and so, while he keeps his case alive, in alaska, his story is remembered as a bizarre episode of reckless spending, waste, and greed. right now on options action, we're all about those rates. yields up today but still pulling back in the last week. plus time to shine, gold and silver on the move this year, but should you be betting on the safety trade we're polishing off a precious metals trade you won't want to miss and how they're setting themselves up for reports. i'm melissa lee. let's get right to the names seeing the most options action

this week. among them coinbase, netflix, tesla, american airlines and starbucks. all seeing big action this week as well. some etfs on the move, china, corporate debt, real estate, silver, all catching our traders eyes the iyr real estate etf, carter, your thoughts. >> also in many ways one of the biggest things that went on this week was the moving rates, rates lower in response to soft, economic data. in any event let's look at a comparative chart. this is utilities versus rheats, the most most sensitive areas of the marketing. one has really led and one has lagged another way to do this instead of looking at two lines is look at them each and do them relative this is xlu, and what do we know

xlu has rallied and fail, failed and i think going to fall lower. by distinction check out the ilr. it's started to bottom and carve out the beginning of what i think is an important move higher put them together this next chart is a relative line it's one divided by another which is what relative strength or rsi is. what we have is a beautiful double bottom. we have a move, of course, that we broke above trend, and now put in the green arrow makes it long, rheats over utilities. >> just taking a look at the options flows we saw this week i mean i'm going to start with the second name. first xlu, we definitely saw some bearish activity ipthere.

we saw a purchase of the january 27th weekly 571 puts those were trading about 95 cents. that took place mand as for ilr,gist bets on continued volatility but not necessarily to the down side an interesting trade was a purchase to the down side. now, when you buy a strangle you're making a bet the bank is going to move around a lot not necessarily specifying a direction. i do think we have a lot of news to digest here on the rates or inflation front. >> let's get to the commodities now. precious metals on the move to kick off the year. your thoughts on silver. >> listen, i think silver gives you a beta exposure to gold. i think both of those we spoke on the previous show about vix and volatility i think particularly as you

start to see some out-performance of these higher beta names that have lagged you probably want to barbell that against something that gives you a safer play i think all those makes sense to a portion of that play >> carter, i know you like silver >> yesch am issue here it's all about your time frame. cold has come a long way it's becoming quite popular of yet having not been popular, silver, too. of the two also it is lag gold over the last two weeks and in that sense i think the opportunity is in silver >> let's turn to some single stocks airbnb surging more than 13% this week. mike, what do you make of this >> yeah, i mean airbnb this is interesting this is a name we see a lot of puts trading this thing. this is actually not just today

but this week. this is a consistent reality for airbnb some of those are short dated but actually the trade that stuck out to me was a purchase of 700 of the april 80 puts for $7.04. that's not because this is an enormous trade in contract terms but spending a put trade that's 20% out of the money giving themselves time to that april expiration >> carter, airbnb. >> yes, thank you. i was staring at the chart and wondering. let's look at it it's annoying to the fundamental crowd. the stock is threatening to breaking to new lows it has rallied, we've been short i think ultimately is going to get revolved to the down side. >> carter, you said you drew a

blank but in actuality it doesn't matter what you have on the top of that chart. you would have had the same outcome. >> you're right. >> let's round it out with a retail name now, ralph lauren ticking higher this week adding to a recent run. what'd you make of this? >> if i was going to play it from the long side, which i would not. by now you know how i feel about consumer discretionary one thing going forward it does appeal to a higher end consumer, but with that being said you saw it from the bank with the positioning. >> to the point of charts how can it be that ralph lauren gets to that line and starts every darn time? my thinking here it's just stuck

and it's neither going to particularly advance with strength nor deteriorate if i had to be directional i'm thinking short >> they're going to announce earnings we saw a purchase of 15,000 of the february 90 puts, which is going to cap char that earnings. by the way, airbnb i believe is announcing that same day any consumer discretionary thing not really a place i want to be long here. still to come a big week on earnings, we're picking out two names to watch and for everything options action check out our website and newsletter much more oa after this.

