just say no. bye-bye. this is options action tonight. a google alert. >> strong collision. >> there's a new favorite stock sinking fast, but mike khouw has a way to get your money back in google. he's going to break it down. plus, talk about a current proposal. >> would you mind letting me arrive? >> excuse me? >> not that kind of proposal. offering a way to profit from crude's steep decline this week.

he'll reveal how. and is it time to disconnect with linkedin? scott nation says yes and has a way to make money off the shares as they go up, down, and through it all. the action begins right now. >> indeed, it does. in the heart of "new york times" square, i'm mandy drury. i'm in for melissa lee tonight. these are the traders both here and on the desk. we have everywhere everywhere and they have one stock that's captured the traders tonight and that is google. is this a buying opportunity? or has something gone wrong with google? mike, it's not like the story has fundamentally changed. what's been going on with this stock? >> one of the things that's giving is another big tech stock and that's apple.

a lot of people watched the performance of the stock. sometimes people get caught up in the big, round numbers, is it going to go 1,000, like they were saying about apple and then they say, has it come too far too fast? google is not a company that's ever seen one year on year earning declines. this is a company that's been growing since they went public. i think it's a pretty extraordinary story. this may actually be the first year, though, that we don't see top line revenue growth. that said, i think they're in a lot of fascinating businesses. they've really demonstrated they are focusing on the long-term. >> i think you raise a really good point in drawing the conclusion there's some similarities with apple. so is brian, do you see any similarities? >> well, absolutely. i mean, the growth of the android phone has been a huge boom for google and their ability really to research and get out and really develop themselves. change themselves from just being a search engine to being something bigger and better. that's the reason for the stock rise. we've seen a tremendous amount of growth out of the company. just after last quarter, the stock already up over 100 bucks a share, since last quarter's earnings.

certainly, huge upside here, but the stock has run quite a bit. >> indeed it has. scott, is this a good buying opportunity on the dip? >> i don't know. mike makes a great point about the fascinating series of businesses that the company has going on. he also makes an interesting point about the round numbers. unfortunately, the round number we started a month ago with was 800. it went to 900 and now it looks like it's going to take a big round trip to 800. with the ftc looking at the business again, face it, when up get a letter from the government, that's never a good thing. and also, when google made this top at about 920, the option volume exploded. it did 180 or 200,000 options on those dames when it's making those tops. it's now fallen off. option volume has now fallen back quite a bit. it sounds kind of a blowoff top. >> okay, well, it might be time to check on the charts. carter, what are you seeing? >> the chart is excellent. and here's the reason. it's very simple, by my work, anyway. it's because it's off 5.5% from 920 to 770 low today, that keeps the thing healthy.

every time the stock has a three, four-month run, it has a correction. that's the ideal way to progress. what makes something vulnerable is when they don't progress. what's good about this is what's happening. the pull back, it's not like apple. it's not like anything like that, it's very good. >> it's healthy, apparently. mike, do you agree? >> i do. i think the story is intact. scott was talking about google glass, obviously, they don't really monetize mobile that much, but they have a big presence there. are they going to make money from self-driving cars, i don't know. but they have a lot of things in the hopper. a lot of them are really come peopling. when they figure out how to monetize these things, it's going to be a profound story. i do like it. that said, you know, people do

get a little bit skeptical here and there, plus it's not really the most liquid time of the year for the market. so, i do have concerns about the whole market pulling back. i think that's a risk. but in general, i'm going to agree with carter. he think the stock is going higher. >> okay, so, mike is clearly bullish. in fact, he's using a call spread. now, 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 reduce the cost. so, how do you make money? well, that's why we're here, right? we're going to tell you. you want the stock to go to that high strike. that's where you make the most money, that's also where your profits are capped, so, mike, what's the trade? >> i'm looking at the july 900 940 call spread. i'm going to sell the 940s against it for $13.50. that's a net debit of $13.50. we talk about the math working for you or against you. call spreads aren't always the best thing to buy in this case. i'm spending a third of the distance between the strikes, but what i'm doing here is i'm hedging against a potential downdraft in the stock and also in the market generally. this is a way for me to risk

