Cu through its time to risk less and make more options action starts right now. We start with a news alert. 13fs are hitting lets get to leslie with some of the details. Leslie hey, melissa, thats right. 13 app deadline is not until monday but weve seen a couple of notes hit the third point filing is out. Dan lopes made interesting moves in the tech world, notably increasing his exposures to some chinese ecommerce plays alibaba, upping that stake by about 26 , worth about 742 million at the end of the third quarter. J. D. Com, upping that stake by 37 to about 345 million at the end of the quarter in kind of the faang space, increased his space on facebook while keeping in kind of other u. S. Tech world, keeping his stakes in microsoft and pinterest at the same level. He also took stakes in two ipos. Palantir he bought for 21 million and goodrx worth 27 million. As with all of these 13 f filings, the stakes and values are as of the end of the quarter, the end of september and may have changed in the six weeks since. Melissa . Leslie, thank you leslie picker. A lot has changed for some of those in particular. I mean, mike khouw, i was thinking about alibaba and how much market cap it lost after the suspension of the n financial ipo. Thats just one example of how greatly things can change from the end of the quarter when theyre filed versus now yeah, that obviously was a big hit on chinese stocks. Generally the tech stocks, what happened there but it is also a situation where somebody really liked a name, you know, at the end of that quarter, saw that news a lot of those stocks are hard hit. Its possible that they took that as a reason to change direction but its also possible that they took that as an opportunity to potentially add to positions if they think that the situation could and will change at some point in the next 6 to 12 months carter, whats your take on some of those position changes well, i think you talked about the best one baba, thats a meaningful giveback, right down to trend its an excellent entry point if youre not involved if you are involved and youve already taken this hit stay all right lets get back to options action now. Did you know, because of the vending industry and counterfeit currency industry theres a law that prohibits redesigning the 1 bill. That is true but theres also another law thats governing the dollar right now, and that is gravity carter will explain. Take it away thats right. Before we look at some charts, the dollar is under a lot of pressure, gravity. Theres always a reason why. Im not really in the why business but some say its because of the ever widening account deficit. And some say the National Savings is too low lets look at the charts the first chart, there is your u. S. Dollar index. And i have annotated with a double top we had a peak in late 16, early 17 and reapproached that this year and we failed right there look at the second chart another way to draw the lines. Its the same tenyear chart, 2010 to 2020 you have two welldefined formations ive drawn the arrow there theres every indication that were heading lower. Now a longterm chart, this is all data looking at the u. S. Dollar going back to the 1970s and you can see here were working into the apex of this wedge, if you will and this kind of thing usually sets up for something considerably worse so the uup is the trade, but first, heres a shortterm chart of the u. S. Dollar and you can see again, the breakdown potential. And then the uup which is the etf to put on the trade. We think this is going to break and going to break sharply mike, whats your two cents yeah, so my two cents will only be worth about one cent, i think, by the time this is all said and done. We had some other symptoms with whats going on. Everybody is talking about bitcoin. Thats symptomatic of the larger issue. If you look at the secular trends, the Current Situation we see ourselves sees none of those reversing in the near term if youre looking at trying to trade uup with options theres something you want to Pay Attention to currencies tend to be low volatility thats good news in one sense. Options tend to be low priced relative to the price of the underline. But it makes it challenging when it comes to spreading. If youre looking to sell options out of the money, theres almost no premium there. These trends tend to play out over longer periods of time. I was looking at all the way to march. The at the money 25 strike puts when i was looking at those earlier today, those would cost about 45 cents thats less than 2 of the underlying uup but, of course, bear in mind the 2 moves in a currency basket can be quite considerable. Thats the other reason were looking out a significant amount in time. One other thing id ask people to Pay Attention to. Compare those march options to the price of the january 25 strike puts. Essentially youre paying only an extra 14 cents to own that longer days option were mitigating decay were giving ourselves some time to revisit the situation between now and march and look for opportunities to potentially spread or roll tony, whats your take on this trade yeah, so as carter said, were not in the why business but for investors looking to seek perspective, the one place to extract a view for the dollar is looking at fed policy and the fed for months have been advocating for strong fiscal support with in conjunction with the monetary supply or Monetary Policy to continue the economic recovery here but from the current perspective, a large fiscal policy, a response, is likely unlikely and the fed is left open for more qe and thats a net negative here for the dollar when you take that into account in conjunction with the technicals and you look at uup as an etf, its been largely range bound since midjuly and you have a potential breakdown below this 24. 