actually, we might get ourselves into financial situations that we actually feel hopeless about. we look at how much debt we have. we look how much it costs us to live every month. we look at how much money we have coming in and we just go, there's nothing we can do about it. so then your solution usually is, i'll just keep going on and charge. why shouldn't i live the best life i possibly can? until something happens. i know something will happen, right? listen, you can turn almost every financial situation around. the younger you are when you stand in your truth about your finances, the more of a chance you have to turn it around. don't wait, don't keep postponing. start to deal with your money. honest to god, erin, our one-on-one guest tonight, came on this show knowing there was nothing she could do.

she would never get out of debt. she'd never be able to retire. we simply showed her a way to be a millionaire by the age 67. if that can happen for erin, that can happen for you. participate on this show with us. come on the show with me. be willing to dive into your own personal finances so that we can change your life once and for all. that is the goal of this show. to touch you so that you can live a life that you want to touch versus a life that's just, you push it away, you don't want to deal with it and you don't know what to do. now you know. so, until next week, there's only one thing that i really want you to remember when it comes to your money and it is this, people first, that means you people, you, people first, then money, then things. now you stay safe. bye-bye.

>> this is "options action." tonight, sour apples, the dow makes a run at all-time highs, but america's favorite stock, apple, makes a fresh year low. why is that? what does apple pain mean for the markets? plus, forget king kong and godzilla, because there's a bigger battle in stocks versus bonds. only one can be right. we'll show you how you can make money now. and why were all those traders chowing down on mcdonald's calls? we'll find the dough in mcdough. the action begins right now. >> new york city times square. these are the traders here on the deck. and record denied. dow just points away from its its all-time high. while the market makes a run at the record books, one stock closed on a fresh 52-week low and that is apple. shares closing on the lows of

the day. does apple matter to the market and is there more pain for america's favorite stock? let's get in the money and find out right now. the price action on apple not good considering it closed at its lowest. >> a new 52-week low. when the dow jones is a percent away from all time highs. it's holding the s&p back a little bit. 1% is 5% of the s&p. every rally gets sold and there are no -- for a stock that used to be very product driven. people are the only really argument to be made for the stock, it trades at nine times expected earnings that are not supposed to grow a lot in the next few years. >> so it's cheap.

>> look how it treated me. i closed out that short quits threat. it was up very small on wednesday. the stock seemed like it was getting a little bit of upside, but wasn't keeping up with the market at all. obviously it got sold off right after. that meeting, they didn't say what investors wanted to hear. i took my losses right there. i think one of the most telling things, if valuation isn't enough to keep a stock up, it does say, if something else loses momentum, you can watch out. the fundamental valuation won't be enough to save you. >> apple is widely owned, but what the impact on the broader markets? can't we say the market rally is very strong because it's making moves despite apple. >> apple is just not participating. it's important to all the fund managers who are going to have the best chance to beat the s&p that they've had in years if they stayed away from apple. probably a couple reasons you might think you want to own it, because it's so big and so

undervalued. neither one of those is a great reason to own apple. the fact that you love your ipad is not a reason to own it. i love my tivo, but those guys can't make money. >> some people had misguided expectations heading into the meeting on wednesday. last year, they go not announce their buy back there. they did a month or so later. so in a couple weeks, if the stock gets washed out, you could see a dramatically raised dividend maybe somewhere between 3 and 4%, and maybe something else that mr. einhorn wants and that could be a catalyst for the stock in the near term. >> in terms of the strength of this rally, are you a believer in the rally? because we've laid out all cases as to why apple stock will remain lower, yet the markets continue to march higher. >> they're not really breaking through to new ones, are they? if you look at the new york stock exchange, they are approaching the peeks they had on june 29th of 2007.

i look at that, it looks like a double talk to me on the margin side and the market. i understand people have good rationals. >> is apple a canary in the coal mine for the markets, or the markets are up 6% for the year and if apple makes that move higher, then we could be in great shape here. >> i think apple is its own animal. shot too high to the upside. doesn't mean you have to own it because you think it's cheap here. it can get cheaper. >> if apple is not an impact -- >> decelerating earnings growth. this is a very mature comp that grew very fast in a short period of time. you can say the same thing about the u.s. market, as a whole. earnings drive stock prices.

