buy clothes so you don't freeze. it's money that allows you to put a roof over your head. it's money that does so many great things in your life so that you can live. it's not nasty. there's nothing nasty about it. but because you think it's nasty, because you're out there thinking, i don't like this. i don't like to talk about it. that's when you start to have problems with your relationship with money. and that's when it starts to show up in, you have credit card debt. you don't have money in your retirement accounts. you don't talk to your partner about it because it's nasty. if you really want to change your life and make your life one where financial freedom blesses your doorstep, and it is possible, and it's probable, just change how you think about money. stop thinking it's nasty. stop thinking it's a topic that you shouldn't talk about. start thinking it's really the foundation of life. and it's something that i should

talk about all the time. i do. maybe you should follow my lead on this one. now you know. so until next week, there's only one thing that really matters when it comes to your money, and it's this. people first then money then things. talk about it, people. now you stay safe. bye-bye. >> this is "options action." tonight, miss the dow 14,000 rally? relax. eyeing one tech stock that could have your portfolio back in the game. he'll tell you what it is. bet on netflix? they have a way to make money whether the stock giant goes

up, down or nowhere at all. how would you like to get paid for shares at exxonmobil at a discount? the crude deal. the action begins right now. nasdaq markets in the heart of new york's times square. i'm melissa lee. these are the traders and these are the days you need to be in stocked. 14 grand and counting, closing at the highest level since 2007. is it too late to get in? how should you play right now? let's get in the money. one thing that is interesting about the move to 14,000 and beyond is it's happening without technology, in large part and despite the lower move we've seen in apple. >> no doubt about t apple aspect is a very bullish thing. a lot of people, especially in q-1 last year when apple really went parabolic, i felt it was dragging the market up with it, almost 5% of the s&p at one point, 20% of the nasdaq. here we have a broad rally. apple's not participating. let me just tell you, people, this thing scares the heck out of me up here, all this complacency.

we have the vix close below 13. futures are down four points in the last month alone. there's a lot of complacency. i hate the euphoria. if you are talking about putting new money to work, i think you have to wait here and take a pause. i think the complacency is the biggest issue to me. >> why are you so hung up on the vix being at 12 or 13. >> i don't care about spot vix. >> fine, regardless of what it is, the vix is a measure of complacency for sure. look at the s&p 500 today versus 2007, the levels we are talking now, the level today is 14, then it was 16. >> are you bullying me? are you bullying me? >> i'm just saying, you could say complacency is out there, and the vix is low. take a look at fundamentals and evaluations are relatively cheep. there's a reason people want to get into stocks right now, mike coe. >> not exactly sure that i go along entirely with the notion that stocks are cheap.

forward-looking basis it certainly seems that way. a couple of things you need to consider. if we did have an increase in rates, that will pressure the waited average cost for capital, business will bring their earnings down and based on interest rates. if you see too much euphoria on the economic side, the fed would have to rein back. rates would rise. you diskountd stocks more heavily. i don't want to get carried away on the evaluation thing. take a look at the stocks leading the markets. those are very highly valued names. home builders? those things aren't cheap here. stocks like amazon, not a cheap stock by any means. take a look at the whole picture. microsoft, intel, i would actually see people in the ones we refer to as cheap. >> home builders, to mike's point, some people will make an argument that they're fully valued or overvalued at this point. energy is up 8%, financials up 6%. what do you make of this rally here?

>> i'm with dan. i am worried a little bit. for today, you would have expected the s&p to take a step back in the middle of the day, maybe consolidate. it never did that. it never did that. given how far we have come since the bottom in march of' 09, memories are just too short. the vix now, you could buy some protection, stay long, fully invested and actually feel good about your position. the only worrisome trade i saw this week was somebody paid up to buy a ton, i mean a boat load of vix call. >> somebody bought the april 2025 call spread, paying 75 cents, 150,000 times, massive trade. it was something that a lot of option traders had their eye on. one more point on the valuation. we talk about tech not participating right here. xlk is up 1.5% versus those

