you so much for being with me. follow me on twitter and google plus at maria bartiromo. we have a great so for you. fast money begins right now. >> i'm melissa lee. the portfolio breaking down the unwanted that may be working in the exchange traded options you own. creating obama care with the mandate in court today. we are trading on this news. a hot topic with the "hunger games" the the stock hits three-year highs. live in the market site. get to a part of the market we don't often talk about. hitting a record today. you say no way. >> small cap said you see that was going through the list. you can't believe how much of the stock was up.

that said, that's where people go and you saw it come under pressure in the early part of february. that will start to come back to hurt people at the beginning of april. >> and a bull on small caps. they came out with a note today. they have been pullish for sometime and now it's time to get lighter. they have been posting better and small caps are a better price, but bank of america said the second half will be worse than the first half. that may not come to fruition. >> as john cougar mel an camp was saying, he was born in a small town and lives in a small town. we do watch what the rest are doing. it is a similar risk. when i see them ralliying, they have not.

people have been frustrating with the level of this market's move. if you are going too deep, you think this is an unreal move and they will drive more. you don't want to be there. you are an institution and you are dead. for a lot of people to watch the show, not necessarily the same dynamic, but a lot of people feel the market is topping here. small cap might give you a couple of days. that's usually what happens. that could be the place to get out before the rest of it. >> a lot of guys are looking at the inference and saying it meant made the new high like the other indeces. this late stage of the rally, some of the stocks, large holders can push it around. don't forget where we are. there could be market going on and i don't think you want to loan these at the end of the moves you see. >> i'm probably going to die in a small town. if i had to pick one, it would

be las vegas. geographically it's a small town. if you look at a company like shuffle master, that dominates their space. it sounds funny and you get a kick out of it. you play cards and black jack, but it's not just for paigow and those things. it's a game you play in a casino. five unique categories that only plays at 20 times earnings. 13 consecutive earnings. shuffle master which was up small, trading around $18. that's interesting here, folks. >> if you look at u.s. gypsum. we had good housing data from lenar sending the group higher compared to yesterday's dismal performance.

refurbishment, etc. >> who do we give kudos to? brian beakers. wait to go, beaks. >> i would say the other side is the iwm, use it straight out. this is a great way to be defensive. we are talking about small caps that outperformed. they have every reason and you can get on both sides where markets are here. plague the russell defensively and useing it as a hedge at this part of the market move. you saw stocks that were careening down. industries don't protect you. this is a great place to be short and cover your butt. >> that's an important point when you have stock pickers and a macro point. for risk management, you have to be hedged. when you go into the april to august period, you see massive drawdown. you can have the best idea on the planet, but that doesn't matter. be careful and find protection

and again using that is a good idea. >> seeing much activity when it comes to iwm or any other small caps. >> what's interesting to me is if we take a look at how it behaves, the price of options continued to decline. the index itself has been more volatile. they tend to disburse and they trade much more steadily. you see rising correlation, they start to be more volatile. you see slightly increasing volatility. people could be more skiddish here. >> you might have noticed hot topic is one of the companies on the list. part is "hunger games" merchandise. guys are loading up on t-shirts. >> i love them. >> i'm sure you do. the ceo lisa harper will be on the show to talk about the stock.

>> before we close out, anyone know where john cougar was born? >> i want to say indian a. >> seymore, indian a. >> next up, if you own an etf that tracks a sector like technology, you expect to have a similar return to the sector. lately trouble in etf land with notes like plunging as if they rose. what other products are moving in the wrong directions? we have the worst five etps out there. we are joined by president of global transinvestments to count us down, the biggest offend r offenders that may be lurking in your portfolio. we want to go in reverse and track down to the worst one. let's start with what? >> in going-over this, it's important to understand on a

given day to day basis, we may see different numbers. there is one gwo, a credit suisse elements at a discount about 19%. there is actually a buying opportunity for those in there, but it's important to understand that you have to lift up the hood and know what's underneath from time to time. when you get into the problems. the long platinum ubs, part of the problem here. it's the issuer no longer issued additional shares. we get into a situation where the etns or etps start trading. >> that's why it's very important if you are going to invest and expect that etp to track, you want to make sure it's back by physical assets with gold. platinum and the physical.

there some that do that. >> they're do and in the case here, we have a couple that are etfs. they buy stocks and we have one in the bond etf, but in fact it's actively traded. part is the supply and demand issue and the fact that it is actively traded and the assets in the etf are very, very small, hence the premium and finally, there is a market factor. there is a china etf, trying to emulate the market in china which as we know, we here -- it's not a market. they try to do the best they can, but that's trading as a premium. >> a 10% premium is 10% higher. that's 10% more cost to you. >> than the indicative value.

