In. The action begins right now. Lets get right to it. Another record setting week for stocks but a potential warning sign has appeared in the market as stocks hits all time highs treasury yields have been sitting year to date lows. Whats behind stocks and bonds rallying together and what does it mean for the market. Lets go to the money right now. Well, obviously u. S. Equities are some of the strongest around the globe here. Theyve kept that bid. Theyve broken out to new alltime highs. The fact that bonds are rallying right now says something differently. When you take a look at the performance of the s p some of the best performing sectors are all intensive. Health care, Consumer Staples this year, it doesnt exactly speak to some sort of refellation trade and that is something thats due to be bond proxies also. So just because the s p has made 19 or 20 new highs this year doesnt exactly speak to a particularly healthy thing especially when you kind of overlay the fact that you know, persistent low bond yields for the last couple years had been something that Equity Investors had been worried about. At the same time though low bond yields are two side to this. Thats right. I mean, it does help from a discount rate perspective but one of the reasons that the rates have remained where they are is because of some of the Economic News that we saw this week. Capitol goods orders werent as strong as someone hoped. Theyre lowering what were some ambitious growth estimates so i think when you take a look at that the reason that youre seeing rates where they are is because basically the forward look is lower than it has been and then of course it would be justified. You need to see signs of Economic Growth and you need to see material signs of inflation which people might expect when you have full employment and maybe thats false full employment. You would need to see for rate to go higher. We know that twoyear money is holding up as tenyear continues to weaken and theres a message there. The real thing is this. Reporter that if you its independent financials. Risk off has been in effect all year long so december 9th, relative performance of industrials, financials peaked. Theyve all been underperforming and theres nothing that suggests thats going to change. He just mentioned financials and bank stocks have underperformed this year. Bank stocks only up 2 . We know a lot of them really outperformed immediately after the election and from december 9 ths have gone sideways. When i look at a stock like Goldman Sachs and i look at the way the stock have acted down from its 52week highs made on march 1st in that is a really bad quarter that they printed. When i say really bad, it was on a relative basis to a lot of their competitors was not particularly good. Goldmanns considered best of breed. M and a backlog is not what people expected. The stock went down 5 the day after the earnings and the thing has not been able to recover. When i look at this i see a big air pocket between 220 not far below where the stock is trading right now down to about 200 bucks. That is the proposed brexit lows last june. I think you want to look out to q 2 earnings that are going to come on july 18th. I think that stock is going to fill in if you want to call it a gab down towards 200 here. And option prices are relatively low right now especially the time where this stock is trending lower. Its making a series of lower highs and lower lows so to me the trade is simple. Look out to the july expiration. When the stock was trading at 220, 250, you could buy the july 220, 195 put spread paint, 5 for that. About 2 and a half percent of the underlying stock price. It breaks down at 215 and your max gain is up to 20. That may be little aggressive but heres the other thing i wanted to say about this trade. This stock has outperformed since november 8th versus the s p 500. The s p is up 13 . I have to think at some point in the next couple months we are going to get a broad market selloff and i think bank stocks will be right in the middle of it its not just goldman. I think q 2 earnings could be that catalyst for bank stocks to go lower. Do you like the target of Goldman Sachs specifically . If we take a look at the last Earnings Results we saw that Morgan Stanleys fixed income trading revenues were actually doing better than Goldman Sachs and of course they have the Asset Management business that is a little bit stronger than goldmann as well. So if i was going to look at these, id rather own morgan than goldmann. This thing isnt going to decay as quickly once july expiration approaches as short dated options typically would. So it makes a lot of sense even though if you take a look at it on evaluation basis you say okay, maybe 12 times earnings it looks two times tangible book but i think this trade make as lot of sense here. Its not specific to Goldman Sachs. That is the trade weve got here. If you look at regional banks, if you look at other investment banks, they all if we look to the air pocket there that can be filled theres a minor head and shoulders top thats forming and the burden of proof is on the bull. Even though theyve outperformed from before the election, goldmann has underperformed since november 11th. Its gone down relative. Would you apply this to the regional banks . I would. I guess what really got me going is the fact the stocks sold off 5 . That was a huge number on one day after the q 1 earnings and i think if they put up another quarter that resembles q 1 i think theyre going back quickly. And its a nice bounce post the earnings. Now to gold. The precious metal hitting its highest level in a month. What are you