The desk tonight, mike khouw, carter worth, and Brian Stutland we begin with another monster week of earnings on tap next week if industrials like cat pillar, travel names like uber and airbnb, to pharma, with america amerck, and pfizer, and apple and amazon, both stocks surging higher, apple up 50 , amazon had feigned more than 57 . Carter, in apple, where is this company headed from here critical week for apple, not only based on its operating results but there are a few key moments in the chart looking first at a relative chart, apple, its pierced to the xlk, the tech sector, the spyder apples performance peaked in the Third Quarter of last year, ten months later we are down underperforming to such an extent, apple versus xlk, that we are on this trend line, for which its bounced five, six times, almost needs to bounce here the undercut of this would be quite fatal. If you cant outperform your group over the last ten months whats going to cause it from here look at the chart of apple itself, the first of several the stairway to heaven, socalled. The question is, stair wisconsins, if theyre straight they go forever. And can we stay on this or does it ultimately break trend . Lets look at the same chart and put in this moving mechanism the 150Day Moving Average how far above that moving average are we well, take a look at the final chart, its also with the 150 Day Moving Average and going back over the past five years this is one of the steepest readings ever recorded i, myself, want to fade this or be careful with it or take some measures if youre long. Its not done well remarkably, despite that stairway, compared to other choices in the tech sector. All right, so brian, youve got a trade here on apple. Yeah, i do. This is one basically to reduce positions, if youre sort of overweight apple and relative to that we have earnings next week, theres a big event coming up. Im going to minimize my risk to the downside im looking at basically buying an october put option, the 190 strike specifically, and financing that by selling the weekly that expires just after earnings, the 185 put for 50 cents. I think the 185 here is a level that, hey, if i get hit on that, im back in the stock and i have to add more down there im okay with it. Its far enough to the downside. Apple basically options traders predict the about 3 to 4 move after earnings and the 185 strike sits a lot lower. Im really counting on this 190 strike put im going to use, sort of as a hedge against my stock position and heres, you know, obviously you see the charts you see the potential, underperformance relative to its peers that apple is undergoing and maybe it outperforms, good news on earnings next week and its allows it to do that theres Downside Risk. When you look at apple its 7. 5 weighting in the s p 500 if i own a portfolio, ive benefitted from owning apple, its run up, and i own more apple in my portfolio, all my stock holding, easy way to reduce sort of exposure to apple by a put dont have to get called away from the stock i reduce my delta exposure like we call it in option trading and still get to participate if the stock continues to move higher i kind of reduce and protect my downside here, and thats what im trying to do is kind of control risk in apple and look for cheap options, which i think they are in october, as sort of a hedge in that portfolio. Mike, do you like this trade . I think i like the trade. Upper end of its historical valuation last 15 to 20 years. They have exposure to china which is a risk that i think in all of this soft landing talk we have this week hasnt been discussed very much. And, you know, the top line is not growing and i dont expect it to. Consumers are a little bit under pressure here and these are expensive devices, some of the things theyve talked about coming out are expensive as well hedging makes a lot of sense. And amazon on deck after the bell wednesday is now 26 since its last report, and mike is laying out a way to play for some for upside. Mike, take it away. Yeah, i mean, this is an interesting case here because, first of all, it is not back to those recent highs that we saw so, i think that if we are kind of envisions, as i said a couple of weeks ago, that it sort of felt like the market is being drawn to these alltime highs. Amazon is still a little bit away from that now, its difficult to talk about valuation with amazon because weem have always used proprietary metrics when they think about it this country hasnt made that much money all Things Considered people talk about gross merchandise value hitting a trillion dollars, seems like theyre on track to hit that and they often talk about their valuation relative to ebidta, and 20 times right now, thats actually pretty much a 20year low in terms of valuation. So if that happens to be your preferred metric, i dont know that valuation is the metric to think about as a trade, but if you do think its going to catch up to that level were looking there on the chart i think it calls for ways to play this. The Options Market is implying a move over aimt over 6 and you could buy a call spread going out to september less than 6 of the current stock price, buying the 130 calls and selling the 147. 5. Youll notice im comfortable selling those 147. 