with etf and i'm looking for chinks in the armor, but you can go on to any brokerage system and put a dot iv after the ticker symbol and you see the underlining value of the underlying intext compared to the current price and it's easy to see if it's trading in line or a discount or a premium. >> the number one in terms of the worst offender is no surprise, a natural gas. >> right. it's not as though it's a very individual sector. another case where the folks have decided not to issue new shares. they didn't want more exposure to this area. as the market is moving, more demand and more people pile on and we are in a situation where we have over 50% premium. very similar than what we had last week.

that settled and we will see this settle as well. people who came on not understanding that they had this type of exposure got burned. >> make this clear and what's the obligation of the issuer? they issued new shares and until then they let the word out that they were going to. do they have to spend more time looking at this and again letting the word out until they are doing it. it seems like a situation where some had the situation and others did not. it's a lot of issues here. >> it's a great question here and with all the attention it got, they would be looking at this. >> i hope so. >> we are in a situation where we have $1.4 trillion. for the most part, it's pretty clean. we start to see a bruise from

time to time. it's our obligation to talk about it. they didn't want to issue new shares. if you look at the perspectives, this is a trading vehicle. expect to lose your money. they have done everything from the foreclosure standpoint, but as we saw volatility hit lows, there was demand from a hedge perspectives. the volumes light and aware of the fact that they don't track what they think they are tracking? >> not always. here's a situation with chine a for example. you are not buying those china a shares. they are derivatives using the index trying to replicate as closely as possible. does that mean it's not worth of 6% premium?

maybe so. however, as you look at most of them in the assets that are in there, volume is under $50 million. i like to look at an etf with liquidity over $100 million to start and most of the largest out there and as you folks talk about etfs, that's where they are looking for market representation and most importantly. >> the caf that i traded myself, the thing trades like 100 to 150,000 shares a day. that's not -- it's like not too hot and not too cold. that's where a lot of hedge funds can live in rome. you can't walk into the things not knowing who is in the woods with you. this is a serious situation and people are finally getting their eyes open to that.

>> more than ever it's important to do your homework. >> just because they are easy to invest, you are able to access markets the average investor did not have easy access to. >> tom, thanks a lot for joining us. etf stock.com. i don't know if you have ever dabbled in it. >> i traded a lot of etfs substantially. it's interesting. he made a point about how much these things trade. sometimes a little can be a warning sign or a lot. it's not just true when the interest gets too big, it can create problems. ung some people may recall has the underlying instruments for natural gas that they were supposed to be trading and issues with respect to exchange limits on the number of contracts that they were allowed to trade and that prevented them from issuing new shares when

they were having trouble. etfs can as well. you have to find the sweet spot and look under the hoot. >> always do your homework. >> coming up next, why justice kennedy may have changed the trade. more fast, straight ahead. ♪ when your chain of supply goes from here to shanghai, that's logistics. ♪ ♪ chips from here, boards from there track it all through the air, that's logistics. ♪ ♪ clearing customs like that hurry up no time flat that's logistics. ♪ ♪ all new technology ups brings to me,

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welcome >> welcome back to fast money in times square. let's hit unusual activity with microsoft. xbox live will carry premium content and you saw one trade in particular thaw noticed. >> this was an opening trade. someone bought 50,000 of the jan 1445 calls paying 77 1/2 cents for them, almost $4 million in premium. 38% away from here out of the money.

one of the things that are expected to grow, with all the product cycles coming, fiscal 2013 earnings are supposed to grow. this could be a long way to play this thing. define risk. >> this stock held up and holding up on the new high. >> after the move it had to be buying 45 calls, when large cap tech i would argue is the thing that you are waiting for the markets to crack, you are almost in disbelief even though it's not expensive. these are the most crowded hedge fund trades for sure out on the street. you have to be careful even though they are not expensive. >> it's almost a contrarian thing. the stock is up 45% and somebody is looking for another 45%. it's not like we are dealing

with a small cap stock. that's what we are looking for. justice kennedy may be signalling trouble for the obama administration. the government has a heavy burden of justification for the mandate. let's bring in how this may play out. we won't get a verdict until the summer. is it too early to start trying to decipher the line of questioning that the justices have? it's not just the chief justice kennedy. it's the three of the four conservative justices that were asking tough questions today. >> it does appear that the individual mandate may be struck down. it's a surprise because consensus has been expecting that the law would be upheld and in that case tomorrow's discussions become very critical. that is really about what happens to the rest of the

