Disney plus, even if the world right now is confined to getting takeout and eating on the couch this is an interesting situation. Mike thinks uber could be the way to go. It is time to risk less and make more options action starts right now. We begin tonight with breaking news. Lets get right to Julia Boorstin julia . James murdoch resigning from the news corp. s board of directors with a letter to the board saying that his resignation is due to disagreements of content by the Companies News outlets and other strategic decisions. Thats in his letter that is submitted to the board thats included in the s. E. C. Filing. A pretty notable mov and speaks to the split within that Murdoch Family over some of the political content of news corp. We know, julia, already theres a family rift of james and his wife and his brother lockland over Climate Change denialism by fox news and the other outlets and so this was not a surprise with the division perhaps not surprisingly james donated to the Vice President bidens fund and a number of startups around the world. And backing some Climate Change initiatives as you mentioned thank you, julia. Mike, comment on news corp. . Yeah. So, you know, one of the things that news corp. Is contending with isnt just the News Department but obviously they have some challenges in other areas of their business, including issues related to sports that are just a by product of the pandemic and theres a business implications and not thinking that the board of directors is weighing but advertisers get a say in this and theres news about that so im not sure that his resignation basically puts an end to this dispute. Other shareholders may also share some similar concerns as well lets move on here. U. S. Stocks continuing their rally this week as investors eye a Global Recovery but carter says theres a stock market that tells the truth about the world. What is it well get to a few charts in a second but here we are and today we made record low yields on the 10year yes, we were lower on the plunge low of early march, as low as 31 base points, but a record closing low and what does that say when again this week it was all the same thing, energy down on the week, materials, financials all down on the week with the same big five or ten driving all the results. Lets a look at a few things and talk about japan heres the first slide and i have just written here, Global Recovery i would point out and if one was looking yesterday and last night there was a complete breakdown in the topix machinery index literally a collapse what is important, if you look at the next slide, the japanese stock market tells the truth in quotes and thats because japan is so dependent on the world for growth right . It has no internal growth and what were seeing and hearing here from the topix machinery index is it is not all very good take a look at the next chart, this is a comparative chart of the s p and the nikkei very correlated. You can see the divergence caterpillars big competitor missed panasonic, really not good now a few charts take a look at the ewj, this is the etf that tracks the nikkei or the topix, and the well defined down trend line in effect for a year and every time its gotten up to the trend line and hit the head to the penny and in fact it did just a week or so ago. And so, one two more charts next one, this is a little tighter, up close and what we know is we have a double top meaning the ewj couldnt even get above the june high. And then the final chart i have drawn here were hovering ominously right at the intermediate lows in effect so poor relative performance, diverging from the s p, Major Trading companies in japan coming out with very bad earnings and it speaks to the question of is there a Global Recovery all right, mike whats the trade off the back of that one of the things, we take a look at some of the top constituents in th ewj, some wellknown worldwide and easy to imagine some negatively affected by whats going on, toyota motor, mitsubishi, honda. You might say theres a soft bank in there, nintendo, theyre maybe immune and thats the minority when you think about it and you have to think about the prbroader index here and the hazards tha they might be facing and the signs to see from other companirs that are in that group that reported. We take a look at the volatility on the ewj right now, typically a very low volatility index, much like the s p was before everything that we have seen it was about 11 or 12 and then spiked of course along with the rest of the volatility in the markets globally in february and march up to about 45 and come back somewhat but it is still quite elevated right now 21 , nearly double what it was historically and the ewj is not trading at the alltime highs and it might make sense to use a put spread here normally when carter gives a technical view i like to look out 60 to 90 days but here given the weakness and rolling over i look shorter data than that out to september the 54 50 putt spread and earlier today you can spend 1. 50 for the 54s. Sell the other ones against it and spend about 95 cents, thats sightly less than 25 between the distance of the strikes and it is less than 2 of the underlying and break even at 53. 