but until next week, there's really only one thing that i want you to remember, people first. then money, then things now you stay safe. bye, bye. this is options action. tonight, dif dentd doll drums? will rising rates take the air out of one of the hottest trades around? the traders have a strategy for a high-flyy dividend name that could be in for a rude awakening. plus bet on the farm, swrin ga may be beaten down, but the stock may be on for a run. and a trade that gets you in the name for free. and healthy returns, they team up to give you a winning play on

a health care name poised for a rebound. action begins right now. yes, it does. live from the nasdaq, i'm scott in for maine lee is a lee, joined by the traders. it's the one thing on the minds of every investor, rising raigts rates, the potential fallout for stocks, touching the highest level in a year. will the jump stop the trading that sent the money to the big dividend players? michael, the investors have been flocking to tell come, utilities, are we about to see a sea change about the way people play the market if rates go up? >> some we have seen. we saw the utilities get hammered. a lot of the other yield trades, something we have been talking about -- >> and they end up good this week, right? just when you think -- >> i don't think -- one thing i don't think is going to come out of the fed, i don't think they're going to sit there and

shut off the spigot. there's no reason. there's plenty of reasons for them not to. that said with the market will anticipate it, and the rates will climb higher, so i think there are issues. the real thing you need to pay attention to is whether or not the fundamental businesses are good. are they growing? they are not. staples, this is not a growing sector. the te he come. >> but they -- >> they got ludicrous. >> to me, at some point, you have to think about the way utilities and reads game came in, 10%, i think there could be setting up for a little bit of opportunity. i know you take a different stand. but when you think about what's going on around the world, what growth looks like, when trade being unwound -- >> staples stock is dropping from 22.5 when they should trade 16 down to 19 times. they're -- >> the moving rates one of the greatest head fakes we have seen

in some time? >> i don't think so. >> are rates going back down? below 2%? >> maybe a head fake if you look at end of the year. but look at end of 2014, and i could have sold bonds. that's a great sale. mike makes a great point, for decades, they were for widows and orphans, for the past 18 months, hot money traders. and they are going to desert these names when they start going the wrong way. i think we saw that in the middle of the week, the first part. on wednesday, on the close, people were just crossing their fingers hoping that the s&p could hobble to friday. the price action was horrible, terrible. and with the vix up 13% on the week -- >> let's shorten it up quickly and say this. equity traders shouldn't be trying to trade rates. when they are trying to use the names, that's what they're doing, trading rates by proxy.

look at the underlying businesses, whether they want to own it and -- >> they're doing that because the velocity spooked everybody. >> that's the best tell about equities, at least until the end of the month or next month is rates. >> look at verizon specifically. >> texas the largest. when you see stocks that have four, five or higher dividends, that's a warning sign, what you're seeing is the markets eltelling you you there's something wrong. the growth is over. sub growth in wireless is going to be a big problem. you have 100% penetration in north america. that's an issue. soft bank going to acquire sprint. they are known to do competition on prices. that could cause problems. issues, expensives to subsidizing smartphones. the only real backstop is more people are coming on the smartphones, and they're lengthening the cycle.

they have to monetize the broadband piece. i think it's a dilemma, but i don't think they should be looking at verizon as a rock solid way to collect 4% year in and out. there's a real debate about whether that's a buy. >> mike has a trade. he's using a put spread. we've used it before. we crack open the playbook, buy one, sell at the lower strike, you do this when you're bearish and want that stock to go that short-put strike. that's why where you make the most money and the profits are kept. that being said, what's the trade? >> i'm looking at august 50 -- i'm factoring in the point dan made. because they have come back a little bit, they could bounce. i don't to risk shorting or naked short upside.

$1.35 for the 50s, and i'm going to pay the distance, if it my grates. it's the 150-day moving average. i'm not a technical guy, but that's the level that technical guys told me that's where you want to buy them. that's where i'm interested in covering the trade. >> i think the levels are exactly correct. i like the width of the spread. i don't agree with the thesis. i think they're going to come back. it's a 4% dividend, 7% off the highs last month. i think this is a name i'd rather own against other things. >> one of the things, i thought about doing a ratio. i wouldn't mind having it put to me at a lower price. $45, an attractive level to enter the stock. there's an opportunity to drop lower. >> what do the charts see for some of the big dividend paying stocks? no one better to ask than carter

braxton worth. what do you see? >> as for the telcos or utilities, the high dividend paying, this is an etf that's well-defined. at the bottom, put money to work, the top, fading it. touch the top of the well-defined channel and starting to fade. with prices up, a low dividend yield. if you look at the yield on this particular instrument, we are basically down at or near the same low yields you saw? '07 before they got out of wac. not a good time torch to be buying, sell. >> i think someone is backing me up. there is a channel, basically, i think at the lower end, that's when i'm going to switch over to dan's camp and get in. that's below $47. >> why sell that 50 cent put?

