this is "options action." tonight risk one make four. how would you like to quadruple your money in nike in just one month? you don't need to be fleet of foot. just listen to our options trade. we'll show you how to just do it. plus talk about hitting the jackpot. we've got an options trade on las vegas sands that could get you on the stock for free. we'll explain. and one cool cat. in just one month dan almost doubled his money in caterpillar. and there's more left in the trade. what's his next move? the action begins right now. live from the nasdaq market site the world's largest equity options exchange, i'm melissa lee. these are the traders in times square. investors call.

the dow, nasdaq and s&p finishing in the green in near multi-year highs as the u.s. finally free of europe? let's get in the money now. banks did well today. as well as high end consumer stocks. dan, are you convinced that perhaps this three-year anniversary of the bull market is not a marker but is going to mark continuation of this run? >> feels like it. the s&p has outperformed -- at least it did this week in a week that saw a lot of volatility in emerging markets and europe. just a few points away from those 52-week highs. to me the u.s. is being viewed as a safe haven. when you talk about this discretionary stuff. this stuff is working. then when you talk about the u.s. banks a flight to quality believe it or not. i can't believe we're saying that. if you talk about the area we've been in. in a lot of ways, people want to be invested in equities. >> do you buy that right now? >> certainly you have some concern about oil prices. getting near 110 a barrel. the real concern is to take a look. compare oil to copper. those things tend to track each other.

it's more of a demand driven rally. in both oil and copper. and that's what you want to see. that will keep the consumer going. there's real demand going on in the economy. and if you look at the volatility index, in the inflation indicators, you would suggest that gold prices would slip a bit. they have over recent weeks. not moving higher on inflation concerns. not higher necessarily on spry concerns because we have seen copper actually track with oil. what i'm watching here, if oil trends above 110 will copper move above 395 if i see that things are up and up. >> we also saw bonds come off. that's another sign that people don't need that safety. they don't think they do. but the question is, scott, is that do you actually buy that premise? we did have a good reaction in the markets in no reaction to the news that the cac, the collective action clause triggered default. >> we talked about greece for a long time. the amount of money risk in greece is small.

i think bonds were reacting to the fact that despite the fact we have volatility and dan mentioned the volatility that the s&p ended up higher on the week. i think on tuesday and wednesday, nobody would have thought the s&p was going to be higher on the week and the vix would be lower on the week. we're going to talk about high-end names are doing well because the upper end of the spectrum is doing better and it's going to continue to do better than the lower end. the walmart sort of shopper. one name not working out well is tiffany. that's really the only one. i guess you would say that's the exception that proves the rule. >> scott, when you mention -- you talked about the vix moving lower. we did see active put buying in april on vix options expecting the vix to continue to trend lower. one thing that's interesting that might knock you off your seat, september vix futures are trading as high as 28 right now with the vix at 17. you would have to see a 5% to 10% selloff for those to be

profitable for people. there are concerns six months out on the timetable. near term, things are on the up and up. >> would you buy or sell that? >> if i'm going to take a bullish stance, i would be shorting to take a bullish stance on the market since they're negatively correlated. >> sure. one data point of concern was mcdonald's. if you look at their same store sales numbers, what was clear was the u.s. was still very strong. but everywhere else in the world was not. i think that would be -- you know, item of concern. yet it doesn't seem to be. >> some of the things they had to say, listen. the u.s. is strong. but for them europe and asia were weak. this is where they'll get their growth going forward. if you buy a stock like mcdonald's, you're buying it for this international growth over the next five years. so to me the thing trades at a premium to its peers. it had a tough week. since reporting that. to me i think you have to start to focus about some price action

