call it chicago politics. and i think that looking forward attenda coming out of washington is to accomplish everything they have on their laundry list. you ask what's the first thing you that did to karen. the first thing i did was sell my google, which i didn't want to sell, and sell a bunch of other things. because i look at this as, yes, health care got done. yes, financial regulatory reform's going to get done. what's going to be next? cap and trade, taxes, and the growth opportunities are going to be limited. >> and tim, you're also watching google. why sell google? it seems like it was a knee-jerk reaction across the market. it's a goldman story, maybe a financial-specific story, but why sell google? >> i took the opposite tack to joe. i actually bought google down probably about 7%. and to me this was a story i said last night i thought the stock was overly punished. goldman sachs was an opportunity. but you know, today you had a 93% down day on the s&p. we haven't had that since january. you also had huge volume. so this was -- i know guy's got something to say about this. but for me this was a place to pick out the better stocks that got punished. but everything was getting sold,

and everything was getting sold in big volume. and that was an exclamation point on an event that gave people an opportunity. >> and timmy's been right to do that as everybody else. the dips have been buying opportunities. as much as today was about goldman sachs, to me it really was not about goldman sachs, frankly, as crazy as that might sound. i've been waiting for the exogenous event to take place that might put a top on this market. you never know what it is but when you see it you can sort of identify it. today might be that event. joe talked about financial reform. remember last time in january it was about a week after jpmorgan reported earnings. coincidence or not, here we are a few days after jpmorgan. all the financials making basically the same high as we made back in october. touching up against those levels, selling off. it's very interesting. it's very hard for me at least to think about being long this market right now. >> volatility in the overall market spiked dramatically. no surprise. volatility amongst the individual stocks, the goldman sachs, morgan stanley, that also spiked dramatically. karen, if you're taking a look at a possibility of these stocks moving lower and the ability to

establish a position at lower prices than we saw today later on, how do you establish those positions? do you, say, sell a put and take advantage of the premium in the market right now, or how do you decide how to pull the trigger? >> you know-f you've really got guts or some other anatomy, selling the put would be the way to go. i don't love that trade because you know, when you get -- when you get put that stock, you very often don't feel so comfortable buying that stock at that price. i would rather wait, let things shake out a little bit. even if you have to buy it a little higher than the bottom. that's okay. so for me i'd rather wait it out. i don't know what else is out there. i feel like there's another shoe to drop. >> interesting in the after-hours sessions i noted at the top stock is moving higher. it's up by .75%. and of course it's a friday night. the volume might be a little sketchy out there. but take a look in terms of the course of the day and the amount of market cap lost in goldman sachs. investors are really willing to just say sayonara to this thing

and just walk away from it at least for the weekend because if you piece it together with its role in the greece situation, you know, there are a lot of reputational risks out there. >> it can't be good. >> there are a lot of reputational risks for goldman sachs, and if you look at that chart what you will see is there was no recovery. there was no recovery throughout today's session in the entire broader market. it was a return to basically risk off again. and we have not seen that in a while. the concern that i have is sunday night. how does asia react to this? that's why i don't think this is a one-day event. >> i want to go to the "fast line." gary kaminsky, former newberger berman managing director is there. gary, what was it like to be inside 85 broad street, of course the headquarters of goldman sachs, today of all days? >> well, not 85 broad anymore because they've actually moved. >> oh, right. old habits die hard. >> let me just sigh thay this, this is a serious matter. however, if we give it some sort of perspective, and i mentioned

on the halftime today, let's go back to the ipo spinning issues a decade ago, i've got to believe that a lot of people within goldman were actually pretty pleased today. and that may sound a little crazy and contrarian. but understand that there's been a feeling that there's been a witch hunt, as joe alluded to, for almost a year now. maybe a year and a half. and if this was the best case that they could present against a 31-year-old vp, securitization was financial heroin. i said that a year and a half ago. the institutional buyers that are trading in these products are very well aware that people are shorting the products and taking the tranches. so my point within goldman is i think they were pretty pleased if this is the strongest case. >> that's an interesting point you make. brad hintz, who we'll have on the show in a little bit from bernstein actually wrote today that he believes goldman must think they have a pretty fabulous defense, otherwise they would have settled these charges prior to this actually coming

