welcome, everybody right now on "options action," a battle royale from the financials to energy to taking your money around the world, the long and short story for this year plus, dialing up trade in at&t action in this beaten up, once mighty tighten of telecon, the stock ringing high as we start 2023 later, starbucks has been a full caff moneymaker, up nearly 35% in the last six months but one of our traders is getting the

jitters on where the coffee giant is going next. welcome, everybody i'm tyler matheson in for melissa lee, and that's "options action." opt desk tonight, mike khouw and bonawyn. face-off in the financials a texas size tussle in energy. with broad market sectors, not all individual industries are created equal, and tonight a fight within four sectors to declare the biggest etf winners and lose losers. let's start with financials. let's bring in carter worth. carter, set us up. >> you bet so at any given time while a whole sector might act a certain way, there's parts and subgroups that act differently we want to look at xlf all financials versus regional banks, kra one of the ways to draw the license, let's do it again together

it has all the elements of a turn you can put in a well defined downturn the 150-day average is flattening and turning the definition of a bearish to bullish reversal look at kre, regional banks. it's the exact opposite. very bad week compared to the overall sector it's not just banks. you've got berkshire, the biggest holding. you've got private equity, broker dealer, and so forth. loser versus winner. kre, no. xlf, yes. >> bigger banks, national ones the winner there what is the move we're seeing between the two? >> xlf, we've got a lot of the biggest names in financials. these two are going to be reporting. we saw some big bullish bets being made in xlf ahead of that, looking to capture that earnings, basically looking to also capture insurance and

trading exposure big insurances, buy $15,000, buyers paid 49 cents for those short dated bet. on kre, fundamentally we do have a lot of pressures if recession fears are legitimate and also seeing potentially peaking interest margins, you're going to see deposit attrition and slowing cni loan growth. we saw a big purchase of 13,500, buyer paying 87 cents. >> bonawyn, do you have a buyer in this pool >> i think xlf continues to outperform we talk about this, we had mike mayo on talking about credit quality and stickiness of deposits i think you really want to climb up the etchelon in terms of the quality of name. xlf gives you that you don't want to be exposed to loan origination. >> let's move on to the energy

sector a gate crasher makes it a three-way. oil services versus production versus integrated. carter, what's the twist here? >> three lines just the ones you said we have xle and bringing up the bomb is xep. over the past three months, one's up 27. one's up 10. one's down 6 another way to look at this chart is old xle as a constant what do you get? you get the real divergence. bifurcation when a space you want to be long in space and as a pair, short xop. >> mike, what do you think the melee in this market, do you agree there? >> they have caught up but haven't caught up all the way. taking a look at oih, did see big buys there we also saw some bearish bet on

xep. not surprising given the pressure we have been seeing on oil lately trader bought 4,400. paid 7 bucks big outlay and leaning on the short side for xop. >> loser, xop, winter oih or oa? >> one's got leverage to the understood light commodity versus the capital discipline and operational leverage from the oih. >> let's move on to fighting for the consumers' wallet. staples versus health care carter >> we're look at relative charts for these two. very safe haven areas. the market, staples and health care one line it's a ratio, one versus the other. health care divided by consumer staples. the only way to interpret is if the line is rising health care is outperforming this setup is quite good look at it long-term this is fascinating. this is going back to the dot

com peek health care outperforming until 2000, outperforming staples all the way to the '09 low and outperforming again. to my eye we are setting up to an all-time break out for all-time highs that would be xlv versus xlp we like health care. >> mike, you agree with that >> the multiples for xl sbrrks the broad market with within spitting distance, but asking which is more stable in a recession nary environment the answer is always health care looking at staples, they have a lot of margin pressure issues, so they have higher costs, but they haven't been able to pass all of that on to consumers, and it doesn't matter if you're talk about packaged goods disappointing news off constellation on the buyer side. >> bonawyn, could things change?

>> i think it's a relative value trade. i think you're good on both. >> good on both. and feel good about it >> absolutely. >> finally, the main event, the defending developed economies versus the up and coming emerging markets carter, which side are you going to weigh in on in. >> we're going with eem over s&p but let's take a look. this is the s.p.y., and what do we know, it's a very clear uptrend and very clear downtrend. unless and until that changes it's not a desirable asset by distinction, check this out it's eem it's a disaster, but what is it doing? it's starting to bottom. whether you draw the lines the way i've drawn them or not doesn't matter it's a wipeout that is just now threatening or potentially going to move above trend somewhat do we do, the way to finish it off? look at a ratio chart. this is one divided by the other. you're looking at eem's relative performance to s.p.y., and it

has all the elements of a bullish to bearish reversal. >> mike, carter made it look easy to me even i could understand what's going on there do you agree or have some shade for the underdog >> no, i agree with him, and over the last 30 years there have been only been four other times the basic valuation for the emerging names have been cheaper than s&p to now. the options traders agree. we saw a buy of 4 24u7b, buyer paid 90 cents. on the bearish side, saw 15,000 of 365 puts. $12.54 a contract for those. >> bonawyn >> i'm in agreement. i think a lot of negative news has been priced in ee merks. i think s.p.y. has a lot of earnings to come down and i don't think that's priced in yet. >> still to come, we're going to dial up the telecom titan and