here. it does trade at the high teens. it's not a really expensive stock. it trades at a premium. >> i mentioned mcdonald's because the trade tonight is on nike. it almost seems like a similar picture. and it's also close to all-time highs which was the case for mcdonald's ahead of its same store sales numbers. >> it's interesting to me. a lot of ways they're trading for the last year. both paid nice dividends. big buyback programs. when you look at that chart there, you see this interesting bifurcation. nike keeps going. there's catalysts going for them. they have european soccer championships. olympics. nfl jersey deal. there's a lot of things bulls want to point to here. that's the high end of the five-year range here. so it's not ridiculously expensive, but relative to recent valuation, it's not cheap. so when i look at these things and i think the markets have a period of time where china just told us that growth is going to be slower than a lot of people expect, that's where nike will

get their growth. i think near term, when they report the fiscal in march, if they have any indication that things are slowing down, you could see a pullback. >> dan is using one of our put spreads. here's how it works. it is a bullish strategy. excuse me, a bearish strategy. you sell a lower strike put to cut your costs. you want the stock to fall to the strike of the put that you sold. that's where you make me most. that's also where your profits are capped. walk us through the trade. >> this is similar to the trade we did a couple weeks in cat. i want to take a tight put spread here. i want to take a short-term view. i'm identifying a catalyst. i want to look to april and incorporate their earnings. i want to buy the april 105, 100 put spread. paying 90 cents when the stock was 110. buying the april 105 puts for a buck 80. i'm selling one of the 80 100 puts.

90 cents is the max gain. that's my break even and between 104.10. i can make up to 4.10. what i'm trying do is isolate a level in which i can get the stock to pull back to. if there's any bad news whatsoever and again like we're going to talk about in cat, we've got that. don't be fooled in a market like this. stocks like this can move like that. >> do you like the strike prices here? >> i do. and i also like taking a bearish bet here. we look at our research analytics and 2200 different stocks. and nike ranks about 1500 out of 22. there's a huge gap of plenty other stocks you can own. it's had a huge run. call it coincidence or not. it's separated from mcdonald's roughly around the time it seemed imminent that peyton manning was going to leave the colts. his jersey impacts may have an impact. nike seems overvalued here. nike seems overvalued here. >> you have manning and lin.

>> who is lin? i've never heard of jeremy lin. i think the difference between mcdonald's and nike is mcdonald's moved sideways for quite a while. i think people expressed skepticism. nike continues to move higher. i am not a big fan of getting in front of a chart like nike and trying to pick a top. if you want to do this because you're long the stock and want protection, that makes all the sense in the world. you're only spending 90 cents but remember this strike that dan is buying is five out of the money. there's nothing wrong with that, but we tend to look at that relationship and don't be fooled by the fact it's five bucks out of the money. >> let's hit stocks versus options button. want to short nike, you better have over a billion in the bank. you could lose shorting any company let alone nike. offers a 4-1 payout. quadruple your money or end up in the poor house. it is your choice to make. let's move on to our next trade here. shares of las vegas sands had a rise in some 22%.

there has been speculation that lvs could be added to the s&p 500. and the gaming stocks have done well on the heels of recovering vegas market. should you double down at this point? let's call to the chart with the man who had a couple crazy nights in vegas himself, carter braxtonworth. of oppenheimer. >> one's a daily, one's a weekly. here's the daily. while it has been strong here today, what's important about the strength is it resolves the tension that's been going on for the last two years. so a well-defined range. and now we're just now coming out of that range. and put this in context. take a look at the long-term chart. closed today at 5483. this is the same range of where this has come from. so draw the lines any way you want. people talk about cups and handles. but premise is after a big period of equilibrium.

it doesn't make it overdone. you've got plenty of upside. 65 or thereabouts. >> plenty of upside. do you think the fundamentals support the technical take? >> certainly you talked about macao. we did get numbers out of there. seeing that the chinese macao community saw revenue growth of 28% in january and february. 42% year over year. the secretary of economy and finance kind of down played that a bit going forward. you're talking about a stock trading at 35 times trailing earnings. so you may look at that valuation and say that's relatively high. but analysts expecting 30% annual growth out of this company and that's -- you know, that right there is in line with the 35 times earnings for the company. certainly there is more potential for upside to the upside making carter's point, the stock moving to 65 bucks. >> brian is doing what's called a call spread risk reversal. this is tricky. let's review. it's a bullish strategy where you sell a put, use the money to buy a call spread. you want the money to go to the short call strike.