sectors, 5%, 6%, 8%. tech that is have gone apple, gone parabollic, trading at very stretched multiples and starting to discount future growth. it makes me nervous here when we see stocks like protector, home depot, colgate. trading 18, 19, 20% earnings. >> low volatility means, of course, protection is cheap, enabling a lot of people to stay low in the markets and be willing to give the rally the benefit of the doubt essentially. >> that's exactly right. if you're sitting here on the sidelines thinking to yourself, gee, should i be buying more money in stocks, the answer is absolutely not. but that low volatility makes calls cheap, too. it makes them a very good substitute for people who can't help themselves. i would much rather see people buying two, three-month calls to make bullish bets to the upside with premiums low if they're going to try to trade that way. >> let's talk about technologies

specifically. that might be an area people are looking at simply because it hasn't participated right here. you're looking at yahoo! >> to me right now, i hate this market. i'm not buying any stocks here. i get a list together, structures together, things i want to do on a pullback. yahoo! is a name to me, that i don't think it's reflecting the catalysts in this stock or valuation. on a pullback, q-4 earnings this week, well received by the ceo, marisa mayer. there are things that have to happen for this thing to work. i want to wait till this stock pulls back but in a name i'm interested in getting long exposure in, if we do get a pullback. this is a good time to do that. you don't feel like you are just sitting on your hands. you're getting ready to do something if the market moves in your direction. >> the strategy you're using is pretty complicated. it's call a call spread risk reversal. good to crack open the playbook

and break this one down. use that money to buy a call spread. we want that stock to go to the short call strike. that's where you make the most money. it's also where profits are capped. since we're also short input, we must be willing to buy the stock. >> i want to look out five months here. there's some catalyst, asian assets that are really important. this company has $5 of their market cap in cash, no debt. some analysts think their asian assets are worth up to $15. you are getting their business for free. they have this new ceo in place, start cutting costs, continuing to buy that stock and figure out a plan to fix search display ads and they're mobile. if she can do all that, the stock could be really cheap. what i want to do here or what i'm looking to do in a pullback, i was looking at july expiration, okay? i want to sell a put. i want to do it when the stock is ticking lower so i'm adequately compensated. 1965 when the price is up today i could sell the july 18 put at

65 cents and use the proceeds to buy the july 20, 22 call spread for about the same price. that structure costs me nothing. this is how it makes money. it's basically neutral on expiration between $18 and $20, because i haven't paid anything for it. i can make up to $2, between 20 and 22. a max gain above 22 is $2. here is the thing. i put the stock on 18 july expiration on a mark-to-mark. if stock starts moving lower, i'll show losses in my account on this thing. at the end of the day, if i was going to buy this stock lower than here, this is a decent structure, gives you a really good risk reward. i want to do it when stocks are lower with calls up. >> why july? what are the catalysts? >> been under wraps here a little bit. this is her first quarter here. i think she'll get out on the tech conference circuit, speaking at goldman sachs in a couple of weeks. the company used to have an analyst day in may or june. i think if they do that, it's

something people will get excited about. and ipo for alibaba. if that went well, here is something that could explode the valuation of the stock. >> are you a believer in the yahoo! story, mike? >> it's interesting. i like this trade for a couple of reasons. one, a lot of smart value investors liked yahoo! for a long time. it's rounding the bend. it's always hard to chase stocks. this one obviously has a bit of a boost. this helps to take advantage of it. put the stock at a lower level. finally, this trade recognizes the fact that whether we believe it should be this way or not, volatility is low. by selling those options you're essentially not paying a whole lot of premium. i like the trade. >> want to buy yahoo! as a late rally play. that was a bad call, 20 bucks a share. worst case scenario, you could be forced to buy yahoo! stock for $18 a share even if it falls below that level. it does work out to about an 8% discount. our next option, that is the not hottest stock of the year,