these dif kend stocks are not going to drop to zero. the dividend is a floor underneath the stock. so sell that, collect the 50 cents. makes sense. >> stocks versus options. want to short verizon? better be brave, as you know, it carries unlimited risk. mike's option trade defines the risk to just 85 bucks and could more than double his money by august. moving on. it seems the tide is turning for groupon. rallying 11%, it got one of the traders thinking about a stock that could be poised to two from halted -- hated, excuse me, to loved. halted? not exactly. zynga. tell us why. >> i got thinking to myself, they ipo'd at the same time, and had falls from grace. it's been left for dead, much

like groupon, before the rally. the jury is out on this one. i can't tell you. but every once in a while, in a speculative portion of the portfolio, get in front of change. i think this one lines up well. this has 73% of their market-cap in cash. a small amount of debt. and left for dead, 18 guy boois, and three solds. they have been working well. this used to have high short interest. now only 4%. that tells me it's left for dead. when you look at the stock at $2.80, it's an option on the long-term fundamentals of the company. but with $2.50 in cash, i think there's potential for a move to the upside. >> he's calling a call-spread

risk reversal. we don't use it often, crack open the playbook. in this particular strategy, sell a put and use it to buy a call spread. ideally, go to the short-call strike, that's where you make the money and where the profits are kept. since you are short a put, you must be willing to buy the stock. that said, mr. risk reversal, what's the trade. >> just full disclosure, i bought it today. if it drops to the $2.50 cash level. get it on for a credit. today when it was $2.80. if you sold the january 2014 at 37 cents and bought the january '143-5 call spread, calls for 50 cents and selling one of the january calls for 30 cents, that cost you no money.

how do you make money? between $2.50 and $3 you have no loss, 3 and $5, you can make $2, and above $5, make $2. you are putting the stock at 2.50 on the january expiration. they have cash, that is $2.50 in the share. >> it's almost 15% of the current stock price. that shows the concern. the call spread is not that expensive. considering how far out in time it goes. when you start selling options, i prefer to sell short-dated ones. you're stuck with the trade for six months. i would buy the call spread, pay 35 cents, or 40 cents for a $2 call spread. what's the problem with getting to that and not risking much. >> a lot of options to be trading for a $3 stock.

i understand. it doesn't cost anything, but there's a margin. mike makes a great point. selling more option than you're buying. bring it in in time. if you want to do it, think of it as a trade. you can trade your way out if it does what you want it to. >> let's play stocks versus options one more time. to want buy slars, $3 a share, not too bad, but dan's option trade costs nothing to put on. and worst case scenario, forced to buy for $2.50, that's a 10% discount. got a question, send us a message. we will answer on 101 extra on the website. yes, it has been revafrpd. you'll find greater trader blogs, educational material, and exclusive trades. check it out. and up next, health care, the year's best performing sector. but is there trouble brewing for

the stocks? check the charts and give you the trade. here's a look at what else is ahead on options action. >> time for dan to face facts. he made a bullish bet on facebook, but it's gone nowhere fast. close the books or hold out for gains? 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. ♪

. welcomeback, in a week that saw volatility, health care was unskaited and leads the market this year. the best performing s&p sector of 2013. can you continue to bank on the names, that's the question, or is it running out of steam? carter worth is back. >> before looking at the charts, as a setup, we're going to talk about amgen. but if one is concerned about the market, that's half the beat of the market. holds up better, if one is constructive and thinks we're going to selloff, that's a good bounce. you have a two-year chart, well-defined trend. it's sold off some 17% back to the trend that it's been in the for the past two years. other charts, this is the same chart, i drew it different. this current selloff leaves us at the 90 level. which is the level from the

range that it broke out. a long-term chart, keeping in mind the key 90 level. that's the level it broke out from when it was making all-time highs out of a 10, 12 year base. it has a reference point in the day to day, but the long-term chart as well. this is a good opportunity, and we will be long with confidence. >> mike, what do you think? >> this is interesting. this is not an expensive stock compared to the market. people used to remember this was a high flier. as a mature biotech, it isn't anymore. xgeva, is that how you pronounce it? >> works for me. you guys go with that? we're all good. >> i don't know how to pronounce the other one, i'm not too good with that one. but both are showing promise. one is approved, the other has a chance with ovarian concerns. there is a growth story, but the company is cheap.

