The action begins right now. Lets get right to it. Because it was the best day of the year fort dow but despite the rally there are signs in the bond market that not everyone is getting on board. Lets get in the money, dan, what do you make of that . I think an environment where weve been in, we have banks moving, they like the fact that rates have moved up but havent gone a heck of a lot of late and the fact of the matter is you have a treasury yelled at 2. 5 and the stock market feels pretty good about it. It seems like they could move together for all intents and purposes. To never problem that you have to me, i think the problem that you have here, though, is that theres nothing out there in a week that we saw the fed suggests these guys will get hawkish too quickly. Its set up for something. I dont know about the fed getting hawkish. The fed is going to influence the short end of the curve more than the long end. When people are worried about what the longer rates will do, were looking at Economic Growth and inflation. Basically discounting that back to right now. We, obviously, got a pretty good looking jobs report. Thats just one jobs report. Revisions will follow and could very easily be a revision downwards. Bonds were weak for a while. Weve had a very big move in long year rates and it would surprise me actually if they didnt stabilize here or go a little lower while people are digesting whether trump will mean real growth. Right. The headline number was upbeat. We know back two months, the net are revise down. It was all about wages. There was no movement in the average Hourly Earnings or work week and i think its also a tell that weve been stuck in this range for a long time. What will get us out of this range . I dont think anything for now. While everyone is expecting higher rates, i think its time to be contrarian and expect some giveback in the long end. So you say the bond blood bath could be coming to an end here. Lets look at charts and see if we can figure out together. Ive got the 10year yields. You can see that here. So, what, lets see. You can draw some lines like this. I mean you can clearly say that has that look to it. But in many ways if thats the neckline, its sort of completed what its supposed to do and gotten back to the high. You also could draw the lines like this. What im thinking is that not only have we completed this were at a difficult level, but that were going to give back a big part of this socalled, you know, trump or postelection move. In fact, were we to come down, to trend, that would be a move to about 2. 15. The low 1. 3. We doubled to 2. 6. Were here at 2. 4, that would take you to 2. 15. 2. 15 not a random number. 10year chart of 10year yield 2. 15 often you revisit before going again. So a pull back to trend here. Thats about 2. 15 as well. 2. 15 is exactly a giveback on the shortterm trend. 2. 15 is where you would be were you to check back the point at which we moved higher and so here is the tlt. Its the re. I pro call, right . This is what my eye sees. Take it away. Put it back. I think were going to bounce here bounce here. Im anticipating a little bit of a bounce here. Shortterm chart its not random that we held these lows. This is tlt. I think were going to work our way like that. Which ultimately would be the same thing as a move in yields back to the 2. 15 plus minus level. So are you bullish as well . Yeah. For the reasons we just discussed. Were not going to retest those tenyear rate lows that we saw within the last 12 months. Looking at 1. 45 or Something Like that. I think thats ridiculous. But i think were in a show me state as far as the bullishness and Economic Growth forecast that seems like a lot of the investing world took on after the election. At this point i think people getting skittish would be be bullish for bonds. One Important Note is that bonds dont move around that much. Although options premiums are quite cheap, there is a good reason they are so cheap. And even though it doesnt cost that much, i will look to offset the decay. And spread the trade. What i was looking at is the april 126 call spread. You could spend 2. 35 to buy the 120s when i looked at that today, sell the 126s for 65 cents. A net spend of 1. 70 looking at just 1. 5 at this level. About three months for this to play out and thats the way you make your bullish trade here. Do you like this trade . I do. You make a technical case. You have the jobs number, the fed. When you look at this youre looking for a checked package. Not looking for a massive bounce off the up trend in rates. Mikes trade targets that check back to 2. 15. That being said, we get and then they start going higher again. At some point a lot of people believe theres no stock market bubble. Its been a bond bubble and thats been going on for years now and at some point it has the potential to overshoots to the upside. May 2013 where did the 10year yield get when we had the paper tantrum, 3 . The stock market was like much lower than right now. So at some point, the Equity Investors want to see rates move. Thats the thing. Look, you can never get anyone to do something when it seems so obviously wrong. No one wanted to buy crude at the bottom and guess what, no one wants to sell it. Its not going anywhere. No one wanted to buy banks and now you cant get them to sell it. No one believes rates are going lower. Take the road less traveled. To your point, considering the kind of move that you could potentially see, weve seen it already. 