05 to the down side and not a big move would be required to see it go in the money and the idea of a slightly shorter day to put spread here is if it does roll over sharply you wont necessarily see it go right to the maximum value of that spread and the more of that value youre likely to capture so i think thats probably the way you want to play it here a little bit shorter data than normally use on carter technical setup but a trade to risk less than 2 for a bearish bet. Tony, what do you think of this trade yeah, i quite like this trade with a number of concerns out of japan. You have a rising number of covid19 cases over the past few weeks and you couple that with what has been relatively soft economic numbers, both from an employment perspective, sentiment and manufacturing and Services Industry both still looking particularly weak, s i think this risk here are skewed to the downside especially when you couple them with carters chart and i think mike has in my opinion the right trade chart because ewj has not broken below the support level that carter pointed out so a debit spread like this is the right to strategy to play for that potential breakout. Its only risking less than 2 of the etf value with a 3 to 1 risk reward ratio. All right we may have just closed out the biggest week of earnings season but its far from over yet and gearing up to report next week but tony says theres one name on deck that may lose the magic on the results so, tony, what are you looking at im looking at disney going into earnings next week. I think that the risks are here skewed to the downside for disney next week and my views were predominantl driven by the fact that we know that theres a significant decline from theme park revenue. We know that the media and Studio Division is going to be relatively soft and then the disney plus side and the only part of this business that is growing but the numbers for q2 not looked particularly attractive and for that reason, im not particularly strong on this Earnings Report and if you look at the chart here disney when they have reported what they announced disney plus the stock rallied up to 128 level and pretty important to be support for quite sometime before breaking below that in coronavirus and it came back to retest that level as carter would say to the penny. The real story is the underperformance of the disney stock compared to the sector if you couple that with the fact of relatively weak guidance over a past couple of weeks from analysts i actually think that you have a potential miss here for earnings next week the options are implying a pretty big move, 5. 8 compared to the average of 2. 8 over the last four quarters so Options Market are implying a pretty big move and so the trade structure im looking to use to play this is similar to mikes going out to august, a relatively short dated option and buying the 115. 105 vertical put for the august 115 puts and collecting about 95 cents for the august 108 puts and only about 2. 5 o the underlying stock price and i purposely chose a short dated option because the goal to trade is simply to trade the binary option of the announcement and im looking to get into the trade maybe on monday and probably exit this trade by next friday carter, your take on disney well, i mean, you just heard a perfect characterization of the chart, both absolute and relative i have a chart here of disney and what we know is that take a look at the picture here this is a welldefined series working into the apex and that happens before news comes out and then you get a resolution. Bulls like the case it breaks to the upside i think it breaks to the downside and tony talked about relative performance disneys relative performance to the s p not only making a 52week low but 7year relative lows wow with the covid news, what is it thats going to make it take off . Im betting against disney with tony mike, your take on the trade . I like the trade and im definitely not bullish disney here we talk about that relative weakness but i think its important to point out tha just in terms of valuation at a 270 billion enterprise value and that number might surprise some people but they have taken on debt since this all began and so the actual valuatio of the business is not as cheap as you probably think and the peak of 318 billion and of course it is trading at a lower valuation and just consider that virtually every aspect of their business is being severely impacted by whats going on except for disney plus and of course as good as that is it is not enough to make up for the other things going on here check out the web side. You can sign up for our newsletter heres whats coming up next coming up, mike has a way for you to share a ride on uber. Plus, calling all options action fans. Reach into your pocket, grab your phone and tweet us your question optionsaction. If its nice well answer it on air. When options action returns. Welcome back if you thought the earnings train was slowing down, think again, because things are just getting started. Next is uber shares remain in positive territory. But instead of hitting the gas on the results crossing the wire mike says the stock might be gearing up for a break down. Heres his call to action. Mike, take it away so, this is an interesting situation. Probably somewhat unsurprisingly the Options Market implying a move of about 9 but the stock is still higher on the year. This is pretty extraordinary when you consider not only everything going on, we talk about the shutdowns impacts on a lot of businesses, but that assumes that the company didnt have other issues to face ahead of this which it certainly is. Big negative cash flow certainly being one of the issues and thats a reason to be bearish. Antitrust concerns, we have the litigation thats going on in the state of california with respect to their employees so, if you have a neutral to bearish view on the stock, then you might look to put on a position but the thing to be cognizant aware of is that options prices are high and we have elevated volatility and one things to look at are ways to capitalize on it and take a neutral to bearish view. I was looking at selling a call spread specifically the august 30. 5, 31. 