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this this is "options action." tonight, making bank. how would you like to triple your money in goldman sachs in just two months? ain't no bailout, but it is dan nathan's trade on the banking giant. he'll break it down. plus, talk about a blocbuster trade. mike and carter have a way to get long dreamworks for just 65

cents. >> that's interesting. >> you bet it is. and they will show you how you can make money, too. why were traders betting on disney calls? scott nations with the magic answer. the action begins right now. live from the nasdaq market site in new york city's times square, i'm melissa lee. volatile week for stocks ends on a positive note as the dow closes near session highs, but a big warning sign for investors, the transports, sector leading the market's massive rally posting the worst week of the year. fedex, the culprit there. is this a warning sign? let's get into the money right now. to t let's go to kate kelly with reporting that the d.o.j. is in advanced investigation into a probe. kate? >> jpmorgan disclosed that it was being looked at by the d.o.j. in connection with the london whale losses, but we're

hearing that that investigation on the part of the d.o.j. is now in an advanced stage and they are honing in on the london whale traders who were over in europe and putting together the trades that made up this synthetic credit portfolio that got jpmorgan into so much trouble, $6 billion in losses. we understand that issues at play here are the marking of those positions, brought to light last week in a senate hearing and has been brought to light by jpmorgan's own internal research. and the question if there was securities fraud committed in the marking of those books and an attempt to hide losses. these individuals are no longer with the firm. they've been talked about a lot in the context of what went wrong here and i'm sure they'll continue to be. but the department of justice is looking closely at their behavior to see if there is a come peopling criminal case to be made here. >> the timing of this is interesting, given the board recently came out a short time ago saying they believe that jamie dimon should remain chairman. i'm wondering if there was some

sort of meeting and this was decided to be disclosed. >> the department of justice investigation has been going on for awhile. we saw reports in the immediate aftermath that the fbi was investigating and, of course, that's very often the first step in terms of a department of justice complaint. but in this case, we're told that it has been proceeding a pace, of course, carl levin in washington running the sub commit eat the on investigations also had a team who spent nine months with dozens of interviews and owl of that was pa raided in a hearing last week in washington that i attended. it's been a bad week or so in terms of additional headline risk for jpmorgan. that said, they've acknowledged that mistakes were made. they dismissed the people involved. the woman who ran the office that oversaw this, of course, resigned in the wake of all of this and gave back compensation. jamie dimon said how many mistakes were made here and taken his own team as well as himself to task. i think there's been a broad acknowledgement of mistakes,

poor risk management, so on, all around, but a criminal investigation, melissa, into individuals would take things to a whole other level. >> absolutely. kate kelly, thank you for this breaking story on jpmorgan. you know, guys, what is interesting about every leg of the story, except for the initial disclosure of the loss is that jpmorgan has been resilient to these developments. >> shthey should be. if you take the loss at face value, in the scale and scope of jpmorgan, it sounds like a big number to you and me but to that bank with, we're talking about a couple trillion dollar balance sheet, it really is not a material number. i think this is just going to clean things up, they're going to get it sorted out. i don't think this is impactful. >> what i will say, they had the stress test from the fed, and, you know, jpmorgan and goldman sachs were highlighted as some minor deficiencies as it comes to risk management. interesting though, in the last couple of weeks, as the s&p sits 1% from its all-time closing high right here, the banks have kind of topped out. they lost a little bit of

momentum. goldman sachs was down 5.5% in the week. that has to do what was going on with cyprus, but jpmorgan is also down. they lost a little bit of momentum. >> mike points out this shouldn't hurt jpmorgan. that's absolutely right. i think the stupidity is really the exception that proves that rule. >> financials, when we take a look back on this week, we pointed out transports and how it looks like it may be a canary in the coal mine, but financials are pulling back. >> that's actually the exact point. it's not the department of justice we need to worry about. we're looking at financials and transports are the bell weather that's going to turn the other way. it was interesting, with fedex's results, the thing you were basically telling us, there was a lot of cost cutting in europe and in asia, basically people looking for lower cost options. that's not really what you want to hear. you figure if you're in a really strong economic environment, the on si opposite is what you expect to get. i'd be more concerned about financials for the reasons you suggest. >> let's go to goldman sachs,