out today. that's a good point to make. >> my first reaction when i heard about this, and i am familiar with the securitization market, is i actually was surprised that somebody from the paulsen side of this wasn't also part of it. it did not make sense. that's how these products were created. that's how securitization worked. so i found it somewhat surprising. i did see some of these headlines cross earlier about the fact that blankfein may not survive this. i thought that was one of the stupidest things i've ever seen. >> how about how this extends to the rest of the financial industry? because like karen i think -- today we actually got a bill about a $600 billion derivatives market and beginning to put capital requirements on the hedge funds. i think this is about the financial industry. i think this is a lot of momentum for obama. he made another very strong statement today. what does this do for you on goldman just on the back of this? because they're going to be under scrutiny. they're going to be under attack. and whether it was a light sentence these guys are still facing serious headwinds. >> tim, bottom line i completely

agree this gives tremendous momentum for financial regulation no matter which side of the political aisle you see. this is going to be main street's way of getting this done. i completely agree. i don't think this will impact goldman sachs's business because at the end of the day if it's about trying to look at these type of transactions guess what, you're going to find dozens more of crappy securitizations put together by every one of the banks, and this one, there's going to be ones that were much worse than this. i did try to mention on the halftime as well, remember, citi, you've got this monetization coming around. what the government is trying to get out of that stake, that to me is the one thing that may be impacted as a result of this because of the litigation that's going to probably follow by ambulance-chasing attorneys. >> got it, gary. thanks so much for phoning in. we do appreciate it. gary called it a stupid question or a stupid possibility being thrown out there right now, as raised by dick bove over at rochdale. but is it possible that lloyd blankfein will be out because of this? let's put this in context as well. two years ago did you think that most of the heads of wall street

firms would be out of a job before the financial crisis, or when it was brewing? >> let's ask -- >> this is one of the -- lloyd blankfein was one of the few heads of firms still in place throughout the financial crisis. >> i'll answer the lloyd question. i think lloyd is fine, frankly. i don't think anybody's going anywhere in the upper echelon of goldman sachs. i don't believe that to be the case. you read their statement, it's a one-sentence statement back to the -- or in terms of the s.e.c. investigation. i think goldman probably has a pretty strong -- >> it's not a criminal case against goldman. it's a civil case. so again, it's about looking for punitive damages. it's about, first of all, giving the people that suffered something. and again, it's about paving the road for payback to the broad society that is supposedly wall street. >> let's move on to the second derivative trades right now. we saw a lot of financial-related stories moving lower in today's session. moody's, for one, traded lower. we also saw spikes in some bond insurers like mbia hitting a fresh 52-week high. brian kelly, you're at the prop desk. you're actually shorting mco, weren't you? >> yeah, absolutely.

i don't think this is -- this is the first case. it's not the best case. i think there's more to this. and gary even actually alluded to it, that there is going to be more out there. it doesn't just start with one. i also think what's interesting, and there's going to be a bunch of lawyers over in europe this weekend that are salivating over those goldman sachs swaps deals. so i think you've got this situation here where particularly moody's, the reason why i shorted moody's, where were they on this? what role did they have to play in this? they're next. >> so if you're willing to short moody's, brian, are you willing to connect the dots and initiate some sort of a long position or be bullish on the likes of an aig or mbia, which may have less liability if moody's, for instance, were at fault or played some sort of role or -- >> if they hadn't moved up so much, yes. the problem is i missed that aig trade. i'd have to wait for it to sell off. but yes, i absolutely think. so. >> anyone here on the desk willing to make that trade if you're willing to short moody's or you're negative on moody's, the next logical step would be to long -- >> positive something else. to me the moody's trade probably

for b.k. is a stand-alone trade at this point. i would imagine that would be the case for most people. although a lot of people like to have a hedge on the other side. but i'll go back again and say as much as today was goldman to me it was about the market action. we made these basically same highs we made back in october. and a lot of these financials. you just look at a chart. and technically today was a lousy day. >> it was. and you guys were talking about that google action. that had no lift today. i was long google coming into the earnings, and i had to sell it just because of the price action. still like the story, but i've got to wait for a better place to get back in. >> does it make you concerned, karen, google, what's happening in the markets and the price ak we saw on google as a shareholder? >> no, it really doesn't. i didn't add to it today but i just think this reaction, this really has nothing to do with google. you can come up with all kinds of derivative, how does it affect goldman, and you know -- nothing to do with google. this i view as very fleeting for that. >> 55 billion google shares traded today. i mean, that's an insane amount of volume. at least on an average daily volume is about 4 times.

