>> tonight the ultimate apple trade. how would you like to make four times your money in apple in just one month? it ain't on the new iphone but it is dan nathan's options trade and he will show you how you can make money, too. plus talk about hitting the jackpot. teaming up for a trade that will get you long las vegas sands. they will break it down. >> live from the world's largest equities markets exchange, these are the traders here, snapping a six week winning streak. but there is only one stock traders are watching and that is apple, the world's most valuable company making fresh highs this week. seeing huge call volume as well. tech, of course, one of the

stronger sectors. apple in focus and was in focus in the options business as well. >> earlier this week, the call volume, traders reaching for short dated weeklies. they were dominating the most ak vated call and puts early in the week. three days in a row. ironically, this all happened when some of their competitors on the pc side are giving a horrible outlook. they are giving a very murky visibility for the next quarter. this all what they expect to be a big upgrade cycle. rr f >> this week. open interest there, over 1.8 million contacts approaching all time highs. so obviously a lot of bullish activity there. that is pretty much the bright

spot for technology. only because of this stock. so it was about flat week on week. if it had not been for apple, you take the rest of the stocks, you are talking about a group that has been down almost 1.8%. i don't think that's so great. >> a big determinant in terms of what will push the nasdaq higher or lower is the direction of apple. what does that point to you? >> first of all the activity today was about a third higher than you would expect which is surprising that it is a friday in august. we saw about 1.6 kwauls trade for every put. it still remains a little bit bullish. the biggest open interest is that the weekly put was a mag innocent for the stock. i do think, though, that apple, we will talk about it a little

bit more. apple is really interesting. because the stock is so expensive, people want to express their point of view a little more cheaply and they are doing that with options. >> basically you pointed out the fact that dell and hewelett pack ard are doing so poorly. >> it's in tablets and smart phones this is a category that dell and the others have been left in the dust. there is a massive bier if occasion because old tech and the computers on your desk or the ones in your pocket. to me, those guys are going the way of the do do. they are classic value traps for those stocks to be down so low after the guidance they gave, that's really bad. but a lot of money is obviously

pushing into apple. i want to make one point this activity and vols spiking, it's a little gidy here and makes me a little nervous and that's just the short term bearishness. >> and that's good for viewers to know. and read that as gidy. why don't you walk us through as to why you would interp it that way. >> especially in a name like apple which is a stock that is largely composed of cash. it is a lot of cash on the balance sheet. you do see implied volatility rising. that suggests that people are starting to buy options. it's all very one-sided flow. if everybody is leaning one way you should start looking in the other direction. the only positive sign is the fact that with rates declining, tell con and utilities suggest some of the safety stocks. >> i know there are a lot of apple fans out there. apple files if you want to call them that. and hthey will say you're crazy.

you think at these heights maybe it's time for a pull back? >> i'm like a broken record. it makes me nervous. it's a great company. the balance sheet is absolutely amazing. $120 bin. to me, what i want to do is take a look at other ways to play apple's exposure. you mentioned its 20% of the nasdaq 100. it's massive. i think investors should be focused at these levels. what else do they own? this is where you kind of have to get worried. that's why i want to play apple short term with xlk. >> it's one of the common strategies. >> it's a bearish strategy. you buy one put and sell a lower

strike put to cut your costs. how do you make money? you want that stock to fall to the short put strike. that's where your profits are capped. dan? >> picking september expiration, apple has september 12 with a lot of anticipation with a lot of different products. i think people are expecting multiple and that could set up for disappointment. i want to use the xlk. apple makes up 26% of this etf. the top five names make up 50%. google, att, microsoft, ibm and apple. i want to do a short dated one point wide put spread. 3029 put spread. 15 cents. my max risk is 20 cents. between 29.80 and 29, i can make

four times my money. that's the 80 cents. like i said, my max loss is 20 cents above that. >> we are putting a put spread on apple. you might look at a historical spread. and decide where you want to set the strikes. so mike, when you're dealing with the stocks, the other stocks in there, of course, it makes it harder. >> he mentioned some of the big names in there. att is in there. i don't mind being short that stock. so i think that's a good short. he pointed out that apple makes up a big chunk of it. >> market agrees with dan. xlk puts today four times what calls traded.

this is pretty cheap so i might actually go out a little furter in time. view point on apple. all about apple. >> scott makes a really good point. sold for 15 cents. i sat there and debated it. so to me, when i put these trades up, this is put it on and forget it if i get the 5% movely be happy. >> let's wrap this up with stocks versus options here. some consider that insane as shorting stocks carries unlimited risks. >> nude photos -- yes. nude photos of prince harry's wild night have been burning up

the web and sending tabloids into a frenzy. las vegas is about adult freedom. particularly adult freedom has the sforry. why? >> it was an epic marketing campai campaign. >> it made world news. it's also made vegas opportunity is tick. whoever took the photo clearly broke that code. at least 90,000 people have clicked so far. it's like a month's worth of people that go to excess. the stock market.