at this point, there's been a lot of shenanigans to drive earnings over the last few years. companies have been buying back a ton of stock, cutting costs, managing earnings and that's where we are right now. when you think about equities in the dividend yield and the s&p 500, it's right about at the 10-year treasury. it doesn't look that appealing to me when we're at five-year highs in the s&p. i think we're ready for a pause here. i don't think you put new money to work in equities here. >> so dan is bearish. he's using a put butterfly option, a play we don't als often use. so it's good to crack open the playbook to see how this works. it's a bear strategy. you buy one put and sell two lower strike puts against it. to protect yourself, you buy one even lower strike put. sounds complicated, but the goal is simple, you want the stock to go to the two strikes where you are short. think of it like threading a needle. >> threading a needle. not as complicated as it looks. the professor will explain some of the points. but today when i was thinking about this, i wanted to buy something that was in the money

here and give myself some room and not spend a lot of extrinsic value on this. so today when the spy was 152, i bought the april 153, 148, 143 put butterfly and i paid 90 cents for it. i sold two of the april 148 puts at 185 each for a total of 370. then i bought one of the april 143 puts for a dollar. okay, 90 cents is what i paid for it. that's my max risk. my profit, up to 410, between 152 and 143 with max profit of the 410 at 148. i have losses up to 90 cents between 152 and 153 and i lose all of the 90 cents below 143 and above 153. and here's the thing. i'm trying to capture a range here and not have this thing be a lottery ticket. i'm in the money.

i think there's a very good shot i have 3 to 5% downside. >> a let of numbers and check it out here. write them down. check them on the web. dan, i got a question. if you believe the broader markets are going down for all of these reasons, and you believe that apple is weak here, why not put this trade on the cues instead of the s&p 500 where apple is a much bigger percentage, so you get more bang for your buck. if the markets go down, apple have more of an impact? >> i like that. this is called "options action" here people. i like the exposure, but it's a defined risk play. i like the structure here. it's a great point to investors. pick on what's weak here. nasdaq hasn't got anywhere near a new high -- >> i think this is why you're

choosing to use a butterfly on the s&p. you're making a bearish play, but recognizing that's not what the market's been handing you. the fact that even though the at the money options are cheap, the out of the money puts are not quite as cheap. that's one of the reason why buying those closer strikes and selling the other ones is something you want to do. if the market starts to skid out you're covering that. >> let's wrap it up in stocks versus options. think the rally is over? you better be right. dan's put fly offers a five to one pay-out and defines risk to just $90. a rally in both stocks and bonds. ten-year rally again today. now the last time stocks were at this level, five years ago, the yield on the ten-year was 5%.

now it's just under two. so who is right in this battle for your money and which will be the first to break? let's call to the chart the man who just won the battle with new york traffic, carter from oppenheimer. what do you see? >> we'll look at some reads here. but one of them is right and one is wrong. which is to say, either there is traction, housing, job creation, all-time highs, suggesting things are okay. which case, the cost of money has to start to move. or money staying down like this, suggests the market is a fake. and something is wrong. this is the biggest read we'll talk about. a long-term chart of all reads here. what you'll note, how they made the highs in the housing bubble collapse and we've not gone back to the high. keep that reference point in mind when he look at simon property. now look at yields and we're at record lows, which is to say you're getting precious little yield while you're taking on quite a bit of risk.

not much more than a 30-year bond, but much more risk. let's look at simon. the biggest read. and again, as opposed to to all reads which haven't gone back to their highs, it's well, well above their housing bubble peak high in 2007. t ake a look at simon against all reads. and this is excessive and we think you fade this. this is the short-term. simon is starting to roll over, if you look at a one-year chart. keep this rollover in mind as we look back to the long-term chart. what you have here is this phenomenon. we think it's in trouble and we're a short seller. >> can bonds and stocks continue their rally together, or will reits be the first casualty here? >> i think bonds in particular are an area that are very, very risky.

so for one thing, how high fixed income instruments can go, it's capped by the risk free rate. and that's capped at zero. so we're approaching the extreme levels. you have a lot of risk. you're getting in very little return in exchange for that help reits are interesting because they pave like bonds. they have inflation adjustment component. but basically if you're buying a reit, you're making a bet that rates will probably remain stable and at a low level. that is a risky bet to take here. now of course the other thing we're looking at is a comparison essentially between also what corporate earnings yields and equities look like and what bond yields look like. that's spread. i think it's also artificially created in large part by fed reserve action. so if you feel like there's any chance that they take their foot off the gas pedal, that could create an increase in rates, cause the spread to narrow significantly. it makes reits very risky if that's your belief. i just don't see any reason to

continue with that. >> mike has a bearish view. he's buying a put tonight. here's how it works. when you buy a put, you want your stock to go lower, and specifically fall below the strike of the put that you bought by more than the cost of the trade. but above that level, you will see losses. it is a very simple trade. mike, walk us through. >> so much like bonds themselves. reits actually relatively low volatility. i'm not going to play around with complex spreads. i'm just looking to buy the july 155. spend five bucks for those things, about 3% of the price. this is going out in time. we don't have tons and tons of expiries in between, but basically the idea is making a bearish bet is not going to decay quickly. if it turns down, i can look to spread. >> i don't want why you would own simon properties in a situation like this, but mike makes two good points. he's buying a put because options are very cheap in this name. when you buys options or options

spread, go further out in time, this makes a ton of sense. >> listen, i think you link into a name like this with implied volatility. if it goes in your direction, ticks up, you spread it and lock in a portion of that appreciation. to me, i think it makes a heck of a lot of sense. >> meantime, got a question out there, send us a tweet, we'll answer it. optionsaction.cnbc has been revamped. you'll find blogs, educational material. check it out. here's what's coming up next. >> hi-ho silver. in january mike and carter made a bearish bet that was the talk of options nation. but it hasn't worked out. so how can they fix their trade? find out when "options action" returns. time for pump up the volume.

the names on the sizzle index. a cheese burger for a buck. i'm lovin it. make no mistake we're talking about the world's largest restaurant company by revenue. this week the golden arches glistened after announcing plans for expansion in russia. who is it? the answer when "options action" returns. ♪ [ 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.

