tumbling 2.25% and showing gains in 2012 for technology. the nasdaq still the winner on the year. that will do it on closing bell. thank you for watching. follow me on twitter and talk to you next week and i have the week off. options action begins right now. stay with us. >> morgan's pain, your gain. bank shares getting batter and a trade on morgan stanley that makes seven times your money ahead of earnings. he will explain. talk about a hot trade on chipotle. they are teaming up for a trade on the stock that makes four times your money in two months. they will break it down. all those options traders chowing down on dunkin donuts calls. the 411 action begins right now. >> live from the nasdaq markets, the largest equity options

exchange. these are the leaders and welcome back. volatility and stocks finishing the worst week of the year. the lows are gold. fining you names and strategies that turn volatility into opportunity. banks and tech and materials getting clobbered. where was the money going? it seems like they continue to set fresh 52-week highs. >> when you think about it, financials and tech here, we have seen a rotation add with a lot of bank stocks down about 10%. ap cell down four days in a row about 5% off of the all time highs. what's working is starbucks making all time highs. panera bread and young. look at that. microsoft stock was raging. up 30% on the year at one point and down about 8% now. as we get into q1 reporting season, investors are hitting the pause button. the moment names are still working. >> if you look at the fact that tech and financials declined,

these are two areas that have not risen for the same reason. financials are more of are we back in safe harbors as a situation. when you start seeing widening spreads and seeing widening sovereign debt spreads, those are the things that cause the concerns that cause the financial to crumble. the tech space is a different story. the results have been good. when you see that concern, i wonder whether the other areas that are -- i don't know that we are seeing a rotation. i wonder if they could be the ones that can crack. >> you talked about banks and financials that got killed this week and today. part of the problem is they have come so far so fast and done so well. a lot of them are undervalued. we talk about bank of america that completely rejected the $10 level. that was an important level. something for everybody in the brought market. it looked horrible and wednesday and thursday it looked good. it finished ugly and closed ugly today. on the low and vicks closed the

week on the high. that's never a good thing. >> that's a great point. they usually do go up when they decline, but in this case today, it was up more than the decline in the s&p and that does suggest that people are turning up the knots. friday you would expect it to be lower and s&p is lower, but it was up much more than you would normally expect on a friday. >> we look at the changing of the guard and the momentum in the stocks. what do you make of that? does that signal a market change? it's not that apple is down, but if you take a look with the s&p, the losses for the week are double that of the s&p. >> it is frothy when you look at panera and young, but one of the things as far as tech is concern, we saw google and it looked like decent numbers and the stock sold off. apple is one that we saw sandisk. haven't had an upday.

it is a supplier to apple. everyone thinks it's the best thing ever. it's not. look what happened to nokia. they are destroying the competitors and squeezing the heck out of the suppliers and sucking the life out of a lot of market caps. >> let's focus on the financials. jpmorgan and wells fargo. we saw the space completely battered across the board. part was concerns out of europe. the european banks fell into the close and the u.s. banks take their lead from that sell off. next week you are looking at morgan stanley and that moves into the european banks of late. >> we have wells fargo and jpmorgan and that is as good as it gets. they are down almost 18% off the march highs. it's short that is down this much into events and what's becoming an uncertain market. the implied move is higher and

almost a little under 5% going into the event. i'm not looking to make a move just on earnings here. i want to look out to may. moody's told us that they may downgrade this company with the credit rating by three notches that will increase the funding and make them less competitive. i want to look out to may for a low premium structure to have a bearish bet, assuming that the sovereign debt stuff heats up. i want to make a low premium bet that this stock goes unchanged on the year. >> dan is bearish and uses a put fly. we have to open the playbook. you sell two lower strike puts against it on the same expiration. you buy one lower and you want the stock to go to those two strikes that you are short. you want it to land just right. >> definitely thread the needle. this is four legs. you always want to use limits,

but when the stock was 17.5, i bought the may 16, 14, 12 put flies. i paid about 23 cents for it. i bought one of the may 16 puts for 45 cents and i sold two of the may 14 puts for a total of 26 cents and then to cover my tail, i bought one of the may 12th puts for only four cents. the max risk is 23 cents. my max gain is $1.77 between 1577 and 14 to pay off trails off between $12.23. the mass loss is the 23 cents above $16 or below $12. a massive range and a massive profit potential between the three strengths. >> it's interesting with trades like this. you are trying to thread the needle and $2 and the strikes