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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 a huge slate of earnings next week more banks and airlines and traders are diving into two names ahead of the action. let's kick it off with netflix mike, take it away >> netflix, this is an interesting case, of course, because this thing has really moved over the course of the last four earnings, more than 20% an average -- more than 25%

actually and it's had a huge move off the bottom it was actually almost getting to be a value stock. i don't think that's the case anymore here trading moeb 29 forward times earnings but i can see why anyone be inclined to press the longs here given the way the stock is behaving right now the option market is implying about 11% move and near dated options premium in particular are quite elevated and using a diagonal call spread i was looking at buying those march 350s, spending a little over $20 and that meant selling the 375s for about 5 notice that the call i'm selling is basically very close to or jubs above that 11% up side

move >> carter? >> this is the circumstance of two things in conflict it's a great winner but back to the scene of the crime it was april 20 a year ago when it plunged almost 40% on its earnings my hunch is actually to be long but toby smaller long than one has been >> what's your take on netflix here >> i think from a valuation standpoint it's come quite a bit. it's been cut in half if not more in terms of playing this and mike's trade in particular on first glance you look at the risk reward and go i don't know if that's the setup i want, but keeping in mind and knowing if the professor moves, he's looking at a diagonal and knowing him he's going to likely rolling in something else against that, taking in mere premium, and lowering his cost space. from that standpoint i think it's a very interesting trade. >> mike, did he guess right in

terms of what the professor would do >> there's two things. that's exactly right the near dated options are actually going to expire in the next week. that's going to offset a lot of decay. so you're going to have opportunities. the capital commitment here is relatively low certainly it's relative to going out and purchasing the stock and the implied volatility for those options is considerably lower than just these near dated weeklies that are basically only looking at earnings. >> let's move onto another big name delivering results next week pro proctor and gamble also reporting thursday >> this is an interesting thing. when you're in a let's call it a bear market condition, people love to rush to staples, package, things like that that seem fairly safe, first of all the company is not cheap it's not cheap to its peers. it's probably a turn over to the peer group and certainly not

cheap relative to the s&p. take a look at the revenue picture. all you ever did was take a look at the revenue line and say, oh, well, it's not really growing and after it's a little worse than that. prices are going up, volumes are going down when you want to buy a business that's selling less and less of what may make year after year. this is not a stock that typically moves a whole lot on earnings in fact, it's less than 3% which is what it's currently implying. still, this is not a stock i'd reach out to buy here. if anything i'd favor going to the short side, and that's one of the reasons i'd take a look at the put spread and a very close put spread i was looking at the march 150, 140. going to spend about $3 so 2% of the current stock price less than the implied move going all

the way up to march to make a near side short bet on proctor and gamble >> carter? >> a strong stock that stalled, might have some charts to depict that a strong move off its october low along with most stocks in the market but we've broken trend we have something of a triple top. you can see that there and if you put in the trend line you can see we have broken trend. my thinking is to play on the short side >> i really like this trade. whether you look at the implied earnings move or the beta 0.4 you're probably not going to get some crazy move here i like that type put spread that will likely capture the bulk of that move. >> mike, last word here. >> that's the important thing to think about when you're looking at companies like this one that doesn't move a whole lot, it's often tempting to get some leverage, buy those cheap option wheres, the ones way out of the money. with a name like proctor you're likely not going to get that if it's going to weaken it's

probably going to do so modestly and slowly even with catalysts such as earnings coming uch. one area having quite the run but could the surge get overheated and how should you play the move? options action back in two