80 support level here and a breakdown below this range projects all the way down to about 23. 50 to the down side substantial down side for uup. So for those reasons, i really like mikes trade and the fact hes using a straight put and going out to march, buying himself quite a bit of time because i see if we get the breakdown below 24. 80 youll see a quick and fast move and a straight put allows you to take full downside exposure here on uup to the down side lets play this all out and look at the impact of the dollar so, carter, whats the next logical step what emerges next . So emerging markets and before we look at the charts, lets discuss that if you have a weakening dollar, we know many emerging economies are debt heavy theyve borrowed in dollars. Weakening dollar deflates their debt we also know that many emerging economies and countries are commodity exporters. A weak dollar helps commodities. Of course, also many of them are dependent on Foreign Investment and a weak dollar helps as well. So just a handful of charts. The first is the etf that tracks emerging markets no judgments on that chart next chart, well, we have a welldefined break out to think that the s p has yet to really clear its september high eem is on its way. And then the final chart, you can draw the lines this way. A welldefined level from which were breaking out, and a welldefined up trend. So weve broken out above the apex of the Triangle Free to move higher. Mike, how do you trade emerging markets from here yeah, so taking a look at eem. One quick point, this is a followon to the conversation about the dollar and thats particularly true of eem because eem is not a currency hedged etf. We had some data coming out of china. Their export data for october. That looked relatively strong. We have this sort of dichotomy going on right now also with the pandemic are we going to see followthrough on good news of the vaccine or are we going to see some pressure as a result of an upsurge in cases. In any case, whats good for china is good for emerging markets, etfs generally. The way to play this is with options because weve come so far, so fast and any bit of bad news is going to affect that as well i was looking out to january the 4951 call spread. Spend about 60 cents for that. Selling at 51 against it for 40 cents thats a net deficit of 50 cents. Thats a little more than we like to pay for vertical spreads. In this case were spending more than the 25 or the 1 payoff were looking for here i think thats well justified here because, number one, we have, as we just pointed out, seen such strength already and sometimes paying a premium is justified. I think it is here tony, you like this trade i do. And because if you look at eem here, to understand the strength, you have to understand a little bit as far as what youre getting exposure to in eem and something important for many investors when investing in the etf to understand that we look at eem from a geography aspect, twothirds is exposed to china, taiwan and korea which collectively have about 1. 5 billion in population. Those three countries predominantly, life is going back to normal here. If you look from a sector perspective, half of this index is consumer discretionary, technology and financials. Three sectors we think are going to do fairly well through this recovery when you couple that with the breakout of eem above a major resist assistance level of 46 as carter pointed out, you couple that with a weaker dollar that we just pointed out, the exposure you get in this etf, i think eem can be substantially higher over the next 6 to 12 months so for those reasons while i like mikes trade, i understand he was trying to reduce his risk and the 51 call options is reducing the risk of the overall trade by roughly 40 compared to just outright buying the january 49 call options but from my perspective, because i believe theres substantial upside, id prefer to take a little bit more risk take on a little more delta or go out to february and spread this to about 4953 to the upside or buy the january 49 call mike, you want to give a quick comment on tonys alternative trade . Yeah, i think thats a good play ill tell you why i chose that 51 strike call to sell actually and thats probably more tonys domain and carters than it is mine i was looking at technicals and it seems to me we fell off a level right around 51 in eem not that long ago and generally speaking when you have that situation in my experience, you will run into some overhead supply that isnt a longterm bearish or resistance type of a thing, but were only looking out to january here i was looking at that level as a potential pause point. That was the reason i was willing to sell that call. Dont forget our options action newsletter and website. Meantime, heres whats coming up next. Conduction, construction, wires and plumbing copper could be thought of as the most precious of metals to the Global Economy if the world needs it, then you should want it, too. And tony has a play to help you start shouting mine, mine, mine. 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. But you can work out anything wowith comcast business. W. Get fast, reliable, and secure internet on the nations largest gig speed network. Flexible tools like wifi you control. Voice solutions that connect you from anywhere. And expert advice here, here, or even here. Be fast. Be flexible. Bounce forward with comcast business. Get started with a powerful internet and voice solution for just 64. 