dan. you are looking to put a bearish trade on goldman. >> not having much to do about goldman other than it happened to be the weakest. this is one of the best banks out there. this is one that you want to buy on dips, if you believe in the u.s. financial system in a lot of ways, okay? but on a relative basis, like, we just said, you know, the euro stocks, the bank index got nailed this week. and it down 3.5% on the year. the xlf is up 10% on the year. so, when i think about goldman sachs, we just mentioned the stress test, these are one of the two guys that were flagged as far as having deficiencies in risk management. you think of the great quarter they had in q-4. the stock has been off to the races since then. so, what i want to really just look at is, in the next couple weeks, the next month and a half, when you think about what's gone on in the last two years in this time period, the markets had at least a 10% peak to trough selloff. i want to look at goldman sachs, i think it could be vulnerable, if we get another move, so, i want to use a defined risk way to play it, i want to do a put

spread in may. >> dan is bearish on goldman. he is using a put spread, it's a familiar strategy but it is always good to review in the strategy. sell a lower strike put of the same expiration to reduce your cost. you do this when you're bearish, you want that stock to go to that put strike. that's where you make the most money and where your profits are capped. walk us through it. >> next week, we have the shortened holiday week. to me, you want to see how we act in the quarter end. you can almost leg into a position like this. today, i put a little bit of it on. i bought the may 145, 135 for $5. i sold one of the may 135 puts against it for $2. my max risk is that $3 i spent for it. i can make up to $7, between 142 and 145. my max gain is below $7. i lose up to three between 142 and 135. it's a defined risk way to work

into a bearish position. this is not a stock i want to be short here. >> i think that dan brought an interesting point up in the beg beginning, and it's not necessarily about goldman sachs. mike, i know you are bearish financials in general. would you have chosen goldman sachs, especially in light of this jpmorgan breaking story. would you still go with goldman sachs with this trade? >> yeah, i think it's as good a candidate as any. first of all, the businesses they're in are under some pressure and there's questions if they'll be able to be as successful as they have in the past at allocating capital to the most profitable places. take a look at it. there are other financials that have had great runs, like aig. they are still trading at a big discount. goldman sacks are trading a little over one times. so, from a fundamental standpoint, this is the one i would choose. >> all right, let's go stocks versus options. goldman sachs better be ready for a bailout of your own. shorting any stock offers risk. let's move on here. the pressure is on for

dreamworks animation, its newest movie opens today and the digital animation studio needs a hit after some recent dumds. cnbc's julia boorsen joins us from los angeles. how important is this for dwa? >> well, melissa, dreamworks releases just two films a year. each one has a big impact on its bottom line and stock price. the movie that opens today is the studio's first movie distributed by fox. this after its deal with paramount expired last year. and dwa could use a hit after "rise of the guardians" bombed and major layoffs. the movie is expected to gross $40 million this weekend and if it does less, the stock could take a hit on monday. now, dreamworks animation faces more competition as other studios crank out more digitally animated family friendly fare, but this movie will benefit from the fact it would face

competition until late may. melissa, reviews have been mixed, but 87% of the audience liked it on rotten tomato which is a pretty good sign. >> julia, thank you. so, is dreamworks stock a blockbuster in the making? let's call to the charts with the man who carries a thshrek d with him everywhere he goes. >> let's see if we can make some money. i think we can. here's a one-year chart. i want to focus in on this tight fight that's going on between 16 and 17 for six months. very tight congestion. and then the stock aggressively advances higher, 10%, and consolidated again. keep this action in mind, over the last six months and i want to step back to 2 lothe longer chart. that consolidation, six, seven months at 16, 17, is exactly the '08, '09 low and the lows of two years ago. this is where you can have risk reward. you get it right and this thing pops to 22, 23.