5 call spread i could collect 40 cents to sell that going into earnings and the idea is, if the stock stays here that will come in some what and below that level through august i will collect that premium. If it declines i collect it much more quickly if the stock does somehow come up with a positive surprise and go higher it is probably not going to go all the way to the full dollar value and not as if youre simply in the short term risking 60 to make 40 cents. It will probably stay somewhere in the neighborhood of 80 cents if it went all the way through and so this is a situation where three things can happen. Two are good and of course, if it does rally it is a lot less risky than shorting the stock wound and if you bought a put you spend a lot to do that i was looking at the september 30 put costing 1. 75, a significant portion of the stock price and you would need Something Big to happen to see it prop on a bearish bet here you dont need to. Tony, what do you think of this trade so i think this uber Earnings Announcement is going to be an interesting one, because the primary focus here is going to be on uber eats and grown faster than expected but it is a much substantially smaller part of the business and its also a lower margin business and it is a really competitive market and difficult to gain market share the only way to do so is to acquire companies and why uber went after postmates so im not particularly strong here on this particular earnings cycle but i do think that one of the best parts of the trade is mikes trade because hes collecting 40 of the credit spread look this normally youre looking to collect about 33 . So the fact that hes able to collect 40 gives you a fair amount of edge and as mike said, even if it goes against you youre not risking closer to 60 cents, so you have a 1 to 1 ratio with a better probability of profitability of the 50 . I like this type of spread carter, what does this look to you theres an expression the stock doesnt act well people understand that when the pitcher isnt doing well or a player and thats what this is. Down 3 of the past weeks, down 5 of the last 8. Its heavy this stock, two things dropped 67 on the march low and then its first traday of trading was its best day back in 2019 and never above the ipo price. I dont like it. Excitement about eats, though, its a good point, mike. Yeah, i think that is a good point but also one of the issues thats bringing up the antitrust concerns you have a situation where everything is going on and whether its a Necessary Service or probably not going to get out of the way of that and Something Else which is this is within of the companies that has been trying to get into Autonomous Vehicles but this is an expensive, a capitalintensive type of business and theyre facing stiff competition from quarters in that area and not clear to me with the current cash position and the negative cash flow to keep these things up, acquiring businesses, embarking on Autonomous Vehicles, and keeping their other businesses going on and a bad recipe and something will have to give at some point. All right. Coming up, shares of boeing hitting turbulence. Well take your tweets well answer some questions on air. We are back right after this turn on my tv and boom, its got all my favorite shows right there. 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. That selling carsarvana, 100 online wouldnt work. But we went to work. Building an experience that lets you shop over 17,000 cars from home. Creating a coast to Coast Network to deliver your car as soon as tomorrow. Recruiting an army of customer advocates to make your experience incredible. And putting you in control of the whole thing with powerful technology. Thats why weve become the nations Fastest Growing retailer. Because our customers love it. See for yourself, at carvana. Com. Walk to end alzheimers alzheis everywhere. Tion all of us are raising funds for one goal a World Without alzheimers and all other dementia. Because this disease isnt waiting, neither are you. Go to alz dot org slash walk. This piece is talking 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. Welcome back to options action. Time to take a look back at the open trades. Last week they went out to paint the town green going back to the beginning of data 1985, sherwin versus the s p, a sixfold increase over the general market now i if introduce the nasdaq 100. We know these are the this is apple. Sherwin is even beating the nasdaq 100. I was looking out to september. You could buy the 6. 20, 6. 80 call spread and selling the 680s against it for a net price of 20 per share. Sherwin williams jumped nearly 5 this week. So, mike, what are you doing yeah, it was a great call by carter i would have to say and it worked ou nicely, too, for us on the options side because it didnt run through that short strike that we have but the thing is, we got the move we were looking for so i think now that we have it well in the money probably makes sense to take the profits and move on. What happens next with the stock, carter . Well, thats right. Obviously there are two ways to approach a winner. If you are there for a specific event, earnings, a specific chart setup, we were, is it cause this point to maybe move on i think so it was a big week for sherwinwilliams and housing stocks in general. Rate environment continues to favor this group over many other groups but there will be other plays. I think take the money and run meantime, tony said boeing could be in for post earnings turbulence if you look at the relative performance to its sector it is really starting to underperform here over the past few weeks so you couple the estimate revisions with the underperformance we are seeing against the sector and typically the things i look for for a potential miss here on earnings i will go out to the august 28th weekly options and im selling the 180, 195 call spread im collecting about 14. 50 and paying about 9. 10 for the 195s. Boeings down about 8 since that trade what do you do now so if you sold this call spread on monday you would have collected roughly 5 in credits. Earlier today it was trading 1. 65 so you