since we're also short of put, you've got to be willing to buy the stock at that price or below. this will tie up some cash. keep it in mind. brian, walk us through the trade here. >> whenever you outlay an option trade to know your risk and getting into that trade. when you talk about las vegas sands, it trades at beta. to the s&p 500. if you see 5% or so, you may see las vegas sands fall 15% or more. i wanted to find that risk. the june 46 put, i can sell that put. what i want to do is play to the upside. play to the $65 target and use the money i'm collecting to buy a june 60, 65 call spread with that. between the structure, you collect about 10 cents on this trade. i like that. if the stock is around this level, i collect 10 cents here. from 60 to 65, i have the potential of making $5 on the call spread. the risk here is the stock falls below 46, you would be obligated

to purchase that stock. you have to be prepared for that. i like this risk reward profile here to still play to the upside. >> dan, we just had a conversation how nike could be poised to move lower because of challenging international growth. if you're a believer that china is saying we are going to be in a slowdown, can you also be a believer in the fundamental thesis for las vegas sands? >> that's a great question. i actually think that's the case here. when you saw earlier in the week when china did lower their growth outlook, what did the stock do? it went down a lot in a short period of time. that's the risk. i think brian's isolating that moving average, that support level with that 46 put. i mean, to me, again understanding your risk of entering a trade structure like that, you're saying to yourself i'm willing to buy the stock here at 46. to me i like the risk reward profile. you've got to get to $60 to break even on this thing which is a bit away. >> would you put this trade on? >> i like this trade a lot. >> dan points out that the problems in china might not be over. i do think the problems that

wynn has had are good for lvs. probably good for this stock. brian makes a great point that this has to fall a long way before you get the stock put to you. and then dan makes the point if it got down there, i'd probably want to be a buyer of the stock. i think this makes a whole lot of sense. >> you know that vegas is a beautiful town. great food and shopping. it still lacks this, that is stocks versus options. want to buy the lvs stock? it'll cost $55 per share. worst case scenario in brian's trade, you have to buy lvs for 46 ts. with the credit losses wouldn't kick in until 45.90. our thanks to carter braxtonworth of oppenheimer. send us a question and we'll answer it in our web extra after the show on optionsaction.cnbc.com. we'll post trade updates there as well. got to check it out. here's what's coming up next. talk a metamorphosis with a bearish bet on caterpillar stock.

dan doubled his money. there's more left in the trade. will he cash in on cat? find out when options returns. time for pump up the volume. the names that were heating up the sizzle index this week. got some secret files lying around? this company would be happy to shred them for you. its name dates back to the '50s when it figured out a metal mine would be the best place to store documents. options traders burn through the company's calls this week, betting the stock will be on a tear. who is it? the answer when "options action" returns.

welcome back to "options action." time for the upside call. we take a look back on some of our winning trades. last week we called dan out for a sour trade on apple. today we congratulate him on making a cool call on cat. take a look. >> on "options action" there's only one way to construct a strong trade. risk less so you can make more and that's exactly what dan did with his bearish bet on caterpillar. dan thought shares of the giant were heading lower. >> thing comes in just a bit here. >> shorting the stock, not unless you want to demolish your portfolio. to define his risk, so dan instead bought the april 10 strike put.

now he needs stock to fall below that price by more than the cost of the trade or in this case below 107.60 by april expiration. but 2.40? we're trying to build a winning trade. show us how to do this for less. >> i sold the april 100 puts. >> well done. to spend less, dan sold the 105 strike put for 1.40 and built his put spread. but he did something even better. he made making money easier and here's how. between the 2.40 he spent buying one put and the 1.40 he collected selling the other put, he cut his cost to just $1. and now instead of needing caterpillar stock to fall below $107.60 to make money, he can say profit if it falls below $109 by april expiration. hold the applause because there is a tradeoff.