healthula. should the mandate be severed. they take away the mandate and also take away the underwriting provisions that they agree to in obama care. that's regardless of whether they were sick or healthy. they could not provide for the sick. they both go away. we expect the earnings up and they should ral oat news and in particular, they should see the most upside. >> the bear scenario on the other side is what? >> the bear is the mandate goes away and these provisions stick. we are estimating 5% incremental earnings downside. it's not that far. the penalty is weak to begin with. expect that the sector will pull

back and rally from there. they would be much more defensive in terms of bets. unitedhealth is the most favored and the largest and most diverse. i would favor humana, very much a medicare story and finally cigna which has fairly low exposure to exchanges. >> let's talk about unitedhealth. at a three-year high and trading around 10 to 10 1/2 times earnings. a lot on the upside is this stock is hitting against the ceiling. >> there is a lot of room. they are conservatively $65 and from earnings, they are going to beat and race earnings. they should see exposures and leading up to the election as well. >> they will happen at the end of the day tomorrow?

throughout the session tomorrow. do they happen when the pull verdict is given. >> the stocks have been responding to the reactions in the justices. surprisingly, we have seen more indications than they expected. we will see movement between now and june as well. the first quarter earnings are a huge catalyst as well. you should see dedicated money playing the space, buying into the names ahead of the first quarter. i expect that it might stay away until after the verdict in june. >> in terms of the two, which are you telling investors is the most probable? >> it's hard to say and thought that the mandate being upheld is the most probable. with the mandate being struck down, looking at all the briefs from both sides of the aisle, it appears that there is almost a fear of god of having them

struck down. it seems more likely that we will have them should the mandate be struck down. >> anybody playing these health care names? good performer this is year. >> this is wild. you look at it yesterday up 3% and down 4%. people are flipping around like a fish out of a boat and stuff. the big thing for me is obama. in our election, obama is ripping to the upside. if you get a hint of obama losing. they are not considerable and that's something that i think is on the come for the next three six. >> so far the thought as anna mentioned that the mandate could be struck down did not mention anybody's mind. the width of this, doesn't that give romney an edge here? >> we talked about the health care sector and i personally can't figure it out. it's very difficult to

differentiate romney and obama care. i don't know if anybody else can. >> you have to mention today pfizer. i know it's outside of what we discussed. here's the company with great balance sheet and dividend. we are at a four-year high. it has money on the upside. we mentioned it for a long time and it continues to work. >> i think it's right in the conversation. there is an article outside that they will grow their business 60%. that's the key to health care around a lot of places and especially in the emerging world. generics are doubling from 2007 to 2012. they will double in another five years. they are trading versus the historical around 20. they are playing the future for at least the pharma industry. >> in terms of the handicapping, are you seeing options that

indicate any guesses? >> we are seeing bullish blows in well point and unitedhealth. that's consistent with the view and pfizer traded over three times the daily volume based on the same things they were just talking about. >> an issue we will continue to watch. next on fast hot topic, a lot riding on the "hunger games" success. what happens at the trade if it falls apart? that's up next to answer your questions. #

>> > you sent the guys an e-mail to congratulate them. it's impossible to pick the right movie. that was carl talking to

maria about why he sold out of lions gate shares is prior to the huge run that they have seen on the "hunger games." not a good trade as carl mentioned. he was sending those guys an e-mail and overall his performance has been good, but the lions gate story is unbelievable. >> yeah. we saw him today. he was here and the funds are up 34%. he's having a great year. we thought he had it wrong from the get go and we were on his side. that turned out to be the right side to be on. i think the stock is worth owning, but we are seeing a bit of a pull back. we will have another reason to be in lions gate and probably introduce her in a second. >> the t-shirts you have been buying. the nail polish and the pins. >> how do you know about the nail polish. the t-shirts, yeah, but the nail polish.

