side of him was he knew, if he could just get his hands on money, he could be somebody. and i think that maybe there's that element for marcus. marcus wants to be somebody. he's a story. he is a story. ♪ right now on "oa" it jumped 25% this week after earnings the most heavily traded option, it is, of course, nvidia, how it could earn you even more than lululemon moving the opposite direction. so bad it's good, is there a way to risk a little on an earnings robbed without bending backwards. there is tesla and technology, ways to help your port tole owe do to help your portfolio do the same i'm melissa lee. we're live on the desk tonight, mike khouw, carter worth, and brian stutland

let's get right to it. let's get to nvidia, after it ended in a 25% gain this week, the stock jumped up in the rankings to become the host heavily traded options name in nominal terms, one of the biggest over the last several months because of its more than 160% run year to date. here's the kicker. if you own the stock there is a way to squeeze more juice from the semicitrus foot with options, mike, please explain. >> yeah, you know, we often talk about selling covered calls and how it isn't typically advisable to do that going into big catalysts such as earnings it certainly wouldn't have been in this case, would it this is, unfortunately, a stock i happen to own, although we do own several other semiconductor names and many traded up as a benefit from nvidia's stellar performance here but once that catalyst has come and gone, and, in nvidia's case, the stock has rallied to, i would call it, a

extraordinary level, but implied volatility after that catalyst remains high i was looking at this earlier today, and the june 405 to 410 calls, those were about call it 2.5 to 3% of the current stock price. so, if you're fortunate enough to hold this stock, now that that earnings catalyst has come and gone i think that this might be a very good opportunity to sell some upside calls i mean, you're yielding 2.5, 3% over the course of three weeks if you sole those at levels i was seeing today and you still have somewhere in the neighborhood of 8, 9% where the upside over the next three weeks i don't know what's going to get it to go that much higher over such a short time frame now that we've already had this big pop. >> jensen huang could come out and say ai a few more times. carter, for those who didn't see "fast money," what do you see in the charts here? did you want it -- when a stock makes such a big jump, is it possible that they've entered sort of a new range higher >> oh, sure. so if you think about any major

rerating, when a stock drops and gaps 20%, an fda miss, mor people dying than living from the drug, or pops like this, up, it's a rerating. the stock has been -- and rightly so, because of news. i think they had -- sales were 60% above in the quarter what wall street was expecting. the question, though, is once you've been rerated, not 3% or 4%, 25, you typically stop there. when a stock drops and gaps that much or rises that much, it starts to churn. on an intermediate basis, and you notice that nvidia is really where it was yesterday, yesterday was the news, didn't do much today, it's likely to be here for quite some time, many, many weeks at least. >> well, brian, a little bit of a different experience here, you laid out a trade on nvidia last week, hedging for more move in the opposite direction what are you doing now with that >> well, i think when we looked at it we laid out a trade to buy a put spread heading into earnings in case the earnings picture wasn't that great, and you'd be protected to the

downside we only spent about 1% of the value of the stock during that time, so i like what mike's talking about on selling a call, because you can make back some of the premium loss in that put spread as a hedge by simply selling the call on the upside as long as you're willing to be called away on the 400 level this is the reason why we buy put spreads as protection in earnings like this, i only spent a little bit of money, i still got to hold my stock, which we continue to hold for clients, we still have that as part of the portfolio. we mentioned nvidia was my number three weighted stock if i had to pick on a nass tack-related stock and this was a way for m to continue to hold the stock, pad a little bit of protection and play the upside. when they guided higher on their earnings, it wasn't like they guided a little higher for next year's earnings, they guided a lot higher i think this ai thing is real. we always joke about it but it's sounding more and more real. that's why the market is moving

more and more in that direction and why nvidia climbed s significant after earnings if you want to recoup the loss on the put spread, sell the call like mike talked about, i still think there's a place here, we're at critical levels, obviously, oversold, i know on "fast money" a lot of guys talking about overvaluations here, significant levels, so selling the call makes a lot of sense at those levels and continue to hold the stock >> even with the big move in individual semis, there could be more room to run carter's charting out the group, one tech name that could continue its recent climb. carter. >> just the follow on to money in motion for monday, the theme being to be long semis relative to tech. semis have such a long way to go to catch up to both the market and the overall tech sector. let's look at a couple charts. we know, of course, that one week ago we're looking at a ratio chart here, that's simply one thing divided by another, so if the tech sector's relativ performance to the s&p, we not gone above the 2021 high, if you look at the next chart, for the first time in 23 years tech has recouped all of its losses