♪ [ 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. ♪

where were options traders pumping up the volume this week? mcdonald's. call volume was up almost 40 times the average daily volume at one point. you just heard account mcdonald's calls were active, what do you make of it? >> this was on tuesday after the monday when the stock did well compared to the market. stock is historically cheap and some people are looking for a dividend increase, they want to buy the 95 calls. >> time now for fix my trade. when trades don't work out, you just want to say fix my trade. that's what happened with a not so sterling bet on silver. >> on "options action" just because you risk less doesn't mean you'll make more. unfortunately that was the case with cohen carter's trade to silver. >> dropping as low as 20.

>> if my man hates silver, mike thought i'm selling it too. but just going short, hunt brothers and back to meet unlimited losses. so define his risk. bought the strike for 85 cents. now has a right to sell at that strike price or $28 by march expiration. that 85 cents is the most mike can lose. but in order to make money, mike needs slv shares to fall below the $28 level by more than the 85 cents he spent on the trade. or below 27.15 by march expiration. it gets better. if the shares do drop, that put will increase in value faster than the slv will lose value, meaning more money in mike's pocket. since the time of the trade, silver has fallen 4%, not quite enough to make this trade a winner. now "options action" fans the world over have one question.

no, not that question. they want to know how these two will fix their trade. before we answer that. let's look back at mike's trade. the slv has declined. why hasn't the trade worked out? while they got the direction right, their timing is off. with expiration around the corner, the time value is seeping out of the options. silver and gold have been falling and expiration is three weeks away. could this trade still work out? let's call back to the charts, check in with carter? what do you see? >> in terms of silver itself, quite broken. considerably lower. stay short. in terms of structure, turn it over to mike. >> so considerably lower. that marries what's going on elsewhere. copper today broke its moving average. so industrial metals aren't doing well. gold is not doing well. >> gold looks terrible and silver looks terrible and i'm inclined to say short here as well.

just don't want to do stay short with this option. we're basically at the money and running out of the little bit of time. what i would do is sell this and trade a risk reversal. for those that don't want to be naked short the metal, i would advise a -- take a look at where it opens. if it's around 85 cents or where it closed at 70, sell this and stay short, but try to get to a neutral way. i'm going to press my short on the slv for sure. we're only down about a dime and it's working our way. >> going back to what we were talking about at the start of the show, these things act like apple here. there's no rally in them at all. these were crowded trades for a long time that worked very well and also had certain aspects to them. so to me, i think it probably makes lower lows and know continues to do so for the time being. >> i think you stay short slv, only about 15 cents from its three-month low. a lot of these things are having a tough time. uso, the oil etf had a horrible month.

>> it certainly doesn't help that for instance today we had pmis in a disappointing fashion, upi came in, missed by a mile. in terms of economists consensus. china came in at a five-month low here. so really the net consumer of a copper for instance, not necessarily there. >> that's a great point. we were talking earlier about concerns about the fed taking their foot off the gas. if they do that, that's one of the reasons you would want to own these. so there's hardly any reason on the horizon why you would want to own it right now. it's kind of like doing what i did last week on apple. grabbing a falling knife, you're going to get stabbed. >> reminder as we head to break, if you want updates on the trades, follow us on twitter at cnbc options and dan posts regular updates of his trades.

you can stay posted on facebook.com/options action. final call from the options pit, that's next. ♪ [ 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.

♪ [ 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. ♪

♪ you're as cold as ice. >> take a look at this. talk about freezing in the headlights. a pair of deer trapped on an icy lake were recently blown to safety thanks to a helicopter pilot. it started when a doe and her off spring wondered onto the ice a pilot used the chopper's downdraft to blow them to safety. nice, happy ending for a friday. time now for final call. >> i like dan's put, but let's not set it and protect it -- set it and forget a protection. you have to do something with that. >> i mean, listen, this is one

that's in the money. i think you're looking to stay in the game on this one. i think you have some time to wait it out. >> mike? >> spg is a proxy and i don't want to own bonds here. so i'm going to buy puts on spg instead. >> very good. looks like our time has expired. i'm melissa lee, thanks for watching. "options action" we'll see you back here next friday. meantime, don't go anywhere. "money in motion" is up right after this. ♪

[ 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.