5s because with the skepticism i previously expressed if we retest the highs i have a feeling well have a real bit of difficulty trying to exceed them. Carter, what do you see in the charts well, heres a circumstance of a real lagger that is now playing catch up lets look at the charts first is comparative chart, looking at amazon versus the qqq. It starts in the summer of 2019. We ran up, of course, had the covid plunge and then they ascend together. But thats where the divergence starts, and amazon sinks much more, of course, than the qqq, and now is it having caught up a bit does it have more of that . Lets look at the next element, so this is amazon with no lines, no drawings. The key here is that amazon bottoms much later than the market, markets in october, and amazon not until december, january. But put some lines on it and youll see at least, what my eye sees, thats the same chart, but we have converging trend lines you can see that its bounced to the penny, quite nicely, off the ascending line from the low, and the question is now, do we, as implied by that up arrow, do we break above this down trend line in effect since the markets peak, overall equity peak in december 2021. I think we do. What is your bet, brian, up yeah, i mean, i think the charts are lining up i like using a call spread to play the ups like mike mentioned. When you look at the earnings next week analysts are expecting Cloud Computing sales to be softer the stock has lagged the qqqs for example, but i think the Consumer Discretionary, the am amazon site itself will take the stock off to the upside. For me, 150 not out of the cards. Can investors read anything from a third tech giant that reported already this week that will be alphabet. It beat on the top of the bottom line thanks to strong youtube and cloud revenue numbers, the stock finishing the week up more than 10 mike, leaning bullish according to the reports what are you doing from here we talked about this last week, we didnt highlight an options trade per se but it was one of the final calls we made if you own the stock, you stick with it. The earnings number beat was about 8. 5 , the stock is up only a little bit more than that. Everything i think that was true last week remains true this week it was cheap then, and actually net of the increase in earnings at this point the valuation essentially is unchanged, even though the stock is higher so, you know, for those that own it i would stick with it for those that dont own it, you know, you now have the benefit of having a Solid Earnings quarter behind you, and so i dont think that you should feel like youre chasing if you buy it here. Carter, do you concur thats such a good word, isnt it well, yes and no heres my thinking we actually perchanced on a note on google, an update from mondays report, and its made the case to sell the august 140 calls. What we know, take a look at this cart, heres google with its smoothing mechanism. The next iteration, it is exactly as far above its 150day, 25 , as it was below in october, september, 26 you can only go so far in principle before you have some sort of mean reversion overdone to the upside, i would trim a little bit if youre just long only player i would sell the 40 calls. I would take some measures. Huh brian, where do you stand . Are you with mike, or would you trim, like carter says i would continue to own the stock. I do like the idea of selling that 140 call to carters point, sort of reached its price objective to the upside, and maybe a little bit limited near term, so an august call, for example, perfect, short term expiration, collect a little bit of premium, continue to own the stock. The valuation is compelling to the upside if you ask me we have names like microsoft, amazon, meta, those are all actually in Large Cap Value s p 500 index. Google is not. Alphabet is not. Thats one stock i would add almost to a value play relative to those other names thats a stock we like owning and sort of a replacement for consumer services, and advertising kicker and everything else. We love google but selling the call makes the right sense for the next couple weeks. Still to come, shares of bud have been a dud since the spring when sales of their once top ranked bud light started to tank over the last month the stock has started to make a comeback will earnings help them tap into new investors . For everything options action, check out the website and news leert letter, more oa after this. Calling all options action fans, tweet us your question at options action. If its nice, well answer it on air when options action returns. Thinkorswim® by Td Ameritrade is more than a trading platform. Its an entire trading experience. With innovation that lets you customize interfaces, charts and orders to your style of trading. Personalized education to expand your perspective. And a dedicated trade desk of expertlevel support. That will push you to be even better. And just might change how you trade forever. Because once you experience thinkorswim® by Td Ameritrade theres no going back. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Good luck. Td ameritrade, this is anna. Hi anna, this position is all over the place, help hey professor, subscriptions are down but thats only an estimated 15 of their valuation. Do you think the market is overreacting . Howd you know that . The Company Profile tool, in thinkorswim®. Yes, i love you please ignore that. Td ameritrade. Awardwinning Customer Service that has your back. Welcome brack. It is late july when its as hot as it is in new york you might find yourself reaching for a cold one the controversy surrounding bud light is taking a toll on sales and the stock, down over 10 since the start of may but is the tide starting to turn . Mike goes cracking this one up for call to action mike. You know, its interesting, i was taking a look at the last year of ownership in our long only strategy and one of the longest holdings weve had, and we often trade catalysts such as earnings, it was Constellation Brands and Constellation Brands has been the net beneficiary of a lot of controversy that theyve been facing since the beginning of the second quarter. That spread between these two stocks is really remarkable. Were talking about 32 outperformance for constellation relative to bud. And actually, if you go back ten years youre looking at a company thats essentially trading at the same valuation, overall about 200 billion i think that we might be getting some potential upside here because at some point this is going to break and bud light is not their only product. Im not going to say theyre completely out of the woods here were about to find out essentially how much damage has been done because we havent really seen or heard the impact. We havent had an earnings quarter where enough of that has been available for us to find out. But im inclined to make a bullish bet in part because i can use options. Options premiums are not reflecting a great deal of volatility theyre essentially trading at twoyear lows. I was looking at a shortdated call spread,the 6065 call spread is what i was taking a look at, spending 1. 