looking at . It does look pretty good. Lets go look at these levels. We can figure it out together. I want to start out with something that is not about the trade. If youre sitting at home at any point this weekend or you get there on a monday or tuesday and anyone ever tells you its not a good investment, i have picked nonrandom timeframes. This is gold versus the s p mplts that is from november 11th, 2007, the prior absolute peak of the market and the winner is, gold. Et lease go to the next timeframe. Nonrandom timeframe. This is a longer term and what this is is from the absolute peak march 24th of 2000. This is 17 years ago and this is gold versus the s p. Now, you would say okay, what stocks have dividends . Okay. I have that. Ready . This is with reinvested divid d dividends and what you see here, yes, we know that dividends are a big part of your total return. In fact, more than its still a blowout. Lets go on to gold now. Just if anyone tells you gold is not an investment you tell them that. All right . Here we go. How do you draw the line . This is a longterm chart. What my eyes sees is this. I think you have a nice well, call that tension. Lower highs, higher lows, somethings about to give. Lets put this in a few more contexts. This is very important. Same top chart but the bottom is relative performance to all commodities. So even as gold has been going down, golds performance relative to all commodities whether its tin or copper or nickel, oil, natural gas, cocoa, pork bellies are up. Thats very important. Next chart. So heres the here and now. I think we have this. Here are the lines. Okay. Were going to draw them ourselves. Here we go. Oh, theres a computer. Watch this. Up arrow. Thank you, computer. Up and out. I want to be long gld. So how are you trading gold sf. Im looking out to august. I think you can buy the 121, 127 call spread when i was looking at that earlier today those 121 calls were 265. You could sell it for a net of over a dollar 80. Thats math that we happen to like and i want people to think about this. To carters point as an investment, land can be an investment. Doesnt necessarily generate income until you put a hotel or Something Like that on it so investments can be assets and i think thats what hes referring to although i havent been much of a gold bug myself. If you start seeing investment flows into emerging markets and away from here that would weaken the dollar, that would be bold for gold too. And we have seen that in the equity performance. But do you necessarily have to believe that the stock market in the u. S. Is set for a pullback to be a believer in gold . Well, i dont think so. You know, there was a really interesting occurrence this week and obviously coin got a lot of attention with the surge that it had, but the bit coin surpassed that of the gld and we know theres trillions of trillions of dollars of gold reserves out there but when we think about gld we think of the inverse relationship to equities and we think about traders using it as a way to position the decline. That got me thinking about gld the same way youre thinking about it. If theres some truth to this and if we are to have a rocky period this summer, owning that 127 call spread many the gld looks like an easy one especially with how cheap options are. Some people would obviously like to buy the equities because you get much more equity out of gdx. Gold miners if theres going to be a move, either is going to work. Got a question, send us a tweet to options action. Check out our website. Our newsletter makes for some great beach reading. Heres whats coming up next. You want to see something really scary . Check out shares of general motors. The charge point even more pain. Well tell you how to profit. Plus, heres what shares of amazon are doing and if you want to lock in gains, well show you how to do that for free when options action returns. Futures now newsletter. Youll get the latest news and a sneak peek of our latest interviews. Sign up now on cnbc. Com fewers now email. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. The future isnt silver suits anits right now. S, think about it. We can push buttons and make cars appear out of thin air. Find love anywhere. Hes cute. And buy things from, well, everywhere. How . Because our phones have evolved. So isnt it time our networks did too . Introducing americas largest, most reliable 4g lte combined with the most wifi hotspots. Its a new kind of network. Xfinity mobile. Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at Td Ameritrade. Welcome back. Amazon hitting another all time high. Reaching 9. 99. Be shares so close to 1,000 does it mean its time for amazon to split its stock . Hey, melissa. And that depends. If amazon wants the glory of 1,000 stock thats a club that only has four members then its just a few bucks away. But if amazon want the presteej invalidation of the dow it will have to split. Amazon is nearly four times the price of the currently highest priced stock Goldman Sachs and its 36 times the lowest priced one ge. Amazons sky high tag would throw the index all out of whack. Amazon has only split its stock three times since its ipo and the last time was 18 years ago. Just this week he had no plans for a split any time soon. Additionally amazon might have to pay a cash dividend, something that it has never done. Thats not a requirement but every name currently in the index does it. Again though, this may also be unlikely for amazon considering theyve never been shy about using cash to reinvest back into its business. The other reason for amazon to hold out is the socalled curse of the dow when they underperform their