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good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back. welcome back to "options action," everybody before the new earning season begins with financials on friday, one of last season's

stragglers is still coming in then, too, and that would be delta airlines mike, delta is the airline that everyone seems to love to love what are you seeing? >> yeah, i mean, the one that everybody loves to hate is love now, southwest delta is going to be announcing earnings this is a name we hold in our event fund typically this is a stock that moves 4% the options market implying a move of about 5 1/2% here's something to think about. they've obviously added a lot of debt during the pandemic this was a company that made $7.50 a share. think about that if it could get back there, the company would be trading at less than five times earnings that's not what i'm forecast, but they do seem to be climbing out of trouble we have slightly declining fuel costs and of course they have a little bit of a hedge going on because they own a refinery.

on the counterpoint side you have got rising wages. when you take a look at this situation, you could of course go out and buy the stock but with that higher than average implied move, one of the move we saw somebody doing this week was going out and buying the slightly in the money 35-strike calls and they paid about $1.40 for those. as a alternative you can see you're going to be risking less than 4% of the current stock price to make a bullish bet going into the earnings, and if the news comes out and it's more disappointing than we expect, that's all you're going risk so you could buy the stock if you like the story long-term we do. but if you want to risk less, go out and guy a slightly in the one call. >> carter, what do the charts tell you >> it's a recovery story in terms of fundamentals, but in terms of the chart big week for airlines. the new york stock exchange index up 9.6%. the dow jones only up 3.5.

here's the charts with no lines, no drawings. let's put some in. take a look at your screen we have something that's about to pop back to trend we like this. >> thoughts on delta >> i echo carter it's a turnaround story. i'm not thrilled bb&t the debt balance, but if they can get those operational levers under control, it works and they don't owe a dividend i think mike makes a lot of sense. >> we have a lot of vigorous agreement. >> i've tried to avoid it at every turn, but right is right. >> let's go on to at&t the technicals causing to you dial into this name. what do you say, carter? >> this is sort of a dogs the dow situation. it's no longer in the dow. verizon is it's my favorite dog of the dow for the year and a big week for both verizon and at&t, and i think there's more to come. >> all right mike, what's your trade here >> so, at&t is also a stock that

i own and have actually helped for a little while here. this is an interesting story relative to verizon, because they had some meaningful divestitures earlier this year they respond off warner brothers if you take a look at how they've done you can see that spinoff was probablya very goo move now, to own this stock you're going to collect a very handsome dividend, so high in fact that i think some people might think it's implying it's going to be cut, but it does look like it's well covered, so i don't think there's too much concern there what's interesting about that, though, is if you have a high dividend, and i think bonnawyn was implying this, that doesn't get paid to people who make calls, which miakes one of the big trades we saw this week interesting. we at the money call notice how much the buyers paid. $1.40 at contract. now, again, you buy the calls, you don't get the dividend, but

that also reduces the cost of the calls if you're thinking, as i think many people do, that you could see some stock price appreciation they're giving themselves a lot of time for that to play out, risking less than 6% of the current stock price for a trade that lasts over a year. >> thoughts here >> you asked for disagreement, you're going to get it i'm not thrilled about this one. i understand carter's point in dogs of the dow, and i think that's premised on the total return, which is inclusive of the dividend so, yeah, i'm not really playing in this one, but i understand it's been a dog. >> carter, we skipped over your charts let's two back to them. >> sure. for at&t, there's a downtrend that's well defined, and i think we're going to return to it. here's the before and after. if you put in lines it projects to around 22, the $21.50, close at $19.50. nice 10% move and again you get

the handsome yield. >> all righty, there's the chart on at&t. up next, could a fresh buzz be about to wear off on star bucks? tlr featured trader brian cuand has a way to understand collate your portfolio from getting scalde frgs

. welcome back to "options action," everybody starbucks serving up some grande gains today. the coffee giant already up nearly 8% to kick off 2023, but today's featured trader says there could be big problems brewing. brian stutland joins us now. what's your trade? spell it out for us. >> tyler, you're right the stock was up big today it's been up huge venti style, up over almost 50%, and this is not a stock. this is coffee, right? this is not something that's innovated growth type story.