we think that's where it's going. if you're wrong, it just stays here. we're long. i think you buy it and make the bet they are going to turn the corner here. >> carter, thank you for that. mike, do you agree with carter? >> well, when you look at a chart like that, you see this is a company that had a much higher valuation awhile back and so you wonder if there are chances it's going to head back up there. dreamworks is kind of the best of breed in the animation space. they've had some problems with the recent releases. my kids liked "the rise of the guardians" a whole lot. i guess not enough people did. i look at that, i look at high content demand and obviously the market, which i've been skeptical about, though continues to act very strongly. and that's going to rise -- that's basically a support for all stock. so, i can see why we would make a bullish belt. julia said, you know, they need to have hits, that's what's going to support. otherwise, they have very volatile earnings. and that's why, to make a bullish play, i'm going to use a call spread in june. >> mike is bullish, he, again, is using a call spread. for those new to the show, this

is a bullish strategy in which you buy one call and sell a higher strike call against it to rep deuce the cost. you want the stock to go to that high strike. that is where your profits are capped. mike, walk us through it. >> i'm going to buy the june 20 call us, going to spent 85 cents for those. sell the 22s against it and collect a quarter. that's a net debit of 60 cents. this is a place where i think, you know, we've seen volatility rise a little bit, but basically we're dealing with a situation where options are still relatively cheap. the stock has been at lower levels. i want to do it in a way where i'll ri'm risking relatively little. >> scott, do you like dreamworks? >> i do not. i think they're going -- >> ouch. >> they are going to lose out to pixar and disney going forward. this movie is not quite as buy their as the situation in blackberry, but it's almost buy their. i just don't think it's a good set

setup. >> almost like blackberry, but still, in the same sentence, not good. dan, do you agree? >> blackberry -- >> i know. really dire. >> avoid. >> so, do you say avoid? >> no, i don't think it's probably a very buy their situation. i think this movie is going to do just fine. they're not going to have a huge write down like they did on the last one. define your risk in some of these controversy situations, use options. >> the question is, do you want to risk 60 cents or 19 bucks, which is where the stock is. if i'm going to make a bet here, i'm going to use options to do it. >> let's talk about stocks versus options, not a movie, but probably should be. want to buy dreamworks, 100 shares sets you back $2,000. mike's call spread risks just $65. got a question out there? send us a tweet and we'll answer it on our web extra right after the show. tonight, scott has a different trade on goldman sachs, so, you'll want to check this out. and while you are there, check out great trader blogs and educational material.

here's what's coming up next. how about them apples? last week, dan made a bullish bet on apple and his trade is already in the green. so, how can he shake out even more gains? find out, when "options action" returns. time for pump up the volume. the names heating up options trader's sizzle indirection this week. when you wish upon a star, you get a multimillion dollar company specializing in theme parks, media networks and beyond. this week, the stock was magical after forbes reported that the company's flag ship franchise brought in $11 billion last year alone. so, options traders took a trip to the happiest place on earth, betting that this stock will make all their dreams come true. 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 ] ♪ [ 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.

♪ werehere where were options traders pumping up the volume this week? walt disney company. at one point, call volume was almost eight times the average daily volume. welcome back to "options action" at our new time. time for i need more cash, where we look back at winning trades and see if we can make more money. just last week, dan said the bottom was in for apple. the stock has moved 3% higher, but he's made much more and here's how. on "options action" you don't have to be a genius to make money. you just have to risk less so you can make more and that's just what dan did with his bullish bet on apple. dan thought apple shares were set to recover. >> the stock might have found an intermediate term bottom. >> but just buying the stock, 100 shares would cost $44,000. so, to spend less, dan instead bought the may 460 strike call for $15. now, to make money, dan needs

apple shares to rise above 460 by more than the cost of the trade or above 475 by may expiration. but shelling out 15 bucks just to bet on a computer company? what do you think this is, the apple store? dan, let's do this for less. >> i sold one of the april 460 calls. >> that's the ticket. so, to spend less, dan then sold the april 460 call for $8 and created his call calendar. but he did something better. he made making money easier, and here is how. between the $15 he spent on buying a longer dated call and the $8 he collectedly selling that shorter dated call, dan's cut his trade to $7. instead of needing apple to rise above 475 to make money, he starts to see if apple trades above 467 by may expiration. but it gets better. that's because the value of the call dan sold will decrease faster than the value of the longer dated call that he bought. letting him do something that apple's engineers can only dream