by selling that put, he cut his cost but limited his gain to the difference between the strike of the put he bought and the strike of the put he sold. and since the time of the trade, shares of cat have cooled off falling some 5% making dan a winner. now "options action" fans across the world are tuned into the show. they just want to know one thing. what will dan do now? before we answer that, let's see how much money was made. had you shorted cat's stock at the time of the trade you would have made 4%. dan's put far buck can be sold for $1.60 that's a return of 60%. there's a lot left of the trade. what do you do now? >> with a trade like this that was out of the money. scott identified the one with nike being 4%, 5% out of the money. you identify a level you think it could go. in cat, i thought it could go back to a level of support. it went there on tuesday. so i actually took off half of the position because i had more

than a double on it. now i have the rest of the trade on for free. that's how i trade these things that are trades. they're not investments. >> with economic numbers improving, you have to be careful here. i think construction will move higher. the economy is looking better and better. to take this off makes sense. i laid out a trade at the beginning of the year to get long industrials. cat was one of the names i was willing to get called away at the level. we're right around there. for him to put that on at the time he did, it was a great trade. >> i would take some profits here. right now the market's not giving you a lot of time to take profits on your bearish trades. we saw that on tuesday and wednesday. you really have to take profits if you've gotten a good trade. >> if you want updates on your trades, follow us on twitter and dan posts regular updates on his twitter as well. check us both out. >> before we head to break, many of you are probably saying where is mike khouw? he will be back. after three and a half years of

never missing a single show, he's off today. on some much-earned vacation. he will be back next week and hopefully the next three-plus years. up next, you make the call. we are taking your calls live. if you want to participate, e-mail us. the address is "options action"@cnbc.com. back right after this.

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[ male announcer ] get a 4-week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. tonight aught cnbc sports, letting go of a legend. the colts decision to let peyton manning become a free agent. that is tonight 7:00 p.m. eastern on the nbc sports network. time now for you make the call. our caller today is putting bobsledding back on the map for america. he won two world championship titles in history and broke a 62-year medal drought when he slid to gold in vancouver. let's welcome steven holcomb. five-time world championship bobsledder. it is an honor to speak with you. what's your question tonight? >> thanks. i appreciate it. "options action" is one of my favorite tv shows. i'm excited to be on. right now i'm currently trying to defend the four-man gold. hopefully win the two-man gold in the next olympics.

one of this biggest sponsors is expensive. if other sponsors want to help out, i'd love to talk to you. in the meantime, i hear a lot of names. i know traditional video games were a hit in february. one of my favorite video games activisi activisi activision, call of duty modern warfare 3. it's a big seller. if i want to buy options, what's my best way to play it? >> that's a great question. scott, what's your answer? >> despite the big win you mentioned with the video game, it's been in a range for awhile. given the situation, i actually want to get long by selling options. i would sell the april $12 put for about 50 cents. great way to get long a stock at a discount. >> all right. we got a lot of data today about video games being down significant amount. i think it was 20% in the last month. very bad data points. what's your take on the stock? >> a couple things.

one on video game sales, you have to worry a bit of a concern that a netflix model enters the world. where people can return them. if that's going to have an impact on the actual sales and revenue in the video game area. i'm actually playing game stop to the upside. i like the fundamental basis behind that name. >> that's an interesting one. >> steven, thanks so much for calling in. we appreciate it. best of luck to you at the next olympics. steven holcomb, gold medal bobsledder. i've never spoken to a bobsledder before. first time for everything. time now for the final call in the options pit. >> i want to make a view on some stocks traded at all time highs. tight put spreads. >> vegas, baby. stick with that las vegas sands. maybe use leverage if you have the capital. >> looks like our time has expired. i'm melissa lee. go to our website for more

opti option action web web. see you back here next friday. "money in motion" is up after this next break.