90 a month. Plus, for a limited time, ask how to get a 300 prepaid card. Call or go online today. Welcome back we started broadly with a dollar focused down on the impact on emerging markets and lets narrow this funnel to something more elemental on the periodic table. The atomic number 29, symbol cu, obviously its copper. Tony, lets c what u got i want to look at Freeport Mcmoran which had a strong reaction to the vaccine news, which for those investors wh didnt chase this who are being patient, you have an opportunity to seek some Long Exposure if we look at a chart here, i have a chart of the copper to gold ratio this is a twoyear chart we see that copper is largely underperformed gold for the better part of that. Since the march lows it started to stem that underperformance. If we zoom into a sixmonth chart, weve started to see the copper to gold ratio break above the moving average and just this week on the vaccine news, break out above a major resistance level. This solidifies for me the underperformance and now the outperformance of top copper to gold this gives me confidence in the shape and the recovery of the Global Economic recovery from covid19 so when we look at a chart of fcx here, this is a chart, a stock thats all over the place. This stock peaked at around 2014 of about 40 declined 90 down to 4 in less than two years and now is one of the strongest stocks in the s p 500. And its just on the verge of a massive breakout here above the 20 resistance level so from my perspective, i see an up side target of about 24 in the next two to three months so if the trade structure that im looking to utilize here reflects the 24 upside target that i have here for fcx and the fact that implied volatilities are relatively low here, only bat 10 over the past 52 weeks the trade structure im looking to use is going out to february, giving me about 90 days worth of time and im buying the 2024 call vertical here spending 2 for the february 20 call options and collecting 75 cents for the february 24 calls. Net net here paying about 1. 25 which gives me about a 6 move to the upside in order to break even here for fcx on this trade. Mike, i feel like tony didnt like the periodic table humor, but i think you appreciated it what do you think of this trade . I did appreciate it and i do like the trade, too you know, this is an interesting situation because when you look at a stock like this one, where basically its just appears to be going straight up, its important to remember that sometimes that doesnt necessarily make it expensive. This one isnt particularly actually its trading at eight times less value ebitda sort of awe cried measure to Free Cash Flow there arent a lot of places with potential sec collar tail winds. You have valuation that dont look too stretched to me despite the big rally, i think that actually this is still a good entry point of course, given all the things weve talked about, options are still the right way to do it carter, quick thought the incredible thing is on the low, pandemic low, it was below its financial crisis low and now its come up smartly but its nowhere near where it can go much higher. Coming up, keeping up with the global theme, we look back on our trade on japan and the other big story this week, the race for a Covid Vaccine we map out a path on moderna, next 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. The lack of control whenover my business kai, made me a little intense. But now quickbooks helps me get paid, manage cash flow, and run payroll. And now im back on top. With koala kai. Save over 30 hours a month with intuit quickbooks. 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 to options action. Time to look back at one of our open trades, keeping the global look alive several weeks ago we laid out a bet on japan this is a low volatility etf. That sets up well for making directional bets but it is slightly elevated like many global indices were seeing implied volatility surrounding the election largely. Seeing a little bump there i was looking at the january 63 calls on ewj about 65 cents when i was looking at those and then selling the novembers against it for 20 cents. Net net youd be laying out 45 cents per contract since then, this trade has worked out so, mike, whats your move now yeah, this went right to the strike that we basically put on. What you want to do with those short calls is cover those you can hang on to the longer ones and that same thing actually applies to all of the calendars and diagonals we recommended in november cover the short calls if theyre in the money up next, the other big story of this week the promise of a Covid Vaccine big news out of pfizer and j j well drill down on another major player in the space. Options action back after this 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 visiyou get the freedom ofrn what a 7day return policy. This isnt some dealership test drive around the block. Its better. This is seven days to put your carvana car to the test and see if it fits your life. Load it up with a weeks worth of groceries. Take the kiddos out for ice cream. Check that it has enough wiggle room in your garage. You get the time to make sure you love it. And on the 6th day, well reach out and make sure everythings amazing. If so. Excellent. If not, swap it out for another or return it for a refund. Its that simple. Because at carvana, your car happiness is what makes us happy. Welcome back to options action. Weve got some blockbuster news on the pharma front. Pfizer saying its Covid Vaccine is more than 90 effective that got us thinking about ways to play what is playing out for some of the other drugmakers in the race for a cure. You saw some interesting action in moderna which dr. Slawi said he expects data from moderna in the next few days or so. What are you looking at . Yeah, so moderna saw more than three times the average daily options volume and call sig