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welcome back to options action semistocks have outperformed the market in the last few months. kevin kelly joins us now to lay out a trade. hey, kevin, what's the trade >> hi, melissa happy friday well, the trade is actually hedging your portfolio against the semis. and one of the reasons why is if we look at the semiconductor industry, it's really cyclical, so it has pretty big exposure to a recession or even corporate spending and one of the great aspects of semis has been its exposure to the cloud and data center. and so that could actually become a headwind as opposed to a tail wind because we're actually anticipating that there's going to be flat to down capx in the cloud and data center space, which really helped them out over the

previous several years another thing about the semis is there's heightened geopolitical risk right now around the names. and we've seen the china lock downs actually impact a lot of the supply chain when it comes to semiconductors, but you also have the u.s. government which has restricted exports to china mainland so it's a hotbed issue there, and another interesting thing that happened this year is that the tone out of the consumer electronics show was actually slightly more negative normally it's pretty bullish on the year, so that's pretty interesting against the backdrop how the semiconductors has been up 10% this year if you look at nvidia it's up 15% and still trading at a heightened pe over 50 times forward earnings we think one of the best ways to really protect your portfolio given the vast amount of runs and how semis may be long in the tooth is actually purchasing a

put spread all the way out to may. so what you're going to do is let a lot of those catalysts that i talked about play out through may, because you'll get two earnings seasons that will actually impact as well as on the guidance going forward should there be heightened concerns around the space. so what you want to do is actually go out and buy the 225 put here, sell the 195 against it it costs roughly $9.55 and you can make two times the amount of your money on that so i like the risk reward aspect here and given the fact that it's run so much and it's really cyclical, this is great way to hedge the overall market for the next several months. and the most you can lose is that $9.55, so you're really capping your losses in a volatile space >> kevin, thanks kevin kelly, intelligence. mike, what's your trade?

>> we're pretty underweight the space right now. we do own taiwan semi, but that's the only chip name we actually have at the moment. the interesting thing about the trade that he was just suggesting is that when you trade a variable spread like a put spread you're basically playing at the money emplied volatility and selling out of the money implied volatility, and whether that's going to impact whether that's attractive or not is how much skew there is when there's more what we call put skew means the out of the money bids have relative puts. and interesting week over week it did steepen so actually more attractive hedging trade to put on today than it would have been even a week ago because of that dynamic. and it has had a bit of a move here i do also think this was a pretty beaten up space and has a lot of beta, so if you get some surprisingly good news coming out of earnings on some of these you might actually get a pop >> carter, what do you think of

the charts >> it's not a cohesive group while there is the etf or the stock index which that's based, there's such a divergent path, but the big one dsm at 11% it's fantastic. it has all the elements of a bearish to bullish reversal. >> what do you think >> smh has run back to that level previously before this big move higher. you can check with carter and get his insights there i would echo the other two analysts in terms of tsm and the fact we have seen some of this higher beta stuff catch lately i 100% agree with the cyclical of the space and using it as a hedge. i would likely slide this as in

terms of the maturity of it. >> michael asked a question since that's the popular semi stock of the segment. how do you view the impact of the rally in china and how that rally reverses is that correlated >> there's definitely correlation. all the chinese stock and that's a slightly different situation than taiwan semis. these things were so beaten up basically on bad china news, they had nowhere to go but up. they were so cheap relative to their peers in almost any geographic region. in many cases they're going to be competing for many of the same sorts of business but trading cheap elsewhere because of that headwind and having that relieved essentially gives it more up side i think that's one of the reasons why we like this one and little else. up next your tweets and the final call

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." time to take some tweets 370 puts, should i sell or hold? carter >> well, as a hedge you'll be able to go through earnings here while it would take a 7% decline to make those in the money, i would hold them. we don't know what's coming, but there's every possibility earnings will be -- >> with china reopening listening to the charts what do you think about the bullish risk reversal for nike? mike, i'll go to you for that. >> okay, so first things first, you know, i like buying longer dated options. i like selling shorter dated options. so i think the only thing i would say to adjust this trade might be to actually shorten up the expiration on the put side

so work your way into a diagonal i don't like the idea of being short options on any stock, frankly, for a whole year. >> all right, our last fan asks what do you think about floor and decor, fmd >> on a valuation basis this has looked a lot cheaper at that said at 21 times forward it's not particularly cheap to the market if i was going to play the space given where valuations are i'd probably play directly in the builders >> time now for the final call >> nothing wrong with taking a profit from now on i would do it gld reduce >> i like mike's pg put spread >> mike, what do you say >> proctor and gamble going into earnings i think cheap put spreads is a way to play to the down side. >> remember monday is a holiday.

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