are a good ring to have there. i haven't seen anything fundamentally good for the businesses. declining volumes in every asset class if you are looking at the trading. if you were anywhere, you want to be on the buy side and not the sell side. we saw that. you look at those types of things and say the trend has not been that positive. we need to see revenues turn around. >> the chart is ugly and europe is a problem again. all of a sudden, the thing about the butterflies, you have to thread the needle. that becomes more critical as this gets closer. if you don't feel like you can thread the needle, take it off earlier. sometimes it works and the map is not working for you. that's how you alleviate the problem is take the trade off earlier. >> that's a good point. if the stock is down, it will at least break even and what i like to do with the situation where is it is expensive and i take

half off and let the other half ride. >> that's great. >> hit the old stocks. morgan stanley or others, unlimited risk. stocks can go to zero and that's a long time. they have a 7-1 pay out and defines the risk at $23. interesting risk reward here. let's move on to the next trade bank. momentum favorite in burrito king, chi potly. it is 7% and the stock hit a high in today's session. where is it headed next week? let's call to the charts, el mariachi himself. carter, what do you see in the charts? >> four graphics and the story is quite compelling. the daily chart over two years and one of the principals is that when you get to the bottom or top or top or bottom, you respond to the channels.

when you get to the top, you back away. you get to the top and you back away as you respond by bouncing. at the top, it's not good risk reward. you take a look at the same circumstance on a five-year basis. it's the same principal. 40 or $50. a massive advance. at a level where the price or perfection and often that's not the situation you want to be in. let's look at what we are talking about. next week you have earnings. the last six quarters have missed on two and four. the important thing is the last two misses, the only misses have been in the last three quarters. of the last three, look at the price action. this is the response of the stock from two days before to one day after. very little upside. down, down. not a good situation. as a little appendix, this is one heck of a stand against the

king. this is a five-year chart. chipotle and apple. down 5% off the high and take your chances by being launched. wouldn't do it and the opposite sides. >> not a pretty picture that carter is painting. what's your take on the stock? >> there is a couple of things. obviously it's a richly valued stock. we are trading about 64 times earnings and you can justify that if you see explosive continuous growth going on. this was a company that was growing at a rate that is still good, but if you take a look at the last couple of quarters, growth is starting to decline where a lot of the expectations and analysts are trying to stay in front. the average price is lower. they keep upping the estimates or keep up with the price action. what you need to do is keep up with the fundamentals and is the growth rate justifying the valuation. we are at the upper end at 64 times earnings we have seen.

>> bears as well. mike is using a put strategy that we often use, but it's good for that so let's crack open the playbook. one put and sell a lower strike with the same expiration to reduce the cost. you want that to fall to the lower strike put. that's where you make the most money. >> i want to capture the earnings and i want to capture more time than that. what i am trying to do is buy the june puts. they were trading on or about $15. they were about 7 1/2, a net debit of $7.50. you will have to pay attention to where the stock is when you pay this, but that's what you are looking to do. spend less than 25% between the distance between the strikes. it seems like this is part of the money, but you have to look on a percentage basis. $20 away is not that much. >> the analysis laid out is interesting. you have recently put on a bear

strategy on apple and that's the comparison he makes. >> had to bring that up. >> it was the timing. >> i am such a cirqsucker. i did this a couple of times. last year the trading pattern was different. it's volatile when the stock was a $300 stock. now it's a one-way trade. i think if you are going to take a shot, you take it here. i am trying to do this in apple and chi potly and it gets expensive. >> it made an all-time high. when the stock made a high, i will say mike is buying the puts which is the thing to do. >> i love their tacos though. >> the burritos are quite nice. >> don't buy the stock. >> we will have you later on the show, but when you make the comparison and say chipotle has a bearish chart? >> they are equally crowd and

popular and now it's broken. earlier this week it closed at $6.05. not so good. that's how things fall apart. >> see you later in the show. more time on stocks versus options. want to short chipotle, it is the equivalent of eating 20 jalapenos. it could cause you discomfort. the 4-1 pay out and the advantages are so much clearer when you use food to illustrate the point. we will see you later on the show. the address is "options action" and we will answer it in the 1 on one after the show on our website. "options action." you find a recap and with all of them centering on next week's earnings. you want to check that out. >> talk about a blockbuster

trade. carter made a bearish bet on lions gate and put cash in their pockets. there is more left in the trade. how did they do it? find out when "options action" returns. time for pump up the volume. craving something sweet? if you think ice cream or donuts, they can hook you up. they are known for the coffee and the tasty planny are for global growth. they bet the new teal will make them serious dough. who is it?

