Transcripts For CNBC Options Action 20161204 : vimarsana.com

It could be your signal to make serious bread. The action begins right now. So whats the way to play catch up if you missed out . Health care stocks really have to do with what people to be the next policy and how it may effect those sectors. One that got a huge pop right out of the gate was health care stocks. It has given a lot of that back. It sets up pretty interestingly. A lot of the reasons have more to do with surging rates and the dollar. Its the dollar implication. All of these are good yielders too. Rates going higher they look less interesting. I think its not just the fact they have given back has little to do with the rotation and whats going to happen under the next administration. We have talked in the past that high dividend paying stocks but actually if you take a look and compare it to what ten year rates look like a lot of big names trading 15 time ors les o they dont look all that expensive. There is the principal at work here in many ways. This group, area of market was a huge performer, specifically bio tech and this was a disaster and last year was a disaster. The spread just year to date is down 5. 5 . At some point it doesnt last. All right. Lets get more here about a trade here. This is the enare ji select e etf. Health care. Xlv. Yes. They all yield abo. What is interesting here is we have a chart. Its the worst performing in the s p 500. I think you want to set up and i think they will raise rates 25 points. You could see the dollar stop going up. You could see rates stop going up. One of the things i want to do where well have two extra days off, i want to do a trade of the xlv where ill gobe selling it. I want to try to cap what is the trade here. When it was trading 68. 5 here you could sell at 80 cents. You could buy one of the january calls. You could put it on for a 75 cent credit. This will make money. As the stock moves down youll have losses and then youll have losses below 66. What i want to do is define if things really go sideways far couple of weeks i have a really wide range here. I like these strategies but the downside would be relatively small. Because it is a relatively low space you end up finding those are pretty tight. This is about 2. 5. And think about what buying a january call over the next two or three weeks will decay. I am trying to set up something. Right. I think the key thing you started with is it moved post election. It is this pull back that provides the entry point. It looks almost the same. If one wanted to get more juice you could do that. But im looking for the reasons i stated about the yield, about the performance. And the downside is going to be relatively small. Johnson johnson will not take a big header. As noted, the financials have been a standout isnt the trump rally. Take a look at visa and mastercard following a 9 and 5 since the election. You say there could be more pain ahead . It is interesting. Visa i thought would focus on that. Visa duoesnt trade like a financial. It trades more in line with tech. A couple of things bothered me. A twopanel chart. The situation is as follows. We were able to break out. The relative performance, visa was never able to make a new high. It hasnt made any net progress. It head highs as recently as a couple o couple of weeks ago. I didnt make this fit. This is the absolute low over the last three years. Thats your sort of flash crash low. We have broken trend. To my eye well come down and basically touch. Even if you want it to be moved up a bit its higher than that. All right. How are you trading this . It is interesting because it has been a real success story. We have things we are looking forward to. We are looking at a little bit of margin compression. For example, getting the affiliation card they are basically giving up more incentives. I think one of the areas they have done very well is continuous growth. They will probably not see as good growth in either of those areas. Because the stock has the cost of options that has taken up a bit. Im looking at the 75 65 spread. You could buy it for 345 and sell. It of yfset. It is a really difficult time to own options especially if everything goes kerplunk. You know, maybe are just sort of kind of continuing this upward trend. It will be a hard way to make money to stay in the game. A strategy is if youre look out to march maybe theres a way to finance it by doing the calendar. Maybe its buying the longer dated one. The other thing that stands with the behavior of certain consumer names which is come to light. They are showing some sort of accumulati accumulation. They are really retail stocks. So its heavy. Mastercard is heavy. Something is not right. Some of the data we have been getting also indicated they are very strong. It just goes back to potential future growth. Both of these will probably not see the expansion. And you think that visa, mastercard and papy pal feel the mastercard, paypal going down when the market is going up. Send us a tweet. Check out our web site abdomen while youre there check out this out. Here is whats coming up next. Soft commodities have wilted this year. There is something that suggests now is the time to buy. Well explain. There is one more way to make money in crude. Well break it down when we return. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at Td Ameritrade. Generosity is its oyou can handle being a mom for half an hour. Im in all the way. Is that understood . I dont know what shes up to, but its not good. Cant the world be my noodles and butter . Get your mind out of the gutter. Mornings are for coffee and contemplation. That was a really profound observation. You got a mean case of the detox blues. Dont start a war you know youre going to lose. Finally you can now find all of netflix in the same place as all your other entertainment. On xfinity x1. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade melissa, it has been a big year for commodities. Not everything has participated in the rally. Take a look at copper. Up over 33 pkd. Gold and silver up. Crude oil up. On the flip side the soft ags tied to farming are getting dragged through the mud. Corn is down and wheat down 14 and sitting close to a twoweek low. Soybeans are up year to date. Whether every or not soft ags can firm up remains to be seen. So you said this could create a buying opportunity. Lets put it in context first. So commodities run the gamet. What i thought i would set up here is the current spread between what you call softs or food stuff and raw industrial commodities. So the optics are clear. The blue line is raw industrials. The green line is food stuffs and in the middle orange is all commodities. So this is the chart absolute. If i were to freeze all commodities and hold them as a constant across the screen there is the orange line. I will expose the spread. There they are absolute, five years. Raw industrials up here, food stuff down here. Here is the spread. Lets do it even longer term. This is since all data begins. So 15 in iert direction. What happens Going Forward . Everyone loves one thing and hates the other. So these are the data points. This is the relative performance to materials. What you see is outperformance in every time frame whether its the median to mean. Where we are in the cycle now, this is already starting to outperform. We would bet it is going to continue to play in line with history. A rare circumstance only happened five times. The spread is extreme and everyone loves this and everyone hates this. I think i will take the other side. Mike, whats the trade off of this . I think a really simple way to handle this is sell the january. Thats basically trading sideways through january. It is at a very favorable level. Ye yeah. And the only other thing is i think it sells itself. Im not selling anything. Zb i dont mean it like that. If you really think this thing this stock has been cut in half. You want to set yourself up with a bit more time and the bit more profit potential. If we look at the chart and i should have looked at the chart itself. It is a gradual bottoming out you can see it there. I dont think you have a lot of downside. You could get that. And 75 cents on an 18 stock gi in just over the month. You can do it again and again. Ashe metric. It doesnt speak to the opportunity. And you talk about a gradual reversal. You dont like this at all. No. Thats all right. No, but i think we are talk about two different strategies and we are buying what youre selling. There you go. Oil posted its best week since 2011. Its great news for all of our traders. Well tell you why when we return. [pony neighing] what . Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at Td Ameritrade. Its how adventure begins. Credit card. And with the miles you can earn, its always taking you closer to your next unforgettable experience. Become a cardmember and start enjoying benefits built to take you further. Like group 1 boarding. And no foreign transaction fees. Plus, when you fly on american airlines, your first checked bag fee is waived for you and up to four companions. Every purchase with the citi® aadvantage® platinum select card takes you closer to adventure. Whether its somewhere you can see your breath, or a place that takes it away. Apply today for a limited time offer and earn 50,000 aadvantage® bonus miles after spending 3,000 in purchases within the first 3 months. By using the citi® aadvantage platinum select® card, you can begin to pack more into your adventure. Become a cardmember to enjoy these benefits. Apply today. Visit citi. Com travel, or call 8773597828. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at Td Ameritrade. Mike has a trade ton uso. You can spend about 30 cents for that. They havent gotten their act together in a long time. We got an assist there. The question is there follow through . That part is unknown. If you have good profits you might want to move along. It blew right through the we are actually short. If you more than doubled your money there is no shame in taking some profits. It will be worth it. You would want to take profits even if you wanted to press. All right. They arent the only ones basking in glory. Dan, what are you doing with this trade . It is 7 wide. It costs about 4. I guess in agreement with these guys it moves to far so fast i think you could see consolidation. It happened and no one ever trusted them before. I dont know why they start now. I would like to see them consolidate and move up and ill look to get back in. I think at this point its wait and see. We have to start seeing inventory data. To prove they are sticking to it. The disagreement was it should be you, not me. It wasnt that big. If it was really game on you wouldnt go up. You would put on six or seven. You would get it to where they believe it would be. Right. Didnt do that. Once it goes to a certain point and then we are back in that. A lot of the industry isnt the united states, a lot of these have been recapitalized. They have gone down. When you recapitalize you flush out the old. It is substantially lower. You can expect production to increase. All right. Coming up next the final call and your tweets. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade what . Pony neighing] hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at Td Ameritrade. Time for some tweets. January 120 calls for facebook. Incredible setup. Over fake news. Going right back 125. My facebook evaluation looks fairly decent. The chart doesnt look so great. I think january 120 calls are probably not a bad way to play it. It is not just facebook. Its amazon, google, people who dont pay a lot of taxes or pressure. There is a gap at 125. What do you think . I suspect 110 soon. Okay. Very direct. Next tweet asks any trade you have gold plunging and bond sinking. I think you either do a risk reversal. I think it has come back and at some point you get a throw back here. We saw big buyers yesterday. We highlighted it and i think its a decent way. Give yourself at least 90 to 100 days. I guess whats the fundamental reason to do it . There isnt a fundamental reason for gold. Its not a safe haven you have to have . No. Thats nonsense. And too late to buy puts in the tlt into the fed . I think a lot of people calling for a bond crash for a long time. They wont make the same mistake they did last december. They will raise and i dont think they will do another 100 basis points and i think you see bonds moderate a little bit. Short end of the curve isnt going to short term rates will be a little more helpful to you. All right. Final call time. Carter, kick it off. I would wand to play the commodity card. Visa also but dan. Our time expired. See you back here next friday. Mad money starts right now. Announcer the following is a paid advertisement for the shark rocket complete with duoclean technology, presented by sharkninja. To get your carpets really clean, you might think the bigger the vacuum the better. But big means bulky and heavy. Is that really what you want . So shark introduced a totally new idea with the original shark rocket ultralight upright and nearly 2 million have been sold. With true no loss of suction. The power to deepclean carpets and floors. And the versatility for abovefloor cleaning, too