in or out? that's what millions of greeks are trying to figure out right now as they took to the streets today ahead of the most important election for your money since our financial crisis four years ago. welcome to "options action." i'm melissa lee. these are the traders at the nasdaq market site in times square on a busy friday. stocks closing on highs posting the second winning week ahead of sunday's election. the goal is clear. finding strategies that are working amongst this chaos let's get the latest from greece where rallies have died down but the tension is high. no one covered the crisis better than michelle caruso-cabrera on the ground in athens. what's the latest there? >> reporter: there are three key questions for the market. is somebody going to win this

election this sunday? remember, we are holding this election because last month the results were inconclusive. too many splinter parties driving the vote apart. the expectation is this time around one of the two leading parties will command enough votes but it's not guaranteed. if we see another inconclusive election that could lead to uncertainty. that would mean another election in another month. greece runs out of cash before the next bailout and the troicha would have nobody to negotiate with. assume that won't happen. if there is an outcome, who will win? the pro bailout party or the anti-bailout party? right now the market consensus is if the pro bailout party wins you will get a rally. if the anti-bailout party wins, then you will see markets fall. however, that brings us to question three. what if the central banks step in to provide massive liquidity in case the anti-bailout party controls the outcome?

then you might see a counterintuitive rally. it's hard to know what's going to happen. expect volatility. back to you. >> michelle caruso-cabrera on the ground in athens. thank you very much. don't miss her documentary which airs sunday at 8:00 p.m. on cnbc. we want to get to the markets. michelle make as good point. are we in for a counterintuitive rally where you want the worst case scenario? isn't that what we saw -- the belief that central banks will step in when things are falling apart. that's what led us higher here. mike? >> it's clear that that's what the expectations were. we started to hear the rumors and see people make those bets. a good example we talked about on "fast money" when we saw somebody buy 60,000 upside calls in the spy and sell a small amount of puts. what happened is so much risk buying on the down side made

buying the upside less ek pensive. somebody figured you could have a snap back rally. that's what people started to position for. i think probably more people should have done it honestly. today, we saw the vix up with the s&p up marginally. people are still really concerned about the down side. >> it feels like we are spring loaded to the upside or the down side. something bad happens there in the central banks step in. we are spring loaded to the upside. something good happens and central banks don't step in we are spring loaded to the down side. >> central bankers around the world will be chained to their desks, won't be allowed out of the office. they will be prepared no matter what. mike mentioned the vix which didn't go negative until there was 30 minutes left in the trading day. discount that and everything was higher for the reasons you have laid out. equities, gold a little bit. bonds. i think people are discounting greece because they think even if the worst thing happens ben bernanke and his ilk will be on the case. >> we are focused on it because the elections are sunday.

it caused volatility last month. there is a host of other reasons investors should be far more worried about greece. central bankers are ready to provide liquidity. we are talking about fixing solvency issues. let's talk about how we started the week with the bank bailout in spain. investors sold the news. to me, i think once we get by the election we have to focus on some of the other issues that are concerning europe and get back to the u.s. >> it may seem the economies around the world are on the verge of going to you know where in a handbasket. in the markets we have seen a rally. the dow is up 5.4%, within 10% of all-time highs here. despite the concerns we have lifted higher here. >> one of the reasons is because the valuations on equities on a historical basis when you compare it to interest rates look exceptionally compelling. you wonder if this is a situation where we are positioned to buy stocks at very, very compelling low prices.

you talk to someone like leon cooperman and that's the story every time when things look bleak. that's when stocks prevent an opportunity. >> mike mentioned options in the spyder earlier and today. the biggest trade was buying calls. people are trying to get exposure to the upside. >> one stock caught a bid that curious fashion this week. that's facebook. the first positive week since going public. it's the one month anniversary. finally closing above $30. although by just a penny at the official close at 4:00 in new york. how did you interpret that? i thought it was curious for that to happen on an expiration friday. >> you were asking earlier today. i think it was a good question. how much open interest was there around $30 in june? those were the options expiring today. basically what happens when there is a lot of open interest

sometimes you will see market participants have to buy below the stripe or above to hedge it. that causes the stock to what we call pin. when we look at what was going on that's what we saw. the stock was 30 and a penny. there were four and a half million shares to buy below the strike. maybe as much to sell. that compresses the stock to it. we talk about pin risk and we saw it with facebook. >> the question for investors, institutional or individuals, what do you do as the company is set to report the first quarterback and the lock-up looms. >> the action has been pretty positive. if you have the 30 strike on in june and you wonder what to do if you're long you don't want to exercise it. what if you're short? expect to be assigned on half the shares. that's what you will find monday morning. i wouldn't expect facebook to be far away from 30 on monday morning. >> with the concern now in the markets about european exposure,