so it r&r trades a lot. really quickly the other financials i think are most targeted joe talked about asia. the european banks have a double whammy. deutsche bank with significant exposure to southern europe. deutsche bank over 10% down. and don't think the s.e.c. hasn't tauxd to the fsa about this and the european regulators. expect there to be some type of follow-through out of europe because they if any place have the knives sharpened even more. >> we can't leave the goldman discussion without talking about john paulson. john paulson had a role allegedly in this whole thing by selecting the basket of securities at goldman sachs then marketed. so you've got to wonder about his own investments and sort of his ancillary impact in terms of his funds. and what we saw in the gold pits, we didn't see a flight to safety. you'd think with the market turning lower you'd see a flight to safety into gold. we did not see that action today. and in fact, if we take a look at some of these holdings, some of those individual gold stocks were down much more sharply than some of the broader measures. >> you wonder that if people now

that have money with paulson say, you know what, we don't want to have any association -- >> just reputational. >> just reputational. you just wonder if that's the case. and you wonder if he has to liquidate positions. he is the largest holder of the gld out there. so you wonder what's going to happen with those. >> hedge fund investors have never been more gun-shy or jumpy and more risk averse, and when you start to smell any type of an issue with a manager it's often a ticket to a redemption. so again, nothing has been implicated against paulson here. he's been named as part of something. so to be clear here i'm just saying the hedge fund ufrt, the investors are very risk averse, and if he is forced to sell, people went down his 13 fs and started selling the biggest names. the gld was one of the worst-kept secrets about his investments in gold. that's why gold suffered. >> but if pension funds or other parties are willing to sell their holdings in a paulson fund because of reputational issues, you've got to wonder about goldman sachs then. will goldman sachs wills business as well? doesn't the same rule apply, or does it not to a goldman sachs? >> i think it does. and thin talk about who's the

beneficiary of some of this action? names guy loves like a greenhill or somebody like that. you know, if you're thinking about -- if you've got to think about somebody else's advising you sometimes. >> speaking of goldman and the potential reputational risk let's bring in brad hintz of sanford bernstein, former cfo of lehman brothers. certainly, brad, you've seen a lot of what is going on on wall street for the past few decades here. what's your assessment of how this impacts goldman? because not too long ago you said that the situation in greece is going to impact goldman because of reputational issues. will this as well? >> well, it will to some extent. you know, discretionary trades. the trades that don't -- that you can go anywhere, buying treasuries, doing repo, executing equities. you know, you'll route some of them elsewhere. corporate treasurers will say investment-grade underwriting. i can do the investment-grade underwriting over at jpm. why have to explain to the cfo

or the president why i'm doing it? m&a. that's different. you know, goldman is the leader in m&a. you know, are we going to see that high margin business go away? are we going to see prime brokerage go away? no. those are businesses where i need goldman as a hedge fund to cover that short in south korea. i can only get that at goldman or morgan stanley. no, those businesses aren't going to go away. so we have a short-term impact in terms of the revenue volume on this. but i view this as a -- we quantified this. this is $1.20 a share paid out in 2011 to 2013. it doesn't seem like this is going to be an end of the world -- >> brad, sorry -- go ahead. >> the $1.20, what is that based on? them paying what? >> that's they lose everything. they have to disgorge their fees, that they get a $50 million fine on this, which by the way would be a large fine.

that they pay a billion dollars out on the loss and they pick up the loss on the credit default swap, or rather the wrap that's on this. when you do that, you end up with an impact that's certainly manageable for a goldman sachs. what people are forgetting on is that this is a 144-a private placement. everyone in this signed that they were sophisticated investors. and all goldman was was the placement agent. they weren't an underwriter. as an underwriter you have a very different obligation as a placement agent. >> that's a good point. joe, you had a question. >> next week on the earnings conference call what's the one question, what's the one answer you want to hear from goldman? >> on this one i want to hear what is your -- the impact on regulation? what's going to happen on your derivatives book? how big is that going to be? because it really looks like the street's going to lose the derivatives fight. a lot of the business is going to shift over to the exchanges. and what's the bottom line? >> i think it will be

interesting to see in their 10q when they do file it shortly how they characterize this situation. do they call up material? what do they think is the potential liability from this? >> right. >> maybe even an internal memo to talk about internal e-mails to not refer to yourself in the third person. sorry about, that b.k., by the way. >> brad hintz, thank you so much for phoning in. thank you for putting some context on the situation. and let's tie a ribbon on this this afternoon because we like ribbons on this show. >> we love ribbons. yellow ribbons. >> all right. it's investigation -- in the investigation the s.e.c. uncovered some e-mails, specifically an e-mail from a goldman vp, fabrice tourre. and you know the name well by now. charged in the s.e.c.'s complaint. he wrote this to a friend in january of 2007. he writes, "more and more leverage in the system. the whole building is about to collapse anytime now. only potential survivor, the fabulous fab," referring of course to himself, fabrice. "standing in the middle of all this complex, highly leveraged,

exotic trades he created without necessarily understanding all of the implications of those monstrosities." fab fab. i don't know. >> good luck, fab. >> good luck to you. all right. more "fast money" and special coverage of the goldman situation coming up next. >> the charges that could change wall street forever with the fattest of the fat cats officially accused of fraud, our traders take on the top question of the day. have financials finally met their fate? find out as america's post-market show continues. one: kills weeds to the root. two: forms a barrier, preventing new ones for up to four months. roundup extended control.