netflix, up more than 80% in the past month, tops the s&p 500. the company is making a major bet on original content with the launch of its "house of cards" series, which goes on its streaming content all day today. julia has been combing the street for reaction. julia? >> it's not just a bet on exclusive content but also a bet on a different viewing model. netflix is offering all 13 episodes at once. the ceo is counting on that to draw new subscribers to binge view. after they binge viewed a little bit, they'll stick around. analysts seem pretty bullish. they say the show looks and feels like an hbo or showtime series. morgan stanley scott devitt issued a statement saying the content strategy is key to its long-term growth, saying the company has the opportunity to reach what he estimates is the

potential market of 50 million subscribers. on the downside, netflix has such a big percentage of the u.s. market, could be increasingly difficult to accelerate its subscriber growth. we'll have to see if there's a spike in netflix streaming over the weekend. netflix itself is not seeing any ratings. melissa? >> julie, this is interesting to me. we laughed when they announced who the cast was for this "house of cards" and what the cost was to create this sort of content last year. to me isn't there a ton of risk if you don't like this thing? if i don't like "girls" i certainly like "game of thrones," and i'm going to stick around and not cancel that thing. if i'm left with their crappy streaming product they have a big problem, because that is a horrible product. >> the thing is they have, what, 23, 25 million domestic streaming subscribers who are happy to pay $8 a month for streaming. they figure this will bring in new subscribers and maybe make

you, not so satisfied with the streaming options to stick around. the thing is that they don't expect everyone to like "house of cards." they just want it to be another thing that makes their streaming subscribers satisfied and excited about the product. >> julia, thank you so much. joining us from l.a. the question is will the netflix rally last? a quick take from the man who correctly called the rally when the stock was at a mere 80. carter, what do you see now? >> i have one chart. i really want to talk about the concept here. markets are inefficient. markets are very efficient on getting individual stocks to where they belong after epic news. when a stock like this releases its earnings after the close on the 23rd, hundreds of analysts are trying to analyze the data, portfolio managers, individual investors are trying to assess the data. it will move up ten, down ten and overnight it finally gets settled. this thing surges 65%. after a reset like that, not a

minor gap but epic gap, a stock will stick and stay. it's been here dead flat for over a week. it's almost now two weeks. and essentially the principle is this. markets are inefficient but on the day of major data, drug release or big miss or big piece of news like this a stock will get stuck to where it belongs and then it stays stuck. thousands of man hours are going into it overnight, trying to figure out what does this mean. right now it is a pair of twos. not particularly bearish, not particularly bullish. if you want to you hold it. it's the kind of thing i would expect to do what it's done. start to be quiet and go nowhere. >> mike, what's your take on this stick and stay thesis? >> first, just talking the original programming. i think this is kind of unproven. to dan's point, what they're hoping is that they are going to cling to existing subscribers rather than build new ones, they're paying up essentially to deliver the same product.

that's kind of a risk. they have to bring in the new subscribers. another list is look at who the competition is. their competition is going to be amazon, the cable providers and conventional entertainment giants like disney, reporting soon. that's a pretty strong list of opponents. and finally valuation. here is an interesting statistic. if i told you that you could buy a stock at 12.5 times earnings, you would thiching that was a good value. what i if i said that's ten years of earnings. earnings per share over the last 40 quarters. at 186.5, it's trading at almost a market multiple of that ten years. take you over 100 years to get your money back. to me the valuation of this company is pretty incredible. i wouldn't short it, but i would sell the call spread. >> obviously, mike is bearish. he is going to sell the call spread. usually we buy them. let's open the playbook and see how this works. you sell one call and define your risk you buy a higher

strike call at the same expiration. how do you make money? that's where you make the most money. walk us through the trade, mike. >> i'm selling the march 170, 175. it expires march 1st. it's a weekly opes. i'm selling the 170s at 11.30, buying the 175 for $1.20. collecting $2.10. that's the most i can make. i'm risking 2.90 if it goes up. if it sits here, i'll collect that money and obviously, if it drops i have an opportunity to cover this at a discount. >> quickly, what do you make of mike's trade? >> it makes a lot of sense. netflix is consolidating. i don't hate the stock as much as dan does. it seems that it it's gotten ahead of itself. >> but dan likes "girls" on hbo. >> i didn't hear that. >> i heard something different. you can hear what you want to hear. house of cards on netflixs, but they don't have stocks versus options.