dan, you're taking a look at a name as a potential short. nike is exposed globally to a slow down potentially in china or in europe. >> no doubt about it. this is a company with 50% of sales from overseas. they get a lot of growth going forward. in the last year this has been a teflon stock until a couple months ago. it just started to make a topping formation here. all of the sudden there was a research report earlier in the week by otr global. they have a following there. they were commenting on weakening shoe sales or trends in china and the u.s. weakening apparel trends in western europe. that's all it took to get this thing going lower here. when we think about some of the big growth names like starbucks and lulu, they have not recovered. this is the first kink in the armor with nike. >> this is a common way to make a bearish trade but it's good to review the strategy. this is a bearish bet where you buy a put and sell a lower

strike to reduce your cost. you want the stock to fall to the short put strike. that's where you make the money and where your profits are kept. walk us through the trade, dan. >> why i'm looking at nike, there's been few negatives about it. it's a crowded trade. with weakening trends in western europe, u.s. and china this is one i want to press but i want to define the risk. the stock sold off. i put a quarter position on. i bought a put spread in july. the 97 half, 92 half put spread and paid 1.25 when the stock was 1.01. i bought one of the july half puts for 2.60. sold one of the 92.5 puts at 1.35. i profit between 96.25 and 92.50. i can make up to three times the money i paid. i have losses up to 125 between 96 and a quarter and 97.50 with my max loss above 97.50.

make no mistake. i need a big move here. this is a stock specific one on a macro play. the markets go lower. >> there are a lot of people who don't want to have companies with a huge global exposure. nike has 36% of revenues from domestic usa. in q-2 the stock is about flat. compare that to underarmor. 94% of its revenues are domestic. it was up 12% in the second quarter. mike, do you still buy into this trend that you can still invest in this way or did the trade already happen here? >> i think you make a great point. we saw the trade happen. that was not the only stock where it was true. >> there were lots of pairs. they took a look at the multinationals with disproportionate revenues from europe and they under performed more domestic plays in the same space. it's not like nike is a really cheap stock or they aren't going to be driven by macro economic

factors. as much as any consumer discretionary company might be. i like the trade. we talked about it on the put side. this is a way to take advantage of the dynamic by selling the lower strike put, take advantage of one of the names that's considered basically a best in breed and hope you can still get to participate in the trade. >> let's button it up with stocks versus options here. want to short nike? to borrow a phrase, just don't do it. shorting stock carries a risk. you could lose money for a long time. dan's put spread costs $125. not bad. let's move on. next week the release of fedex earnings. the company reports on tuesday and it could have an impact on the market. should you buy? let's go to carter worth of oppenheimer. what do you see here? >> let's look at the charts. a standard two-year chart daily. you can feel the tension. a well defined trend up.

a well defined minor trend down. the bears will say it will break down. the bulls think up. we are on the bull side. look at why. this is the weekly and monthly pattern. the tops at 95 have a lot of authority. you have a series of higher lows. the tension is not only the daily but the weekly chart. look at the monthly. this depends on your view of the world. this is a 20-year chart. the stock peaked at 120. crashed to 30 in the lows of 2009. basically we are at 87 and change. the same price we were in 04. you bet this way. if you think the world is okay, bet this way. we're betting up. have a look at two other relevant things. mike will pick it up. this is a 20-year chart of the p.e. in fedex. right now we are trading at or near an historic low over the

last 20 years. relative p.e. is important as well. the p.e. of the stock relative to the stock market. the p.e. for the s&p is 13 and change. here is the relative p.e. fedex is trading at the same multiples as standard & poor's 500. the only time it was cheaper than the s&p was between 95 and 2000. not a function of the stock being expensive. the p.e. for the market was high when tech was running. 95 to 2000 is the bull we know. this is a market multiple. that's as cheap as you will get. you have to buy it here. >> carter is positive on fedex. the p.e. chart is shocking. i didn't realize how cheap it was compared to its own historical p.e. >> it's something you want to look at compared to the market. another reason i think we have another chart that shows fedex revenues. if we look at that chart one of the things that will tell us is the reason it trades at a premium to the market. they have had steadily growing revenues.

they have had secular trends helping them out. take a look. this has been a growth company. the only reason was there were a lot of tech companies and speculative things that drove up the market multiple when it was trading at a discount. what are the secular trends? e-commerce. just in time supply chain dynamics are in their favor. if there is pressure they are at the higher end in terms of cost for logistics. more people may go to rail with a fall in gdp, for example. this is one of the situations where you have a good company, growing revenues trading at an attractive valuation. >> tonight he's buying the call. a simple strategy but good to poeb the play book. when you buy a call you want it to rise above by more than the cost of the trade. anything below that level you see losses by expiration. with that said, what's the trade? this is the third week in a row where you are only buying a call. >> and i have been doing it for the same reason consistently.