stock's been up big. barclay's recked at their stock of 2023. this is huge i'm looking at a trade where maybe i take profits, put a hedge on we saw the unemployment report there was growth wage, but not to the degree that people expected that's why the market rallied. i think that's a negative for any consumer discretionary stock, especially something like starbucks. under 3% -- i look at the options. we saw a huge amount of open interest on the $100 strike, especially in the january. i'm playing the january options for star buck, playing that to the downside stock's made such a big move i'm going play for a short-term decline or pullback back to the $100 magnet that might happen. when you look at the strikes if i buy the 105 strike, at the same time selling the 100 strike

in january options, i can pay only one dollar. i'm risking a dollar if it gets to below $400 i make $4 the risk is strong to the downside maybe we get a pullback especially if the market can't get out of the back and forth trend we've seen over the last few trading days if it starts to return to the downside, this is a bear market rally, i think starbucks goes down with it, gets back to the $100 level that's why i'm playing a put spread. >> let's get carter's reaction to that and a chart you brought along. >> sure. the reaction -- i'm with you 100% let's just say this let's look at the chart first and discuss the circumstance this stock, starbucks, dropped on its low 46% the exact same amount it drop on the covid low. it's now up 56% off that low and consider this -- 25 analysts cover this stock they're collective price target, 12 months hence, is $100

where's the stock trading? $1.06. 25 very talented, insightful, educate people believe it's worth 12 months hence than it's trading now. or you look at the chart it's overbought. >> mike, your thoughts take the trade apart. >> the only thing i would say about the 2r5id is you've got earnings coming out on february 2nd. i wouldn't mind capturing those as a potential event because it might actually manage to hang in there for the short period between now and january expiration, but otherwise i'm with carter and brian on this one. >> all right, bonawyn. >> i'm going put my hat in the race alongside these guys them thing trades at a premium multiple it's not where i want to be. i don't want to be exposed to consumer discretionary, and as carter mentioned, it's overbought. >> brian, how do you feel? everybody agrees with you. >> i'm feeling pretty good well caffeinated, ready for star bucks to drop off bed here mike makes a great point, the

earnings are february 2nd, so if you want to go farther dated certainly that's a play. i used the january strike, huge amount of open interest. i tend to find in options trading that acts like a magnet towards the stock, so that might happen in january by the expiration, but maybe waiting for earnings where you get a run-up, news out, and pulls back after the news happens, that could occur, so i'm okay with pushing i further. put spread seem like the right play. >> thank you so much have a great weekend, my friend. >> thank you. up next, youtwtsr ee and a final call or three

you ok, man? the internet is telling me a million different ways i should be trading. look! what's 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! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. welcome back to "options action," everybody time to take some tweets and our first fan asks, with baba breaking through its downtrend line from october of 2020, a huge 20% gain this week, and

earnings coming up in the next cycle, how do we play the upcoming earnings while minimizing risk? or do you wait for the back test of a pullback? carter, what do you think? >> well, let's make one point. i think when you hear superlatives on wall street, usually run the other way. a big bank said chinese stocks were uninvestable october 17th five days later, they all bottom yes, baba's up huge, but what to do i would sell a put spread. sell the 100s, buy it for a credit and play it that way. >> how does tra strike you >> i think it's one way. i think i like a cal spread here that way you're plague it the opposite direction but similar theory behind it. >> mike, quick thought >> those are equivalents i'm with bonawyn >> our next fan says please comment on my bullish trades for

q 12023. buy tesla march 17150 calls and buy meta march 17140 calls mike, what do you think? >> 150, that's a tough one for march in tesla i'm not sure this one is completely out of the woods. favor overpurchasing the stock, though i have to say i'd be looking at a 30, 35 delta call. meta you're closer i would say much closer to the money, so that's a better bet as far as i'm concerned. but it's had quite a run again, calls are probably the best way. >> carter, one quick thought? >> i'm not bounce camp for tesla, but 150 is a stretch. >> final calls carter, you still have the floor. >> thank you to me it's gold or gdx, minors or the metal. >> i like oih versus xop. >> where we began the evening. >> mike, how about you >> you're trying to do pairs trades, i think options are a

good way to play it because you can manage your risk on the oih, longer term, 60, 0 days out, and xop, buy puts on the shortside. >> gentleman, it's been great being with you that does it for "options action." we'll be here next friday. do not, i repeat, do not g my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends, i'm trying to make you a little money so