relatively a little amount of money compared to the price of google share. >> that is what we do. we hedge the risk. scott, what do you think? >> i like this trade a lot. i think if you want to be long the stock, this is a much better way to get bullish exposure. mike's spending almost $1,400, and that's because options on really expensive stocks get really expensive. but google has many options. if you want to use mini options, only ten shares instead of 100, those options cost only a tenth as much. maybe a better way to get long even though i like mike's trade a lot. >> yeah, no, i think that's a great point. mini options are a really good way, i think, for retail investors to play high dollar stocks like google and like apple, of course. this is one of those situations where, using options is sometimes a good way to get cheap leverage to directional move in a stock. but when a share price gets as big as it has in google, what you find is that an option price looks like the share price of many other companies and this is a very good recommendation that scott is making. >> so, we button this up, let's

wrap this up with a little stocks versus options. want to buy 100 shares of google? that's going to cost you just shy of $100,000, or roughly the price of a new porsche. mike's trade, just over $1300, big difference there, guys. let's move on. stocks not the only thing having a wild ride this week. crude was all over the map. for more, let's go to seema mody. >> that's right, mandy. it has been a tough week for crude oil. wti dropped over 2% this week. that's the worst loss in a month. so, what's behind the pain? well, it wasn't dollar strength. instead, china was largely to blame. a key measure of chinese manufacturing activity came in below forecast this week. in fact, it showed that manufacturing activity in china actually shrank. china, obviously, a big consumer of oil. despite the move us, crude oil remains stuck in a range of $92 to $97, but traders are watching

those levels closely. a break below $92 could lead to much more selling ahead. mandy? >> seema, thank you so much for that. well, brian, i want to get to you first of this one. when you look at the oil complex, what name do you like and what's the trade on it? >> well, when you look at the oil complex, i like the refiners here. there's something big going on in america, and it is the refiners, the reshaping of our company and exporting. and earlier in the day, the june 60 calls were basically trading $3.20. i purchased them a little cheaper than that. but basically, i'm just simply buying a call. there's a little bit of volatility in the market that we've seen, a little bit uncertain tip. certainly the market will trade correlated in that sense if i'm going to play refiners here, it's that june 60 call that i'm going to purchase for $3.20,

anything above $63.20, i have unlimited upside potential. these names, tesoro, phillips 66, i love these names right now, because they can get out and refine and expand their oil shipments across the united states and out to the rest of the world. >> i like that, unlimited upside potential. mike, do you like this trade? >> i like the unlimited upside potential. i like the fact that you're limiting your downside risk. the refiners have had a stellar couple of years. and historically, these businesses were actually commodity businesses. you bought one commodity, you sold another and they tended to see their margins compress. it's been a phenomenal business. they've been able to buy cheap mid continent crude. when i look at a situation like this, you have stocks that have had such a strong run and you are tied to the demand story. going out and buying a call, in a relatively low volatility environment is an inexpensive way to get bullish exposure. i like that. >> okay, scott, what do you think? >> i actually am a little bit

worried about this one. because it is fairly expensive. you are paying a fair amount for that call. this is the only way to be bullish, though, this name, which is up 40% year to date. i don't want to rush in and buy stock. i think brian and make said, you are getting exposure to the upside and hedging your downside. >> in the past, you could look at the price of oil and see it contract like it's done recently. wti, contraction right now. you sell refiners, which have been sold off from the highs. you are picking up a stock that's off its highs and it's shipping now to vancouver, across, out of that mid-continent oil fields and getting out. it's going to have tremendous profit potential. >> got it. okay, if you have a question, dear viewer, you can send us a tweet. we're going to answer it on our web extra. that's on our website. also tonight, scott has a bearish trade on linkedin. you can check it out and other educational material. all kinds of great things to do. go to the website. in the meantime, this is what's coming up next. up next, it's a horror show for cable. >> ah! >> can anything save the industry from cord-cutting and

the likes of netflix? find out which cable stock you should stay tuned to, and which one it's time to pull the plug on. plus, talk about a good deal. mike's great groupon trade made him look like a genius. how is he making even more cash? find out 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. ♪ welcome back to "options action," i'm julia boorstin in los angeles.