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>> at one point, col value was at almost eight times the value. >> options and dunkin brands are active this week. what did you make of the activity. >> volume was up about 10%. a lot of buying in the calls. dunkin reached a new deal and people are wonder figure that won't help the business if there is not more to the story. >> time for the upside call and we look back at the winning

options trades. everyone knows about the smashing success of the "hunger games" and what people may not know is carter had a successful trade at lions gate stock that turned time into mone. here's how they did it. >> on "options action," it's how you make blockbusters. risk less and make more. that's what carter did with the bearish trade on lions gate. he got the studio behind mad men and hunger game his gone too far, too fast. >> you fall back to about 12 and either way, sell. >> shorting the stock -- you out of your mind? >> that could mean unlimited losses. he said you made 13 strike puts for 90 cents. in order to make money, they fall below and that puts the price at more than the cost of the trade. 12.10 by may expiration. 90 cents. >> it's breaking my heart.

>> mine too. >> i am looking at selling the april 13th puts. >> hand him the oscar now. >> they sold the april 13th strike put and created this calend calendar. he did something better. he may make money easier. between the 90 cents he spent and the 60 cents he collected selling the other, he cut the costs to just 30 cents. now instead of falling below 12:10, he calls below the 30 cents or below the may expiration. it gets better. that's because the value of the put that mike sold will decrease faster than the value the longer data put he bought. that only happens in the movies and turn time into money. there is a trade off and in order to make the most amount of money, you might need them to stay above the shorter data he

sold by the first expiration or above $13 and below the strike of a longer data put he bought by more than the total cost by the second expiration or below 1270 by may expiration. since the trade they have been a bomb, falling 15%. this trade is made a winner. cole and carter are the toast of the town. with clooney and clan, don't forget about the trade. "options action" fans across the world only want to know one thing. will these two leading men do now? >> before we answer that, let's see how much money was made. short in lions gate stock would have made about 12%. the ogzs trade costs 30 cents and can be sold for 40 cents, a return of about 30%. they might have gotten the direction too right with the stock below the short of the

put. to make the most money, they need the stock to be above $13. below $13 by may expiration. carter, what do the charts say now? >>s this is the case where you take the money and run. that is to say the stock went from 8 to 16 and doubled. it pulled back to 50% and 12. >> okay. take the money and run. is that what you did or plan on doing? >> it's interesting because with the trade that your dated option is decaying and the premiums still in it. that's how much decay this it give back to you. what you want to do is you monitor them kiflly. i would stay in on expiration data. that's when you want to cover the option. if you don't feel bearish, you can cover the other as well. >> i'm curious what your belief

is in this stock overall. >> a lot of options trades were so expensive. the vertical trades and mike and carter were spot on, but it's a tough one. what you are risking to what the reward is. the stock may continue to move around and it may be a difficult to get out unchanged. >> interesting thing about calendars is mike needed this stock to go down, but now he needs it do to go back up. the spreads do that. they welcome bearish and bullish. mike makes a lot of sense and time value left in that. i would try to collect a little bit more. >> overall, mike. do you think there was concern about the director of the "hunger games" leave something he was a cowriter on the movie and now there was a period where the story might be in question. >> managers of the business start leaving and what i mean is

they start selling shares and they have been aggressively. that is the first warning sign and if you know it will rocket up, they don't think that. that is the best tell there is. >> if you want updates, follow us on twitter and dan posts regular updates on twitter. by the way, dan has a great piece on his site about how to calculate moves. you want to check that out. we have a lot of questions all the time. there is your answer. have a great weekend. thanks to you as always. up next, the final call.

>> time now for the final call. >> if you are going to do this trade, you want to buy a put spread. >> monday i think if morgan stanley opens up, you look to put it in may. >> when you are long on the spread, you want to manage carefully. that's when the option is expiring the most quickly. you want to take advantage of that, but keep an eye on expiration day. >> looks like our time has expired. for more, go to our website and see you back here next friday at 5:00. money in motion trading up after

this break.