back in on the short side. All right. Coming up next, the final call from the options pits. Im here at the Td Ameritrade trader offices. 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 and 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. Td ameritrade. Herthey work hard. Ade, wow, that was random. Random . No. Its all about understanding patterns. Like the mail guy at 3 12pm every day or jerry getting dumped every third tuesday. Jerry 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. Td ameritrade. Welcome back to options action. Time for your tweets. Nathan frederick wants to know what option strategy would you suggest, he wanted to short utilities into a june rate hike. Mike, what do you say . Yeah. So i would actually look to the august 4845 put spread. Its going to cost you about 35 cents. I think were going to see a floor in the xlu. Probably about 45 bucks and change. All right. We also have a question from at market trend 24, who asked, the s p seemed to hit resistance of 2055 today. Thoughts on puts on s. P. Y. . Carter, what do you say about the charts . I think those are good thoughts. So, yeah, in fact, it did fade. It wasnt all that great a close. If you look at the high, the low and close on the day, we close in the bottom half of the range. Markets gave up gains. We very much think one year later we made no progress. You want to be short. All right. So h so he agrees with at market. I think you want to take a shortterm view. The fed meeting is going to be a june ex per ration. Thats call and put premium. The 205 strike is about 3 move in either direction. So if youre looking at puts, 1. 5 to buy the 205 put is reasonable given the event we have. Time for the final call. Carter. Exposure in nike, take a shot on the short side. Michael. The call spread in july, nike is one you want to sell. Nathan. I like the s. P. Y. June 205 puts for about 3. 20. Looks like our time has expired. Thanks for watching. Im melissa lee. Check out the website. Dont go anywhere. Mad money with jim cramer starts right now. Announcer the following is a paid presentation for the nutri ninja ninja blender duo featuring the latest autoiq technology, brought to you by europro. Ninja turn on your life. I feel vibrant. Amazing. Fantastic. Incredible. Whoo i feel focused. I feel energetic. And i feel more alive than i have in a long time. Announcer why are all these people so excited . I have that energy that i had so long ago. 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