40 or so for that if the news turns out to be better than expected, thats a way to play this to the upside theres bad news, and weve seen that in the underperformance over the past three, four months. What do the technicals say, carter well, you know, that thing you started with, bud is a dud thats sort of but the question is, is it so bad its good, is it such a dud its worth playing . Thats the circumstance. Lets look at two identical charts, the first just to put it in perspective, this stock peaked in 2016 the autumn i mean, you know, youre talking about half a decade or more ago, down some 76 . But its been trying ever since to get back on the horse lets look at the same chart and put trend lines in what do we know . We know that it is flirting with moving above that down trend line, in effect since the 2069 you do it, im a beyer. Brian, where do you stand yeah, i mean, given the branding controversy around it, options are chief, thats the way to play it theres serious Downside Risk to try and catch a falling knife. 50 could be the downside and you use a call spread to play the upside, very cheap as mike alluded to with options, use the call spread to play the upside and get the bounceback turnaround and upside potential there. Switching gears, uber is set to report before the bell on tuesday. Its been a hot summer for the stock, up nearly 60 , just since the start of may brian, what do you do . With earnings coming up im playing that earnings front, use a call spread, similar to what mike talked about, using a buy of a near term call right here at the money selling out of the money calls, looking specifically at the 47. 5 strike call, buying that, selling 54 thats sort of a price target off of a head and shoulders bottom partner that looked to be calling. That its price target i expect. With earnings coming up this stock can move on earnings, weve seen it move 6, 7 after earnings, that would put me through the break even point on the trade of 4960 break even catalyst earnings next week, this is a short term bet where im trying to make basically a 21 payout on my money and theres upside i mean, if people are paying 2 grand for taylor swift concerts theyre okay spending extra on uber well see that on the earnings report, playing the Consumer Discretionary turnaround weve seen in the last couple months here. Carter, what do you see in the charts im with you on this. Taking the other side. Its a great chart, i think theres the testament to momentum and relative strength, its not quite exploited but i would point out maybe something thats perhaps more important. We know this stock, it was may of 2019, ipo at 45 a share. And the worst one day u. S. Dollar loss in history of any stock on its ipo here we are at 48, just getting back in the green from its ipo i think you play this, and you play it with confidence. Mike, would you play it with confidence well, you know, interestingly i think when you use a call spread you are able to play it even if youre not that confident. I think thats kind of the idea here because, you know, the market definitely seems to have some momentum i dont think were completely out of the woods despite the cheery Economic News we got at the tail end of this week, i still think there may be other shoes to drop. The fact is the wind is at our backs in terms of long equity. We have seen research has shown selling a lot of premium going into events like earnings isnt necessarily a great idea particularly in stocks that move a lot like uber does call spread is a great way to play this . Brian. I wouldnt call it a lotto ticket but educated bet to the upside not going all in on my whole portfolio, but play around, educated bet that has a very likely payout of 21 payout playing to the upside. Thats how im using it, sort of this not quite lotto ticket but educated lotto Ticket Purchase to the upside. Up next, well mine into a trade mike put on in a struggling down component. Tweets are still ahead options action will be right back hi, im denise. Ive lost over 22 pounds with golo in six months and ive kept it off for over a year. I was skeptical about golo in the beginning because ive tried so many different types of diet products before. Ive tried detox, ive tried teas, ive tried all different types of pills, so i was skeptical about anything working because it never did. But look what golo has done. Look what it has done. Im in a size 4 pair of pants. Go golo. soft music welcome back, lets take a look at open trades, last week mike played out a way to play 3m into earnings, its up 7 this week mike, what are you doing now yeah, so first of all be sure to follow us on twitter. We did provide an update midweek after we got that pop and suggested people could either take profits or roll the long strike of that call spread up, or up and out, so that essentially youre playing with house money. Of course the interesting thing is, i would stick with options if youre inclined to continue to play upside in 3 m here, the reason for that is that although the earnings result, pfas chemicals and states are not inclined to go along with the settlement and that provides an overhang for Companies Like 3m for quite some time. Your take now on 3m carter . We published a note, a followup to the buy 3m note, probably right to take it. All right, up next, your tweets and the final call. You ok, man . The internet is telling me a million different ways i should be trading. Look whats up my trade dogs . You should be listening to me. You want to be rich like me . You want to trust me on this one. [inaudible] wow yeah its time to take control of your investing education. Cut through the noise with bestinclass Education Resources that match your preferred style of learning. Learn your way. Not theirs. Td ameritrade. Where smart investors get sm