i look for situation where is stockses are at low volatility relative to the market. that's true with fedex. i expect the august 9 # 2.5 calls will open up around 28. implied volatility on or about where the stock has been trading. i will spend 2.50 to get me over 60 days to expiration. there are a lot of unknowns. i'm trying to take advantage of a directional bet without taking a lot of risk to the downside risking on or about 3% of the stock price to make a bullish bet, give myself two months to play out. the reason the trade has been effective with names is we are trying to take advantage of what the market is giving us. that's what we have. >> it's funny. there is one line carter was missing here. it was the support line at 85 back to 2010. to me with the stock a couple bucks away from that and you think about it. carter laid it out nicely. depends what your world view is. crude oil is an impact down 20% in the last two months or so. i can see why that would lead

you to think you would get good earnings. what's important with the earnings report next week is what do international packing shipments look like? it will be an early tell as we get into the q-2 earnings. i want to take the other side, but i think the way mike is playing is the right way if you are bullish. >> crude oil can be a barometer for global economic health. if you believe it is a sign for the global economy, that's bad. >> both of the trades, dan's nike trade and mike's require a big move in the stock. that's fine if you understand it going in. >> one more time. want to buy fedex into earnings? a hundred shares costs you nearly $9,000. mike's call purchase offers more leverage and sets you back $250. not bad there in terms of risk reward. we'll see carter later in the show. the address is optionsaction@cnbc.com. we'll answer it after the show on our website. optionsaction.cnbc.com. here's what's coming up next.

can you feel the love tonight? last month carter made a bullish bet on disney. watch it take a trip to wonderland. they are in the green. can they make more cash? find out when options action returns. time for pump up the volume. the names this week. your name here. this company's bread and butter is billboards and outdoor advertising. they have been the biggest outdoor advertising name for more than a decade. options traders promoted the company's call this is week betting that the company would generate more good signs down the road. who is it? the answer when we return.

where were options traders pumping up the volume this week? lamar advertising. call volume was ten times the average daily volume. welcome back. time now for a new segment called "i want more cash." who doesn't? we show you how to make more money from winning trades. a couple weeks back carter and koe made a bet on disney. they made more money using options. that ain't a fairy tale. on options action sometimes risk less to make more isn't enough. sometimes you just want to make more cash.

that's the case with the winning trade on disney. carter thought shares were going higher. >> we think this is going up and out in a big way. >> better pounce on the mouse house, thought mike. 100 shares cost nearly $4300. to spend less mike bought the july 45 strike call for 85 cents. now he has the right to buy disney stock at that strike price or for $45 before july expiration. but in order to make money mike needs disney stock to rise by more than the 85 cents he spent on the trade or above 45.85 by july expiration. anything below that level and mike will see losses. but instead of spending over $4,000 to buy a hundred shares mike spent $85 to buy the call. >> wow! >> that's the most he can lose

on the trade but it gets better. if disney shares rise that call will increase in value faster than the stock meaning more money in mike's pocket. since the time of the trade, disney stock has been a blockbuster, rising 10% and making mike and carter winners. now the biggest personalities are tuned in to options action and they want to know how can these two characters make more cash? before we answer that let's see how much money was made. if you bought disney at the time of the trade you would be looking at a 10% profit. not bad in a tough take. mike's call purchase cost 85 bucks and can be sold for $260. that's a return of more than 200%. that's good in any market. carter got us into the trade. let's go back to carter to see if we should stick with it. what do you see in the charts? >> we'd say let it go. it's making all-time highs and held up well compared to the market. walk away. >> mike? >> this is an option that's now

in the money. it's closer to expiration, beginning to decay. i would be inclined to take the money and run on this one if you felt compelled you could take a portion of the profits and roll it out and up. >> this is also a trade that depends on your world view here, mike. >> certainly. >> so what is it? >> i think that's right. this now has more direct exposure. i am concerned a little bit about what's going on here. i think i would be inclined to make sure i'm keeping a tight rein on risk. >> you look at you till uh i tis, at&t, verizon, some of the defensive names. >> disney is not at&t. >> you would not put that stock in that category. these are the guys that made "john carter." at the end of the day this is a massive move. they nailed it. i give them credit. they did it at a time that things were rocky. like mike's previous trade buying a call, defining the

risk. >> mike loves espn. that makes sense. they have done well. >> he loves "john carter," too. >> he's the only one. >> our thanks to carter. as we head to break if you want trade updates follow us on twitter. dan posts regular updates. coming up, the final word from the options pits.

time for the final call. the last word from the options pit. scott? >> lots of news on sunday. so lots of opportunity on monday. i would define my risk. in a situation like that i would be a seller of spreads. >> dan? >> i'm going to buy a spread with nike. i agree with scott. a lot will be going on here. to me in front of this stuff you want to leg into things. i put a small portion of my nike position and will look for a better opportunity. >> mike? >> spreading is a good opportunity. i may look at nike. also, puts in the indexes are so important. you can finance so many calls by selling one of those, risk/reward relationship totally out of whack.

that's a good way to make bullish bets. >> our time has expired. stay tuned. "money in motion" is up after this. there's nothing worse than going to the post office and waiting in line. i don't have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps.com, you can print real u.s. postage for all your letters and packages. it gives you the exact amount of postage you need the instant you need it. can you print only stamps? no. first class. priority mail. certified. international. and the mailman picks it up. i don't leave the shop anymore. [ male announcer ] get a 4-week trial plus $100 in extras including postage and a digital scale.

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