100 basis points move in no time. The idea that you want to get net long bonds. After a 30year bull market in bonds is stupidity. Youre taking massive risk for minimal reward. The option trade lets you play for the small amount without risking a great deal. Do you think this means financials will stall . You can see the chart if you do the bkx index the sideways action . Rates has been same thing even with the socalled news that maybe there will be a change in the environment. Banks have not made new highs. Theyre still stuck in that range. Moving on to another big story. This week snapchat filing for an ipo and many comparing it to the likes of facebook and twitter. Josh lipton has the details from san francisco. Hi, josh. Some investors might think of snap as the next social media super star and that immediately might draw comparisons to other Tech Companies focused in this space like facebook and twitter. Snap described itself in different terls though. In its filing snap calls itself a Camera Company, the word camera highlighted almost 80 times in the filing and that could draw comparisons to gopro which investors might not appreciate gopro reporting disappointing results this week. Lets take a look at snap and how its performance does stack up with facebook and twitter ahead of their ipos. Start with the top line. Snap generated revenue about 404 million. Twitter, 317 million. Facebook, 3. 7 billion. As for who lost and made money, snap lost 515 million in 2016, twitter lost 79 million the year before its ipo in 2012. Facebook raked in a net income of 1 billion in 2011 and when it comes to users snap only disclosed daily active users in its filing, 161 million, twitter had more than 100 million at the time of its filing, though it no longer provides that metric. Facebook crushed both with 526 million. Of course, the grand hope is that the company into the next facebook, but many are comparing snap closely to twitter. For example, brian wheezer of Pivotal Research says snap like twitter a niche platform in his opinion and snap would maximize the value of enterprise by improving the core product for consumers and advertisers not trying to be ubiquitous for its own sake. Thank you. So dan over here is suited up. To what do you mean . Heres the thing. These are my snap spectacles i ripped off my 13yearold daughter this morning. Heres the thing about this. Thats really interesting. Go back to 2011 and the link up to the ipo, 2013, back to the twitter ipo, and alibaba in 2014, we heard the same sort of nay sayers about all of those ipos. Those were sort of niche for all intents and purposes. Snapchat is niche but one of the interesting things about this company, it is not they dont see themselves as a social media company. They see themselves as something different, a Camera Company and a Growth Opportunity for a company that has 158 million active users it is niche right now and a really tight demographic and they can go to a lot of places. I do see the similarities to twitter and twitter of that group we mentioned the only one that flamed out for all intents and purposes. Theyre talking about a 25 billion valuation for this thing. Flamed out in the long term. Is think is real. Lets not forget that stock prices. Facebook traded on the syndicate big going out and lookeded terrible. Thats fine. The question for people looking at this ipo will be, should i be buying it right about that time and i would issue this caution, weve seen that exercise before. The longterm story doesnt necessarily mean you wont face some very significant shortterm pain. Is this good for twitter . You have a twitter trade. I think when people think about snapchat and their limited financial and history that they have right now, twitter has 2. 5 billion in trailing month sales it is a 10 billion enterprise value. I think it could make twitter look interesting, they report thursday morning before the open. Its move on average over the 13 quarters since its been public about 12. 5 . Whats interesting to me here the stock is up 8 on the year, sentiment couldnt be worse, only five buys on the stocks, 28 hold, eight sells. Theres a price target, average 12 month price target 16. 5 below where its trading. I wouldnt be buying the stock here. I think the quarter will be good, guidance bad. I think the run up to the snapchat ipo could be good for this relative valuation okay, so heres the thing into the print, the stock trading 17. 70 and look to a risk out in june exper operation, sell the june downside, the june 15, use the proceeds to buy the june 20 call. It gives you a lot of leeway. Five months or so. That stock as it goes up towards the long call strike you will make money, down short put strike you lose money. The worse Case Scenario the stock is at 15, has an 8 billion enterprise value down there. All you can say is trade. Nothing wrong with that. People make fortunes trading. As an asset and premise its uninvestable. It was at 75, christmas 13, here where are at 17, a oneway story down to the right. At some point can you make a trade there well there is a bit of an exception to that. A round of current evaluation of valuation of 12 billion or so. There has been this tepid response by the street. Every time its gotten down 15, 14 youve done the trade several times and several times its been successful. I like that because relatively speaking social media Party Somebody will figure out how to make some money. With an 8 billion valuation. You dont need them. I got them. Are you putting bunny ears on me . Yeah, right. And youre puking rainbows. Got a question send us a tweet. For everything op opgss action check out our website. We have this weeks super bowl winner. Just wanted to see if you were listening. While youre there, check out our super cool news letter. Heres whats coming up next. Mom, dad its evil dont touch it. Thats what traders are saying about one Crucial Group of stocks. Well tell you what they are and what it could mean for the rally. Plus, how would you like disney shares for less than a dollar . Okay, its a deal. Youve got it, mickey. Well show you how to do it when options action returns. 