a basket of four casino stocks didn't farewell today. all down double digits. >> thanks for that. >> is it a good investment? let's get answers from the man who has been known to tear up the strip himself. are you kidding? >> yes. >> all my clothes on here. three different charts, all the same time frame. two year chart. it's important when this sold off and this is quite a sell off. he has found this for the fifth time and each time it has responded quite well. the same chart with a different way to draw the lines. same two year chart. we have now broken above the down trend since this important

decline. and finally, what's the objective? we're long here? >> carter is bullish on this. can you be bullish the stock but be fearful of what is going on in china? >> actually that's how we're going to try to play this. that actually is not where they get most of the revenues. still getting double digit revenue growth. when you take a look at those two things it opportunity seem unreasonably valued. they always have to be fearful we are hearing a lot of negative news. if that turns bad it would be

extremely bad. >> okay. so what is mike doing this week? he is simply buying a new call. this is about as simple as it gets. you want the stock to rise above the strike put call by more than the cost of the trade. that's where you see profits. but anything below that level you will see losses by expiration. mike, walk us through this trade. >> all i am doing is buying the october 44 calls and paying 1.65 for those. i don't think the price of options is very high. but i'm not inclined to do that. >> i'm short term berish but long term bullish. part of the reason is that there

was a rumor out that this would be the biggest market in history. mike says he's looking to spread this off. you always have to think about your exit strategy. i think that makes all the sense. >> using options with a rumor is a good idea as well. we saw a lot of directionaling a tity. use them for opportunities. >> all right. let's do a little stocks versus options here. you can do pretty much whatever you want in las vegas exception this. that you can only get here. that will cost you over $4200.

send us an e-mail. we will answer it in our one-on-one web action. options action.cnbc.com. here is what's coming up next. >> so it wasn't quite a best buy. carter made a bullish bet on the beaten down retailer but with the take-over talk on ice, this trade ain't looking so hot. can these guys execute a successful turn around? find out when we return. time for pump up the volume. should i put it on your card? this company is a major player this week bidding on the stock big time. the company will be partnering with papal. and options traders swiped up the company's calls this week in

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>> they haven't lost money much and here is why. >> on options actions, it's how we find the best deals. risk less so we can make more and that is just what carter tried to do with a bullish bet on best buy. he thought the big box retailer would be electric. >> they have diskocounted to mu. >> better buy me some best buy mike thought. bu but getting long would cost you 2,000 tlrs.

above $25.50 by january 2013. >> but, 1.50 doesn't sound like a bargain to me. let's do this for less. >> sell the 18 put. >> that's what we're talking about. 18 strike put for $1.75 and created his risk reversal. he did more than that. found himself a deal. >> did i hear someone say deal? >> you certainly did. and here is why. the $1.50 he spent buying and the $1.75 he earned. now mike now sees profits whether the stock goes up, down, or nowhere at all. >> that's just to good to be true. >> there is a trade off. mike is now obligated to buy it

for $18. even if it falls we below that level. he wouldn't see losses until best buy stock falls below that put strike price by more than the 25 cent hes took in or below $17.75 by january expiration. below that. best buy shares have fallen 17%. now options actions biggest fans are tuned into the show and they just want to know one thing. what will these pitch men do now? before we answer this, perhaps this will make us all feel a little better. mike's risk reversal netted him a $25 credit. he would be looking at a total loss of about 200 bux. here is where it gets

interesting. if best buy can stay bo the 18 strike put, mike's off the hook for losses. volatile stock making up for very tough cases here. carter got us into this thing. so we turn to you. do you see more pain for best buy between now and january expiration sth. >> this is an interesting one. it has been so volatile. the very next day up 22% and now back to below where we started. basically walking away. okay, but it's now back to where we started and worse. >> walk away. what would you do, mike? >> actually i'm not going to sit here and make myself feel good about this trade. this turned out to be pretty lousy and there are a couple of reasons we don't want this any more. we felt comfortable doing it because there was a bid for the company in hand and they said they had the financing. then they came out and said it was a 75% debt deal.

then they appoint a new ceo then they stopped the buy back. i'm not sure where the bottom is in the stock and maybe we found it but i'm not interesting in finding out. a lot of the things that gave me conviction are now gone. i made a bad choice and i'm going to cover the puts. >> you look shocked. >> should we talk about this here? here is a beautiful thing. you know, the earnings is them too. and give the horrible earnings that they did. i don't know how you are expected to fend off a hostile bid that way. these guys are screwed and the big box guys in electronics are going the way of the dodo. >> thanks to you. as we head to break, be sure to follow us on twitter. and dan, regular updalts. coming up next, the final call. [ male announcer ] the markets keep moving.

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>> how is this for a fish tale? a 28-year-old reeled in a 12 foot monster marlin in a competition. it took an exhausting four hours to haul the fish in. because she had help reeling the baes in, she was disqualified leaving the question whether the rules are a little bit fishy. time now for the final call. scott? >> mike is exactly right. it's okay to be wrong but not for that. >> i want the september xlk put spreads. >> mike? >> yeah, i also like the xlk trade. >> the put spreads offer the leverage. and keep your eye out for options that are relatively inexpensive. you want to make the bullish bet. there is still danger there.

>> our time is expired. more options action next friday, 5:00 p.m. in the meantime, money in motion is up right after this. the mar. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritrade. it doesn't just deliver news. it's making news. trade commission free for 60 days, plus get up to $600 when you open an account. like a high-speed train.

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