cord-cutting is in the spotlight. the pay tv business has its first ever net subscriber loss in the 12 months ending in march. that's according to a new report. and perhaps most concerning, the first quarter, which is usually one of cable's best, was particularly weak. cable companies losing about a quarter million subscribers. now, this report comes as netflix launches a new season of "arrested development" on sunday. the kind of original content that's usually found on cable. now, netflix says it's complimentary, sort of another cable channel, but with so many options outside the pay tv universe, like netflix, hulu and youtube, we'll have to see if the trend continues, especially as the traditional cable providers like comcast roll out tv everywhere options to keep their subscribers hooked. mandy? >> julia, thank you. the question is, what names could benefit from this cord-cutting phenomenon? let's go to the charts with the man who is so charming, some say he could actually be on pay per view. carter braxton worth is the man we're talking about.

>> good night. okay, let's look at dish. so, three charts. and they're constructive. this is the daily chart. and what's important about it is, it never gets too far above trend. the stock rises and rises, but it's orderly. that's desirable. look at the longer term chart. the five-year chart. i try to tell the same story. basically, it stays on a 45 degree angle and never gets parabolic, as we see which is often the beginning of the end. this is the move since the '09 low. look at the all-time chart, or, at least a very long-term chart. the important thing is here, as we've been on this nice rise, we've yet to take out of 2007 top, which is close to 50, around 48. we know the s&p has exceeded its '07 high. here is a stock that is still approaching it. the presumption is, it does, at a minimum, what is s&p has done, get back to and exceed its '07 high. we like this here.

>> okay, what about you, mike? do you like this? >> it's interesting, you look at charts like that, you see something familiar when you look at the mobile carriers and the cable companies, you look at a lot of these things. you see something that looks -- 45 degree angles, often times we talk about that, get skittish. one of the things that's interesting, the options market is a little bit skittish in dish. basically what it is showing is that the options premiums are relatively high. it sits up very well. we're looking at the longer term trend, even if it breaks back through that line and sort of follows the trend, but sort of does a little bit of a mean reversion thing, this is one of those situations that actually in a low volatile till environment, i'm looking forward to selling puts here. >> i can collect $1.50 for those. the stock is about 39 bucks, so, my break even is actually going to be down around $36.50. otherwise, i just collect $1.50, over the next couple of months, pretty good return on a $39 stock. so, you know, we -- in a low volatility environment, where do you look to collect? something that's just chugging higher, the kind of place you want to look for a trade like this. >> brian, what do you think? >> mike's trade is great. common strategy that we use for our clients. when carter mentions a stock

that never gets ahead of itself, selling a put makes a lot of money. so, that makes sense here. the only thing with dish that i have to worry about, it's sort of been this lower rung tier satellite cable provider that is just trying to get out from underneath itself. it tried to purchase blockbuster, now it's trying to purchase light squared. watch that deal. if it can get done and transform itself into a wireless internet provider, you have something. >> well, and they are trying to do a deal with nextel. what that means is, there's a floor under the stock. so, i really like this. you are collecting $1.50 to sell a put on a stock that's below $40. the stock has to drop more than 7% before you're experiencing any losses. this is a good way to select some premium. up know, you have to leave some margin in your account. you are going to have to buy the stock, if it does drop that 7%. >> okay, coming up, boys, groupon has been on fire, but could there be even more gains to come?

we're going to find out 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.

♪ [ 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.