>> shares of hot topic are up 2%. a boost with the line of "hunger games" merchandise. what else is in the pipeline? we have the company's ceo who joinses e us on set. great to have you with us. the last time you made commends about the impact is when you reported earnings and said that "hunger games" merchandise was driving sales by mid-single digit gains. >> it's incremental to the core in the business. not as big as twilight, but a very powerful brand and a very powerful property for us. >> what are have you seen in terms of demand that the movie is out. >> the sales cycle is the peak week prior to release. last week was the peak volume and we expect stronger than normal tail to the business so we will maintain in the pipeline

for the next month and pop again at halloween. >> a lot of people you mentioned were twilight and that was a huge boost to the stock. a lot of people go back to the days where you were selling and other merchandise. the stock more than doubled from november to april. it's going to happen because the "hunger games" agreement is not exclusive either. will we see the sharp rise and fall in hot topic share sms. >> we turned around and stabilized it so we are able to actually capitalize on the core business which is also comping in the mid-single digits and "hunger games" incremental to that. when twilight came out, we had a slight pop to comp. the case is different now. we invested in fashion

accessories and make up and -- >> nail polish. >> i'm not the target audience. we used to talk about where dream guess to die, but the fads come and go quickly and transaction value increased by 9%. it was offset by 7% decline in transaction numbers. is that a good thing or a bad thing? >> quite a good thing. we readdressed the business and focused on the 18-year-old instead of the 12-year-old. you are seeing a lot more fashion apparel and higher priced items being performed and a slight decline in the values. we are seeing the turn around and we are having a great increase into the first quarter. related to the core business as

well as incremental "hunger games" business. >> when you are at conferences and the communities are giving you these intelligent questions, are they focused on your core business or do they care about the fads like twilight and the "hunger games"? >> i think we have been able to mid-igate the very aggressive approach to the boom and bust thought process. it would be nice. and they are understanding the fundamental improvement in the business. how are the transactions driving and the average train going out slightly softer, but we are seeing that improve as we move forward in the transition. >> i know you are targeting i major growth path, but is that limited? you married pop culture guy like d

dan. >> what we have done is a tween retailer to a teen retailer. they have more jobs, sometimes. it's aspirational for the 14-year-old and the 28-year-old or the 32-year-old or however old you want to be today. by going to an 18-year-old, we bring in a larger range of potential customers. >> great to have you with us and hope to see you again on the show. a three-year high and perhaps no coincidence it was around the same time as the repolice and a different business now. >> for a special retailer, it's not that expensive and they pay the dividend. at $10.30. it's worth a look.

>> you know what keith asked me? what's twilight. >> it's that pretty time between -- >> the rosy glow. >> he was sing zeppelin between the break and leaving people with the view that he was humming hungry like the wolf. parrot topic of "hunger games," let's check out the "hunger games" in addition we talked about lion's gate. i-max is getting 10%. scholastic down pen trs trs, a publisher that is doing well. hasbro and mattel. capping off a huge run. >> mattel with almost 4% outperforming hasbro. amazon we talked about three or four weeks ago when it traded down and we talked about that level.

it's probably not the time to sell it. you may want to buy it with a tight stop and that's proven to be a great play. i think mattel out of all the names is the most interesting. >> let's get some options action. specifically at trade. >> this is a situation where they sold and paid about 20 cents 4,000 times. if somebody is up about 33% and they are concerned about a pending pull back, one way too hedge that is to do it better by minimizinging the cost and trying to do a zero cost collar. it was selling the 42 against it to give us the proceeds to finance that and also at 90 cents and gives you protection. you will get called out at the 42 level again and the stock, 42

is about the average. >> it's interesting that this stock is up 33% year to date. when you look at the semiconductors, the only groups that are expected to have earnings down year over year. you have really nice gapes that you head into q1 earnings cycle and these structures make a ton of sense. these main options happen to capture the earnings coming out on the 26th of april. they can cause these things to roll over. that might be it. >> more "options action" every friday at 5:00. get concentrated updates. why u.s. banks may be the best way for america's recovery. only if you know where to look. #

>> > welcome back to fast money. live at the nasdaq market site in times square. with the economy in the midst of a cam back, could banks be the

best way to bet on the usa? cnbc headquarters. >> banks are an easy way to play as the viewers know. when consumers seek loans for cars, homes and credit cards, investors have been picking up on it, hopes for a bottom in the housing market and stronger bank balance sheets. more than double those in the broader markets. are they lady for the trade? not if they are willing to take more risk. if the recovery is a rising tide lifting all those, those stuck are going to benefit the most. buying banks in distressed regions provide the greatest rewards. set to outperform the largest competitors or by less profitable banks where they are yet to repeat tarp.

richard steinberg of asset management so he thinks they may be on the cusp of a new cycle. he likes to invest in strong local economies and bar harbor, maine and bryn mawr, pennsylvania. back to you. >> would you buy banks stuck on a sand bar focused on the floor? >> they probably would be under water because it's under sea level, i believe. >> answer the question. if a bank is not participated in this and your bank had not participated in this rally, there is a reason for it. don't try to buy the non-performance because that never works. i shouldn't say never. it rarely works. i would buy ones that continue to perform. a usb that just crushed lately.