associated with the dotcom peak and it's now ahead of the market for the first time but, what you'll see, of course, that semis, next chart, they're not even close so the thinking, and that was the point of the report on monday, was that semis have catch-up potential to th market overall, in terms of simply getting back to where they were on a relative basis to the s&p. now, if you look at actually semis versus the qqq, this is the real stunner, and you can see it there, we're nowhere near the peak associated with the dotcom boom and bust, which is to say semis were really the outperformer during the froth of '98-'99, and semis can climb indefinitely, relative basis to get back to where the qqq was. let's look at th semis overall on their own this is the stocks chart, no lines, no drawings, no judgments, the

first line to put in, well defined bottom, cup and handle, breaking above, second and final chart for the stocks, we're in this channel which would imply further upside to get to the upper band. >> and do you have a chart on cisco, carter? >> yes, i thought i'd stop there. but let's look at that as well two charts on cisco, since you raised it, and they're both the same time frame. the first is using the moving average, 150-day to depict what it is, a bearish to bullish reversal. the idea is to double back here and find laggards. cisco with annotations, it has all the elements the semis had, a cup and handle, it's what a reversal looks like, but here is where you, in a perfect world, you reduce your nvidia if you're so lucky to own it and put it into something like cisco for a catch-up trade. >> mike, you've got a trade on cisco. >> yeah, i mean, in our long only strategy we own a lot of

chips as i mentioned before, unfortunately nvidia wasn't among them i wrote down the ones we do hold here so i would not leave anybody out. we have broadcom analog devices, applied materials, marvell, and we own cisco. of these, cisco is kind of the most interesting in a compare and contrast basis, relative to nvidia, because of course cisco was the high flier in the late '90s and into 2000 that was a name that traded up to multiples, not unlike those that we've seen in nvidia today, it got up to about 24 times sales, which is very close to, i think, where nvidia is trading right now as of today's close. right now, though, this thing is trading about 13 times earnings, so this thing is actually cheap, and it's probably growing eps about 8 to 12% is that super, super sexy, maybe not super sexy, but it's growing faster than the economy and it's quite cheap. what is also cheap, because we already had earnings, are options. i think the simple play here,

and i realize a lot of people think that maybe this tech run is too far, too fast, i think this is a relatively safe name to be in, but you can actually reduce your risk even further by going out to july and buying very close to at the money call, i was looking at the july 50s, those cost less than $1.50 a contract you're risking less than 3 of the strike here to make a bullish bet, and, you know, if we do start to see some kind of reversal, if people start to basically fade this big rally we've seen you're not risking that much. if it continues you will get to participate. >> brian, what do you think of the trade and what do you think of cisco >> cisco, i like, we have that as one of our leaders in large cap value. and i think there's place for it in the portfolio. i think there's probably some more upside, mike spoke to the low 13 multiple or so on cisco i think there's more upside and then given the cheapness in options we're seeing, look, the vix down here below 20, spikes around 18, the volatility, in the options market so cheap compared to what we saw, the

type of move we saw on the market today even, that can pay off very quickly for you that call spread is pretty cheap and you get a big play to the upside after that 59 level that would be nice price target to sell a call and take profits and run on that there's more upside here for cisco. >> for everything "options action" check out our website and our news letter, much more "options action" right after this >> announcer: coming up an earnings season stretch of sorts, lululemon has lost about 8% in the last month, but with high end consumers still spending, could the stock start to pick its end up after reporting results next week? we're reaching for a rebound with options plus, calling all "options action" fans, reach into your pocket, grab your phone, and tweet us your question @optionsaction, if it's nice, we'll answer it on air when "options action" returns.