♪ and we're back on "options action." well, it's time for the upside call, where we look back on our winning trade. now, a couple of weeks ago, khouw and carter made a bullish trade on groupon. to say they spotted a deal, you know what, that would be an understatement, and this is why. on "options action," it's how we always get the best deals. risk less, so we can make more. and that is just what mike did with his bullish bet on groupon. carter liked the look of groupon's chart. >> we think you have lots of upside here. get long. >> all right, mike thought. i'll join the party. but just buying groupon shares , what if it goes the way of pets.com. >> the horror. >> so, mike should it for 48 cents to keep all of that, mike just nets groupon to stay above 6 bucks before july expiration.

mike won't seep losses until groupon develops below $6, for than that 48 cents he took in, or below $5.52 by july expiration. but receiving a naked put? what kind of website are we talking about here? afterall, that would mean mike would have to buy groupon at that put strike price, even if the stock falls well below that level. mike, let's cover ourselves up. >> buying the five and a halves against -- >> much better. mike bought a lower strike put, specifically, he bought the july $5.50 strike put for 28 cents and created his bull put spread. but he did something else. he put the odds in his favor, and here's how. between the 48 cents he

corrected and the 28 cents he spent on that other put, mike took in a credit of 20 cents. that's the most mike can make on the trade. but by taking in the credit, mike made the best deal of all. he now makes money if groupon goes up, down or nowhere at all. but even if groupon drops below six bucks, mike wouldn't see losses until the stock falls below that high put strike price by more than the 20 cents he took in, or below $5.80. below that, mike will see losses. but by buying that 5.50 strike put, mike has protected himself below that level. and since the time of the trade, groupon shares have surged 15%, making this trade a steal of a deal and a winner to boot. and now, "options action's" biggest fan. >> this is the happiest day of my life! >> just wants to know one more thing. what will mike and carter do now? >> before we answer that

question, let's see just how much money mike made. since groupon is well above the strike of the put that he sold, if he were to close out the trade today, he'd keep all of that money, or, in this case, about 20 bucks per contract. so, mike, what are you doing now? >> here's one of these things. when you are short the downside puts, you want to cover them when they are really cheap. you have to look at the execution costs. so, if it is cheap, you can get out. close them. it's good practice as a trader to make sure you cover that risk. if the spread is very wide, though, that's what you have to watch out for and otherwise you can let this one sit. i sold options, this thing really took off. carter was more right than i was. >> i wanted to ask you a quick question about what was happening with pandora here. it was up by more than 13% at one point today. basically came out with a loss, but the loss was not near little as bad as forecast. >> they started digesting it, the stock was up, i think,

almost to $19.50 at one point and finished around $16.50. it just shows how volatile names like this can be. >> right. >> i thought it was very interesting to see that. it did end up closing lower on the day. >> let me get to you, brian, what you think about the new media, social media or internet stocks. facebook is one name that really comes to me, because essentially it has not participated in the recent euphoria that's come back to some of these stocks. >> well, facebook had a nice pop and it sold off ever since. you look at the left for dead sort of names out there, pandora, we saw a lot of upside call buying, so, it's not a surprise to me we saw a pop in the name there. definitely option activity that's bullish in the left for dead names that has shown some upside. and i look just using buying a call. the valuation, it's going to take a lot for the companies to grow into themselves. it looks like they may stay around. buy an upside call, take a shot. maybe that's how i play it. i wouldn't commit a lot. >> scott? >> facebook starting to show lower lows and higher highs. that's why we do a bearish trade on linkedin in this week's web

extra. >> a reminder, as we head to the break, if you want updates, follow us on twitter, where basically 10,000 strong and growing. you can add your name to the list. and finally, if you are on facebook, stay posted on our trades from throughout the week at facebook.com/optionsaction. but coming up next, the final call from the options -- ♪ [ 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. ♪ the owner of a mother cat and a piglet that the cat adopted said it's a miracle and a lesson for all mankind. the piglet was rejected by its own mom. the mother cat seems pretty calm about her new baby, though it looks about four times the size of a kitten. the owner of both animals said he was pretty surprised when he first saw the piglet together with the cat. it seems to be working so far, and that is tonight's adorable optional viewing.

time now for the final call. the last word from the options pits. scott? >> if you have monday off, remember why. >> brian? >> tesoro. i bought calls today. >> mike? >> sell puts in dish. >> have a fantastic weekend, everybody. i'm mandy drury. for more "options action," go to our website. see you next friday. what you are about to see is one ladder-the strongest, the safest, the most versatile ladder in the world. the strong and sturdy little giant ladder system. twenty four ladders in one. coming up, you'll see amazing demonstrations and hear compelling testimonial