it's at a high. >> you don't think that's price he? >> no, no. i will push right back. >> i can push harder than you. >> she has the gun show going. >> i think a lot of people would agree. they think there is more upside. at least one of them does. >> that's great. >> the european is banks in italy and spain. they were down 65% year over year. much better than expected. these guys are printing money with the ltr. they will continue to outperform. it's a trade. the reality is that this is a decent trade for the next couple of months. >> one of the things we have been playing is the spanish side of the banks. huge representation in the spanish etf.

they are trading well over what we would call the lehman line of cds risk. if you top the get short in banks, the etf there. >> mary thompson, thanks for that report. moving on here, right now we are seeing the most obvious clean cut cell signal since the quarter of 2008. what is it? >> if we look at what may not be obvious to me in this case, what if we go below 14? it's the 90s or the 80s or whatever. if it's 2008 to currently where we are, if they crash through 14, you have a serious problem from a gross or a net perspective. we bounced around this level in march. every time we got to the low 14s and i shorted the s&p. that's our playbook and we stick

with it. >> i agree. 19 to 20 and somewhere up there. keith is exactly right. what i want to do is take advantage of those unusually low volatility levels and consider strategies and there could be potential upside, but i'm worried about the risk that you just mentioned. >> maybe a stock at a high right now and you are not sure about further gains. >> a stock that is up dramatically, you will have the q1 reporting and people are focused on the earnings. you can buy a call for what it's realizing and sell the stock and define the risk. >> the great bust is at the ultimate stay away trade and are the miners presenting a golden opportunity. stay tuned.

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all part of the investing in america. catch it at the top of the hour on "mad money." call it the great bust. prices plummeting to a decade low and having a big impact on the related names and the trouble here is that with prices continuing to fall, one would think you would need more production cuts and already a lost them indicated that they are pairing back production and can they get deeper. how painful would it be for the stocks? >> it's painful for the coal producers as well. 's s's so cheap, they have a necessity and the substitution effect meant that first of all, there other uses and more demand to soak up some. the real place that suffers is coal. we have so much coal here, these guys will have to cut back.

that's really the place to trade this. the coal producer who is believe that there is an argument have overpaid in the last nine months. one man's pleasure is another man's pain. what's my point? i'm going to tie it all together. look at the chemical companies. thank you. now the light bulb goes off. look at eastman chemical. we talked about west lake before that whole thing. chemical stocks win to the losers. >> that is true. >> i agree on coal. coal looks nasty. natural gas looks like if you are a practice fegzal knife catcher, go at it. if you are not, you have to look for the stocks the southwestern

energy can go to attorney. people have to come to jesus and come to it quick. the price of nat gas matters to a company that needs to get paid. >> did you catch them? is that a line for shares after the earnings missed last week? >> that's a falling knife. people come out and you buy because it's cheap. cheap gets cheaper and you need to think about that. >> we are trading your tweets and your question we are answering. stay tuned and find out. #

>> > welcome back to the market in times square. we are getting upgrades saying the macro risks have improved for the group. which are the best mining stocks to be in? we talk international and have to go to the investors. >> they like volley here and iron ore that has been under a lot of pressure. the steel trade is coming down and they priced this in. historically relative to where

the prices were and you are talking about four times what they are receiving. i think you want to look at other guys that give you exposure to the gold mining space. i have been talking about them because relative to the metal and the pier group, they have been getting destroyed. another great name as great exposure. and free port mac has major exposure. if you don't want to get hung out to dry, short the gld against it. there is a major disconnect. you can be safe shorting the metal and being along the miners here. that's a great trade. >> that's a very good point. on the other side, it's the top line. if you get gold, you will get free port right. this is a strong dollar move as

well. if you get anything that gets the dollar moving higher. that can happen with a marginal success with mid-romney on the market. there is a lot of ways the dollar can go up. >> i would say if you have soonch seen a stronger dollar environment, that's because of global growth picking up. the u.s. housing demand in topper is going to crank up. gold down is a dollar up trade. this is about economic strength that will put in real demand. >> we will come right back. stay tuned. #

>> > welcome back to the trade and annie's organic. starts trading tomorrow above the limit. >> final trade. >> diamond do. >> what? >> t.j. maxx. i don't know about mac and cheese bunnies. >> long nike. >> they maker beganic mac and cheese bunnies. >> makes perfect sense.