netflix, how would you like to blow up your portfolio? had you shorted netflix this year you would be down 80%. mike's options trade risks $290 can make a maximum of $2.10 best of all can make money whether netflix goes up, down or nowhere at all. we'll see carter later on in the show. send us a tweet @cnbcoptions. we will answer it in the 101 web extra. our new website has been revamped. check it out. in addition to blogs and feeds, you'll find scotts web trade. today is it on exxon mobile. >> that trade certainly delivered. last week, coe and carter made a bearish bet. the stock dropped since. will they hold out for more gains or close the book? find out when options actions returns. [ indistinct shouting ] ♪

[ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

[ cows moo ] [ sizzling ]

more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. welcome back to "options action." time for the upside call. we take a look back. coe and carter made a bold call last week, saying amazon was going lower. they were right. here is how they made a lot of money. on "options action" our very own golden rule, risk less so you can make more. that's exactly what coe and carter did with their bearish bet on amazon. amazon shares had gotten overextended.

>> we think you faded here. too much of a good thing. >> shorting the stock, not even with your worst enemy's money. to define his risk, he bought the april 265 put for $10.75. now he needs amazon to fall. that put it is below the cost of the trade by april expiration. but $10 just to get bearish on amazon? come on, mike. let's do this for's. >> sell the 245s against it. >> now you're thinking. to spend less, mike sold the april 245 put for $5.30 and created his put spread. but he did something even better. he made making money easier. here is how. between the $10.75 buying one put and the 530 he collected by selling the other, mike cut the cost of his trade in half to just $5.45. now instead of needing amazon to fall below 254.25 to make money,

he can see money if they hit below the 545 he spent on the trade or below 359.55 by april expiration. there is a tradeoff. because he sold that put, mike's between the put that he bought and the put that he sold. >> wow! >> since the time of the trade, amazon has fallen 4%, making this trade a winner. now options actions biggest fans are clicking to and fro, to find the answer to their most burning question, what will coe and carter do now? let's see how much money was made. they want me to say a word in there. you thad guts to short amazon, you would have faced unlimited risk making over 4%. that's not bad. mike's options trade costs just under $55. can be sold for a return of 25%. amazon was one of the few names that did not participate in today's rally.

what does that mean for the stock? got to get back to carter. carter? >> this acts poorly day-to-day, not participating and didn't really do well in its earnings, despite the euphoria initially, so stay short. >> all right. stay short. what would you say, dan? >> listen, i'm long and april put fly. to me, this is an absolute bubble. i think it will really react like apple did in september. and don't forget here, people, the expectations are very high this year. earnings were supposed to be up 1,000%. if there's any roadblocks i think this thing goes back below 250, easily. >> what are you going to do at this point? >> we traded out in april to give ourselves a little bit of time for this to play out. i'm absolutely going to stay short here. i think i've indicated i have a great deal of concern about the market generally. high-flying names like amazon particularly. absolutely i'm going to stay short here. >> i would pull the trigger and take a profit.

shorts have gotten their faces ripped off at amazon. i would not stay too long here. >> wow! a lot of other tech stocks did not -- i mean, at least amazon was at or close to a 52-week high before it started selling out. >> i think amazon benefited from money coming out of apple, looking for some real growth. >> right. >> i think it showed that. here at this point, expectations are very high. the stock made a new all-time high just last week. avoid this one. >> reminder as we head to break, if you want updates, follow us on twitter. dan posts regular updates of his trades on twitter. facebook.com/optionsactions. you can also like us. time now for the final call. [ indistinct shouting ]

♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪

[ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. time now for the final call. mike? >> i'll stay in that amazon put

spread. if you haven't bought one, there's still time. >> scott? dan. >> i want to buy puts here. i'm cautious. >> our time has expired. i'm melissa lee. thanks for watching. stay tuned. "money in motion" currency trading is up after this break. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