we've seen excellent eps growth. >> this thing expected to grow 12% a year this year and next. it's trading twice next year's earnings. >> it's spotty on the top line. sometimes 4%, and then flat, and a little bit of a bump. that's what you're buy with the stock. 11.5 full-year -- next-year's earnings. >> they're not paying anybody to name the drugs, they're pulling them out of a hat. >> what's the trade? >> buy some calls. i like the october 105. pay $2.85. you are going to have an opportunity to spread, get into the trade hopefully for no money. sell the puts. the thing is, the stock has been fairly volatile, and that makes these calls look reasonable bleu priced. i'm giving myself time. >> face forward, dan's got a bullish trade on track.

despite the selloff for the stock. how he's managing to put time on his side and stay on the move just after the break. ♪ [ 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.

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[ 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. ♪

yes, it's true, time for total recall. where we look at trades that have yet to work out. dan made a bullish bet on facebook, although it's moved lower, the trade still looks good, at least he says, and here's why. >> on options action, it's how we like to trade, risk less so we can make more. that's what dan tried to do with his bullish bet on facebook. dan thought the social network had a shot at going higher. >> it was almost in crash territory. from the may highs, down 20%. i think it was overdone. >> but buy the stock? >> i imagine we have to answer the question. >> let me make it easy for you. no. after all, 100 shares would set dan back 2400 bucks. he bought the august strike call for $1.55. now he needs to see them rise above the $25 strike price by

more than the 155 he spent, or above 2655 by august expiration. but shelling out a buck 55, really, dan? >> i sold one of the july 25 calls. >> now we're talking, dan then sold the july 25 strike call for 97 cents and created his call calendar. but he did something even better, he made making money easier and here's how, between the $1.55, and the 97 cents, by selling the shorter dated call, he cut the cost of the trade down to 58 cents. and now instead of needing facebook shares to rise above 26.55 to make money, dan sees profits if they rise above the strike price by more than that 58 cents he spent, or above 25.58 by august expiration. but it gets better.

that's because the value of the nearer dated call will decrease faster than the value of the longer dated call that he bought, letting him do something that not even the zuck could accomplish. turn time into money. >> people are going to say wow. >> maybe so, mark, but remember, there's a tradeoff. and in order to make the most money. dan needs facebook to stay below of the shorter dated call he sold 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 above 35.58 by august expiration. since the time of the trade, facebook shares stayed flat. it's neither a winner nor a lose er. and now options actions facebook fans worldwide are clicking and commenting furiously, because they want to know the same thing. what will dan do now yep, but

before we answer that, hit the options versus options button and drill down on the benefits of using the structure. he caught the august 25 call two weeks ago, looking at a loss of about 36%, but dan's options trade can be taken off today for no loss, and there's still plenty of time left in the trade. how do you manage it now? >> you sit with it. it's done what i want to do. the wheel idea was isolated q2 earnings event and selling the july premium to august. it's moving around, and keeping high, in august it's better bid, i want it to be 25 or lower on july expiration. i'm going to look to spread the august calls. >> you got a big event june 20th, facebook sending out a note, they're having a product to unveil next thursday. >> and the stock rallied 2.25% when it hit the market. to me, that's what is keeping

the trade in the game while it's still lower. >> all right, up next, the final call from the options pits. ♪ [ 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.

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[ 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. ♪ it's time for the final call with the last word from the options tradeding pits. mr. nations. >> week's web extra, what to do when your covered call it in the money. >> mikey. >> if you want to make bullish bets on am fwrks en, this it looks attractive. go to october to work it out. >> dan. >> call spread reverse sal in zynga. i want to do it when it comes in at the cash level.

i bought it, i think it's a good opportunity. >> looks like our time is expired. for more options action, go to the website. see you next friday, have a pretty great weekend, and guess what, mad money starts right now. >> announcer: the following program is a paid presentation for the shark rotator lift-away brought to you by euro-pro. >> [british accent]: all right, i agree, your shark vacuum has a no loss of suction sealed system and it's easy to steer, just like me old dyson, but... [harp glissando] my new dyson has the strongest suction of any vacuum! so there. >> well... >> here we go again. >> testing proves that the new shark rotator lift-away... [harp glissando] deep cleans carpets better than your new dyson. >> what-- shark outcleans this $600 dyson? >> 'fraid so. and my new shark rotator also