replacements at first. Apple shares were approaching 1,000 bucks it did a 7 for 1 split and then fell 17 over the next 12 months and it took nearly two years for shares to hit another record high. Alternatively at t popped about 17 when it exited the dow. Now, by letting its stock run up though amazon is becoming less and less accessible to younger and mom and pop investors. All right. Thank you very much. So if you made profits in amazon weve got a way to help you protect those gains. Dan is over at the plaza with this call to action. Its trading at all time highs its about to ring the register. A lot of Retail Investors are focused on that. How do i use options to protect my gains in a stock that i own. Finding puts can do a huge drag in performance. One strategy would be to buy a caller. Youre using the proceeds of that money to buy an out of the money put. Youre interesting in protecting gains but youre looking to do it for a minimum premium outlay and you want to do that often times for no premium whatsoever. But heres the big thing about when youre buying a collar. You have to be willing to give up some potential upside to have that potential downside so lets go through what a cashless collar would look like. I want to make a quick point about amazon. Back to 2011 to 2013 it was all about north american retail sales. When it doubled again it was about aws. About their cloud services. Now the thing has just gone par bollic and people are just talking about a lot of other things that are going to happen in the future. The way they use data, so lets move forward. This could be one reason why you want to protect the stock here. I look at this breakout level at 850 from earlier in year as something that could be in the cards if the stock were to go down. So versus lets say 100 shares of stock at 992. 50 you could sell in august expiration 1045 strike call at 26. You could use the proceed to buy an august expiration. 950 put. That would cost you nothing because each option costs 26 bucks. Youre buying the put for 26. You would have gains in the stock up to 25 but thats where your gains are kept. You have losses down to 9 oo, protection below that thats what you would use a cashless collar far. What do you think about dans trade . I really like this. Normally with collars what youll see is you have to buy a put thats further out on the money than the call that you sell and what ends up happening is you have less potential upside than downside risk. Thats not true here. At the current stock price this is a favorable risk reward and i have a hard time imagining why if you own the stock you wouldnt be considering a trade like this. Its very much like a extrinsic premium free call spread and i really do like the trade. Lets start out with the thousand dollar, i think thats a completely arbitrary thing. Management couldnt careless. But lets talk about the prospects of it going higher. We know amazon has two major draw downs in the last 24 months. The lows in 2016 it was on 28 . Twice the market and we know preelection it was down 17. This is about where that kind of thing can happen again, so having a defensive play and what youre doing is it makes a lot of sense. What happens if the stock actually moves up to that . Thats a great question and one of the things i would say lets say you owned it coming into the year. If the stock went up a little above that youre basically again, this is one of those major bullet points. Youre willing to give up some upside for protection in the downside and the way i see it below that 950 strike, you do have an air pocket down to that pocket of 850. And thats one of the reasons why i chose august expiration. Its going to catch that earnings and possibly some excitement over the course of the summer. Energy stocks having one of their worst weeks. Hell tell you why you should keep betting against energy when we come right back. [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. Steve, other than making me move stuff, im here at the Td Ameritrade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Welcome back. Its time to take a look back at some of our open trades. Crudes comeback was short lived. Its just this and we are just in that i just dont want it. I want to be short energy. Im looking out to september. The 67 and a half, 60 put spread you could spend 3. 16. Sell this against it for 85 cents. Crude and the Energy Sector plunging on disappointing news so carter, what do you do now . I think the plunging is the operative word. S p 500 energy has made a basic 14year relative low to equities. Maybe just going to get worse and worse. Stay away. Mike . Yeah, i think we stick with this as trade runs out to september. Its now starting to get in the money and weve got plenty of time and plenty of room for this to drop further. Is there something to be said for buying laggers . I think these guys are right. You keep pressing weakness. It was also time to hit the brea brakes on auto. Gm 10 down, im looking for a move to these lows at 30. Sell. Im looking at the june 33. 30 put spread. Thats a small fraction of the current stock price. It takes us all the way out to june. Jgm is down over the past months. What do you think next . Although the stock still looks weak we need more time and we can actually sell this put spread for about what we paid for it. 80 cents. I would just roll further out in time. I dont think all of the damage has been done yet. And thats the key thing. Its not just general motors. Auto zone, oreilly, the whole thing is under severe pressure. Up next, the final call from the options pits. Hey gary, what are you doing . Oh hey john, im connecting our b