of. turn time into money. of course, there's a trade-off. order to make the most money, dan needs apple shares to stay below before the first expiration, but above the strike of the longer dated call he bought by more than the total cost of the trade by the second expiration, or, in this case, above 467. since the time of the trade, apple trades have added 3%, making this trade a winner. and now, "options action" fans are downloading the show. and they only have one question. what will dan do now? all right, before we answer that, let's see just how much money was made. had you bought apple at the time of the trade, you would have made over 3%. that's not bad. dan bought his call calendar for $8, can sell it today for overr $9 and that is a return of 14%. but the big question now is, how can he make even more money? dan? >> yes. all right, to be very fair, i did not call a bottom in the thing. i was -- this was an options trade. a good options trade in front of

what i thought was a potential event in front of a dividend announcement. right here at 460, it's perfect. this is where i want it. it can sit here and i make a lot more money. that's what i'm looking to do. >> yeah. what would you say? >> that's absolutely right. you want calendars to sit right at the strike and let that front option start to decay away. a great trade. i tried, obviously, before to do something and call the bottom myself and it stuck me, but this was a better way to play it. coming up, it is the world's most volatile stock but it is the best yet to come from blackberry? it's new device went on sale here in the u.s. today. is it a game changer for the stock? dan and mike will debate it in a battle royale for your money. right after this.

ali/frazier, harvard's m miraculous win and your chances of winning the ncaa office pool.

those battles pale in comparison to put up or shut up. it is where dan and mike debate the fate of a stock. the question tonight is, is the best yet to come for blackberry with the release of its new phone. mike gets the first shot. and remember, no filibustering, mike. keep to time. >> i don't think i need 45 seconds. maybe ten. this phone is not going to be a success. i was at a verizon store, i saw it. nobody's buying this thing. it is not a better product. look at the data. these guys lost about 1.5% of the market share in smartphones over the course of the last three months. but in fact, that represents 25% of what they had. they are absolutely going down. they're not making any money. i don't see this thing as a turn around story at all. >> dan? >> and i agree with all of that. i don't think the z-10 is going to do what it's supposed to do, bring back market share to the company that they lost to ios and to android. but to me, what's interesting of the stock here at 15, it's moving around like crazy. i think 33% short interest, sum of the parts. they have a third of their

balance sheet in cash and no debt. they have 70 million users. at some point, there's going to be interesting financial engineering opportunities. i'd like to see the phone fail and have the stock back at 12. >> maybe shthey should just giv the cash back. >> it's going to be so bad that it could have other alternatives, right? or it has to get better. >> bring the stock back to $10 and probably a great opportunity to get -- >> the only thing creates a floor other on the cash on the balance sheet which is less than half of what the company is worth. people are going to buy to cover when the stock comes in. >> we have two guys here on the desk. scott, where do you stand? >> i can barely use blackberry and the word long in the same sentence. it think it's stupid they rolled this out before the real keyboard model. i don't understand that at all. i would not buy the stock. i wouldn't buy call spreads, i wouldn't buy anything. >> carter? >> well, neither of them like the product, neither of them like the company at the end of the day. i do like this. 140 to 6. and then triples off the low.

6 to 18 and now coiling at 15. that's a good setup. buy it here and you get a pop. >> wow. so, even steven down the middle. that means that i am the judge and i will go with dan nathanat. >> wow. >> and it's not because the product is so great or that it's going to steal share from anybody, but i do like the notion that things will improve or something will have to happen financially. >> thank you, mel, for my first ever win in this segment here. >> yay, dan dan. >> they report next week and this is going to be really important to see how many z-10s they sell. i don't think they're going to sell a lot. i would love to see the stock down. if you want to play this, you do it with call spreads, you don't buy the stock here. implied move is 12%. i would look out to june and look at the 1720 call spread with a stock about $14.75 that costs 65 cents, define your risk, play to that $20 resistance level. it is massive. it goes back 2 1/2 years. >> all right, and remember, the losers trade, the loser, being mike, in this case, it will be

posted on twitter. so, technically, we're all winners tonight. coming up next, the final call from the options pits.