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. 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. Welcome back to options action. Im Julia Boorstin in los angeles. Its a busy week for media earnings with a slew of reports. Fox on monday afternoon and disney tuesday time Warner Lionsgate and viacom on wednesday. Hot topics in focus, advertising revenue, the health of the tv bundle and what trumps presidency will mean for regulation and deal making. Fox fresh on the heels of the super bowl will likely give an update on the big boost from the big games ads and could face questions about turnover at the flag ship news network. Lions gate about to boast for the benefits of la la land with a record seven golden globe win and 14 oscar nominations. Time warner will focus on what and when the acquisition of at t will close and what the Telecom Giant is getting in that dial. Viacom is likely to focus on the turnaround plans under ceo bob backish on the heels of weak performance from studio paramount last year. The biggest focus will be on the biggest media giant disney, reporting after the bell tuesday. With lingering questions about the future of espn and disneys Media Networks division. It stusds yo coming off a record year with four of the top five films of 2016, and a number of big film franchises ahead. Last quarter ceo bob iger was confident espn would adapt and succeed over the long term and near term the company deals with issues. Well see what kind of update iger gives tuesday afternoon. Melis melissa, back over to you. Thank you very much. With all eyes on disney, how to you play the stock beyond earnings . Mike is at the smart board with all call to action. Sure. Were going to talk about the use of a calendar spread. One of the reasons youll use spreads generally speaking, number one to reduce cost or risk. Also in this instance, were really looking to profit from time decay and, obviously, always helpful, improving the near probability of success. Taking a look at this, we can see disney has had a very strong run up over 20 off its recent lows. The trade were going to look here is going to be leaning in the same bullish direction but only mildly so. This is a stock that moves 6 on average. Specifically what im looking at is the february march 1. 15 call spread. You can buy the march calls for 1. 25 and sell for 60 cents. Thats a net debit of 65 cents. And the idea here is, that you kind of want at february expiration for the stock to run up to the strike. These options will decay away and youll own the marches for just a net cost of 65 cents. This is basically a trade to the upside looking for maybe a four or 5 move which is slightly less than average. Do the charts align with this trade . Well i mean, its come a long way day to day. If you were to judge the october to february advance from 90 to 112, its fairly mature in terms of magnitude. 12, 13, 14 weeks in the making. The one thing we can say its not a popular stock on the street. Youve got a price target on wall street only a few dollars higher than it is now and youve got analysts equally split between buys and sells, theres not a lot of love for it. That might help you out. I think it will help. Its interesting, the street loved this thing when it was trading 22 times forward earnings and now its trading 17. 5 times forward earnings and people cant get their arms around it. I find that interesting. So you know, were not looking for a breakout situation from these prices after such a strong move but it trading at a discount to the market. Espn is a strong brand for anybody who has cut the cord. I tried this. Losing espn is a tough thing. What did i have to do . I had to buy it right back. The stock incorporates a little bit of igers past comments saying espn is going to adapt and a lot of enthusiasm about the star wars release. And everything like that. I would say with the trade structure, you can tighten up a little bit. Youre looking at 4 out of the money. I would be shocked if you had a massive gap after the run the stock had and then setting up for a move later on. Its got to consolidate these gains but the strategy makes total sense. Selling short thats a very good point. The thing is, on the regular options what do you have, five dollar strike . You can go 110s slightly out of the money to the downside, or 1. 15s to the upside. I was taking a bullish stance. And thats the reason i selected those strikes. Up next, shares of ups getting hammered this week which is great news for dan who more than doubled his money against the stock. What is he going to do now . More options action right after this. 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 and the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. 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