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i'm hearing from goldman investors, i consider this a game changer. the s.e.c. has charged goldman with fraud for failing to disclose paulson's involvement in a short position. if i'm an investor, that's something that i'd like to know. the e-mails remind me of henry blodgett at merrill lynch saying the stocks were junk while they're telling investors it's great. i think it's a good case. >> are you talking about if you're an investor in goldman stock or you're an investor in those cdo products? >> if i'm an investor in abacus,

i would want to know what paulson's doing, and they didn't disclose that. >> is it your view -- i mean, jake, if you can put it in context, i know you referred to henry blodgett and those infamous e-mails. but is this just as bad as any other sort of crisis that we've seen on wall street to date, or is this something different? >> i think this is different. what the heart of this case is is goldman's conflict of interest, that they're telling their investors that this is a great fund to invest in when they know that paulson is going short and that there are problems with this fund. so goldman's conflict of interest, there's been a lot of suspicion on wall street that they've been doing things like this for years. this case i believe will prove it. >> jake, what do you make, then, of that they lost $90 million on this transaction? >> you know, goldman makes money, they lose money. that's not going to save them here if they misled investors. i also want to say it's a game changer for the s.e.c. the s.e.c. needs to show it's

got the resources and the talent to make this case. they blew it on madoff. they blew it with the bank of america case. they need to show that they can go up against the goldman sachs dream team of lawyers and win. >> jake, we've got to leave it there. thanks so much for phoning in and of course keep us updated on any litigation you hear. gary kaminsky, you're listening in to what jake was saying. what do you think? >> again, i refer to the blodgett thing and i'm going to have to disagree with jacob there. kaminsky, zamansky. this is not like that because the buyers of these products were well aware that these were how these products were constructed. it's not the same thing. it's very good press. it's very good in front of financial regulation. let me just give you one quick point, melissa. the buzz within goldman, i believe, at the end of the day here today was that this is really not a strong case, it was very strange this thing came out midday. something like that has not happened before.

it's very unprecedented. and at the end of the day these were sophisticated -- >> got it. >> -- institutional buyers. >> got, it gary. >> that's the point. >> got to leave it there. gary kamans -- kaminsky. more "fast money" coming up next. traders are always hungry for ideas. so, i start my trading day with td ameritrade's morning perspective. this is key. and look at this. pattern matcher. spots technical patterns automatically. this is what i need. look at that head and shoulders right there. it's like pattern x-ray vision. it's like, uh, a pattern radar. shouldn't you be trading with td ameritrade? that's an idea. this is such the edge. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account.

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this is "options action," your front row seat to the smart money. tonight, wish you had protection today? how about getting it for free ahead of next week's earnings? mike khouw will show you how to buy protection on morgan stanley for free. plus, has this man mastered apple? >> the stock's going to gazillion. >> pretty much. now dan nathan gives you the setup ahead of earnings. and buy the write way. scott nations shows you how you can mint money off microsoft, whether it goes up, down, or nowhere at all. "options action" begins now. and welcome to the show. i'm melissa lee. these are the "options action" traders here at the nasdaq marketsite, home to the world's third largest options exchange. days like today are why you need

to know about options. let's get in the money right now with earnings for the brokerages just days away what is the options market telling you? we saw huge spikes in volatility today. how do you read the tea leaves as to what it means for the -- >> i think investors in financial companies thought they were off to the races after seeing jpmorgan earlier in the week and bank of america today. you know, this goldman news today, we said it a couple weeks ago, goldman sachs has been like the government's pinata in the financial industry. well, today the s.e.c. took out a really big stick and got the innards out. okay? is this an isolated situation? i don't know. we'll talk about it. for earnings next week, goldman reports next week, probably what i would have said anyway. these stocks have run so much, so far in anticipation of these earnings. jpmorgan acted fantastically after their good earnings report and guidance. so i would say it probably was going to be a non-event earlier next week. >> we should put this into perspective. the trade we normally see in terms of broker earnings is we