welcome back to "options action." a short but big week o earnings on deck, retail stocks taking center stage and one of those names has seen shares go downward dog lately. mike, how are you playing lululemon? >> people who watch the show know this is one of my holly index names. downward dog, i mean it might be unfair, the stock is still up about 6% on the year, but

certainly very recently it has been materially underperforming. now, just a couple quick things about the company first. number one, i mean, their demographic, sell to a more affluent consumer, my thinking here is that maybe we aren't going to see as much pressure on the consumer side, they have announced they are doing hiring and any company that's doing hiring, i think that suggests that there is something positive going on i think that obviously supports it in terms of valuation, 25 times i would guess full-year 2024 earnings, and 15% eps growth if they hold to those numbers and if they improve on that. when you see the recent performance going out and buying the stock if you don't own it already as i do you might be a little bit concerned going into earnings we talked about not getting short options going into earnings, rather getting long, although i was taking a look at doing both by purchasing a call spread i was looking at the june 30th expiration, the 353/90 as you probably know we often try to look for spreads where we can spend a little bit less than

25% of the distance between the strikes. we're fairly close to that this is a $40 spread spend about $11.65 it's an expensive stock, $340 a share, this is a way you can risk a little bit, by buying some premium, hoping that it actually catches a bounce coming out of earnings. >> brian, what's your take on this trade >> well, i mean, maybe there's a catalyst in the earnings call that pushes it higher. obviously we've talked a lot about retailers lagging the rest of the market, i'm still kind of in that camp, and, you know, lululemon obviously is a little bit higher end specialty call it workout wear, that people like to get into i kind of like a nike better than the lululemon right now in terms of valuation basis and playing to the upside on that. i might play more to the short side of this, but, you know, given that, i like how mike is structured the trade in a call spread we talked about buying options, spending less than 25% of the distance of the strikes to do that so that in itself makes a lot of sense, you're not risking a lot

to get an upside play on this stock if you're going to play it to the upside. but i'm a little gun shy on any sort of retailer right now. >> carter, how does this one look >> well, we've got the circumstances where on last earnings, the 29th of march, the stock gaps up 12%. if we look at the chart we've given back that entire move and so what you see here is a stock that is sold off to its rising 150-day moving average having gapped up initially in response to earnings, of course we'll get earnings again shortly my thinking is to play for a bounce off the 150-day moving average. >> all right, let's get to another big stock that bridges the main areas of retail, tech, and even the economy at large, some might say amazon shares far outpacing the broader market, up nearly 40%. will the prime performance continue brian's got a trade, brian >> yeah, i think if i am going to play retailers i'm going to stay in the space of amazon. the reason being it's not all about retail i get a little retail exposure

i can't have zero in my portfolio. and then also amazon, you get the cloud and maybe ai play on there down the pipeline. we know amazon is always innovating amazon a big chunk of the nasdaq is getting pulled with everything if the nasdaq continues to push through key technical levels i think there's room to the upside i don't want to make a bet that's all in on amazon. i do own amazon for clients but i think options are laying out right now through july before its earnings catalyst event to continue to play to the upside and what i would look to do is simply look at the july options right now, expiring right before earnings the july 1 20 strike call is cheap enough to buy to the upside i can reduce the cost by selling a put spread selling the 105/95 put spread, collect a little bit of premiu to lower the cost of the call. i'm okay getting the long amazon there's pullback in the nasdaq,

tech, retailers, whatever, i can buy the stock down there and i'd have the cash flow to cover the area of $10 to the downside between the 105 and the 95 strike, but here i get to play the upside i'm only spending a net $6 premium to play to the upside. break even you see 126 there's room to go if the nasdaq keeps going i get to participate. if retailers turn themselves around a little bit i get to participate there. it's a cheap way to play to the upside. >> carter, how does amazon look to you >> that's a classic instance of a bearish to bullish reversal, a stock that lagged but now is starting to come to life i'd rather have my money here, like a cisco, than those that are steep, uncorrected and oh so loved. >> this carter stamp of approval, mike, what are your thoughts on the trade? >> i like the fact he's selling a put spread rather than an outright put here and putting it into risk reversal while it could put the stock down at 105 he's doing so in an ensured way. he offers protection that basically limits the downside risk if things go

really wrong something else, of course, i do like about it, i mean, on our side, you know, we use ai for data analysis. it represents about 25% of our annual expenses, and that's all cloud-based plus you're computing through aws. so, they are collecting a lot of money from us, so they -- i'm sure they are from a lot of others as well and so that's a positive the only downside to amazon, for my money, is that on the retail side they really haven't delivered. even when retail was running hot, they didn't seem to be able to make any money in that, and, of course, now that retail is weakening, it's got to also affect them to some degree as well. up next, we are driving into ford as the auto makers team up with tesla, supercharged ways to play the name straight ahead, "options action" back in two >> announcer: "options action" is sponsored by thinkorswim, by td ameritrade. 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.

thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back. welcome back to "options action." a very positive week for ford, teaming up with tesla to use the ev maker's plug making technology it gives ford owners access to 12,000 supercharging stations across the u.s how are you handling ford stock on this news mike, what do you think? >> yeah, so ford was a long-term holding for me

i actually blew out of it in april, and i think it's a very positive development for ford. whether or not we're going to see a whole lot more strength out of it, it's hard to say. i mean, it seems to me this is as much a benefit for tesla as it is for ford, probably more so, actually my thinking is that if you're thinking about getting into it sell some close to at the money or slightly out of the money cash covered puts, you know, this is a name that has some implied vol in it, you'll be collecting a little bit of yield by doing that, if you put the stock, own it discount to the current stock price. and therefore participate. we'll have to turn to carter to see if this is going to be a breakout it's been in a prolonged downtrend. >> there's the question, carter. >> it's a bond has a 5% yield ford motor today closed at $12.09 on february 2nd, 1987, 26 years ago, it was $12.09

so, adjust it for inflation, you lost about 85% of your money but it's paid a big dividend a time to buy ford is when it is the nvidia of its day. when everyone else has a horse, you've got a car, you are ai that's not what this company is anymore, it's a mature business that sells cars, break even, loss from time to time, again the stock is the same level it was in the first weeks of 1987 it is a bond, it is not a stock to invest in. >> would you trade ford, bri >> yeah, i love mike's trade sell downside put, keep it simple it is a bond it struggles to get out of the bottoms here valuations look really nice and my analysts keep saying buy it and we're always like, yeah, i don't, it just sits there, doesn't do anything, can't get out of its way, can't innovate as well as tesla, sell a put i'd be willing to buy. >> up next, your tweets and the final call >> announcer: "options action" is sponsored by thinkorswim, by td ameritrade. n? the internet is telling me

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welcome back to "options action," time to take some tweets the first fan asks broadcom has had a massiv run-up this week, thoughts on a earnings on first possible pullback >> buy a put spread, protect yourself for next week for the earnings event, the stock is up 1 is 1% today. spend 1 or 2% on a put, no big deal so i would put rinse and repeat that play, and hang onto it. we added of broadcom, we like that stock, hold it to the upside. >> next tweet, where do you see bitcoin and ethereum heading from here? carter, what are your thoughts >> yeah, so the dollar has rallied considerably, and i think you fade the dollar here by contra distinction, the dip in bitcoin, i think they're viable >> time for one more tweet

is there a rule of thumb for selling cash cover puts on a dividend paying stock you would like to own at a price lower than its current price who are how far out should i go? >> not through earnings, ford example from before, levels of support as well, and that's probably about $11 and i like to collect about 1% of the strike, per month, and actually that's approximately where a one-month, 11 strike put on ford would get you, levels of support, 1% a month, avoid the catalysts. >> all right it is time now for the final call ahead of this three-day weekend. carter braxton worth. >> it's not ironic we talked cisco, one point the most valuable company in the world and now it's a mere shell of itself it is bottoming. nvidia, one day will look like cisco. >> brian stutland. >> with memorial day feels like the start of the summer, but i'm going to just use amazon and play that summertime to the upside, buy a call, sell a downside put spread, cheap way to play to the upside. >> mike khouw.

>> cisco calls, make a bullish bet there, and call spreads lulu. >> that does it for us have a great holiday weekend, back next friday at 5:30 p.m. meantime, taking stock with mike santoli starts right now advertisement... ...sponsored by nano hearing technology. fantastic! hi, i'm bill hennessy and i'm dale allen, hello to our viewers at home, we're so glad you joined us today