now you stay safe. bye-bye. this is "options action." tonight, king dollar rules. >> good to be the king. >> but not if you're a multi-national. so which stocks reveal the pain of the dollar's reign? then nathan's naming names and giving you a way to make money. and i whoo are these two men in a bitter dispute? >> i'm very, very pissed off. >> because mike's betting that brad's next flick will be a plop and he's got a way to profit using options. >> and talk about robbing the bank. >> get as many hundreds, 50s, and 20s as young pack into it. >> he'll break it down.

the action begins right now. >> live from the nasdaq market site, i'm melissa lee. these are the traders here on the desk, on an expiration friday. and china, brazil, india, or russia, all in the midst of a sell-off. that is helping the dollar have its best week in 18 months. that could be a problem for stocks right here. let's get in the money right now and find out why we saw the pain in commodities. so, of course, the logical question is, could multi-nationals start feeling the pain next? dan, what do you say? >> listen, to me, i think it's very simple. i think, like i've said it a few times on this desk, the s&p has been a safe haven. we're starting to see treasuries with this safe haven. the dollar has come back in vogue this week. the fed told us the outlook was a little better, economic outlook, than a lot of people had thought they would. but the rest of the world is melting down. i think people come back to treasuries and they'll come back to the dollar. for me, does this create potential headwinds for u.s. multi-nationals that get a good

bit of their sales from overseas? i think that's going to be the story of this summer. >> we've already seen that a little bit in the last earnings season, when it comes to a lot of the consumer staples, names like colgate, palmolive, that have exposure in venezuela. they actually outline a venezuelan it. do you think this is going to be broader? >> venezuela is a special situation, of course, because you've got a currency pegging type of thing going on there. there's no question that companies that are getting their sales overseas have a currency translation problem. you earn your money overseas, when you translate it back into dollars, if the dollar is stronger, there's fewer dollars. that doesn't look too good. one of the things that i thought that was very interesting about what happened this week is is that we have seen now proof that the fed's purchasing activity does not control rates. it's the market's expectation about what they're going to be doing. so you sort of start to lose that illusion. as the rates go higher, we are seeing it in equities. still, rates are very low. people should remember that.

the price of equities is not exceptionally high. there's still some places people can look. >> rates are low, but they've gone up a bunch recently and that makes the dollar more attractive. would you rather invest here and get 2.5% or in switzerland, get essentially zero? that's part of the reason the dollar is stronger. you think the dollar is strong, that's great. but it only helps you if you're dan and dancing down the boulevards of paris, wearing a beret. if you're anybody else, say boeing or caterpillar and have to sell your goods overseas, then it hurts you. the way to look at this, if they're a big exporter, they're going to be hurt. if they'reimporter, they'll be better off. got to oppenheimer for this. >> let's take a look. here's a chart for the last two, three years and the dollar was making fairly substantial lows in 2011. and what's important about this is a series of higher lows, a flat top, if you will. it reflects equilibrium. but after you get into a wedge or pattern like this, you typically get revolved up and out. keep in mind these levels of 90 and take a look at the longer term chart. the dollar has been in a structural decline since 2000. and basically, what's been happening is this curative

period over the last two years, when we see the long-term chart, you'll see what's going on, this is the beginning, what we just looked thereat is the beginning of an important term. this is 2000, and basically, structural decline for the better part of a decade, it didn't keep up with the u.s. equity market, as, obviously, foreign markets, equities are doing better, and foreign currencies, was now this looks quite developmental. we think we're heading to 90 and we think this current action is pretty much a tell that that's going to happen. >> carter does see the dollar strengthening, which would hurt these multi-nationals. you're taking a look specifically tonight at pepsi. >> and this is just one headwind that i see. for a company like pepsi, you were just talking about it on "fast money." some of these multi-nationals,

to me, in the u.s., on paper they can look kind of good. they're high single-digit growers, and they seem kind of safe. what i think about pepsi, it is a company that's only growing at seven times -- or excuse me, 7% a year for the next couple of years and trading at 19 times earnings. it seems a little expensive to me. on a technical basis, this thing has looked fantastic over last year and a half. and it's worked its way up. but all of a sudden now, the technicals seem to be weakening. it just broke through that 50-day moving average, bounced off its hundred-day. and i think it's going to make a run. i think the technical picture is weakening and i want to make a play for the next month that it makes a run at the 200-day moving average that's $75. >> dan is obviously bearish. he's using a put spread. here's how the strategy wants. buy one and sell a lower for the same expiration. you do this bearish and here's how you make money. you want that stock to go to that lower strike put. that's where you make the most money and that's where your profits are capped. >> today when the stock was trading just below $80, about 79, 90, i bought the july 8075 put spread, paying $1.25 for

that. i bought one of the july 80 puts for $1.50. i sold one of the july 75 puts at 30 cents. my max gain on this is $3.80, between 78, 80, $75 on july expiration. and i can lose up to $1.20 between 78, 80 and 80 and the full $1.20 above 80. that's basically right where it's trading. i think we'll make lower lows in this little sell-off we're in. when you throw in the dollar that carter just made, i think it all makes sense. >> these are also the kind of names that investors seem to flock to. in today's session, take a look at the xlp, the eta that tracks some of these names. it rallied today, reflecting the yield. >> i think that's exactly right. they're low beta. if you're exposed to equities and some people have been rotating into more cyclical nails, which tend to be more volatile when the market is moving around, that seems like a safe place to go. but these stocks were exceptionally expensive and even

now, they're not exceptionally cheap. we have a pullback. but it hasn't so much so we're starting to see these trading 13, 14 times. i agree with dan, i still think there's some risk to the downside. >> and it's a trend setter, because three puts for every call. and he makes a great point about the fact that staples generally hold up. i think that's why dan is buying a put spread, even though implied volatility, that is options in pepsi tend to be really cheap. you might think, i'm going to pay at the money put and get all that downside. there's not going to be a ton of downside. this is not going to zero. >> it just came in 5%. i think if the market the going to be down a percent, i think 10%, which is my goal in the next month or so, peak to trough, i think this name will catch up and go to its 200 day. and i would just make one last month. the break-even on this is 2%. >> that's why you do a put spread. >> right, exactly. let's move on to the other big story of the week. one of the culprits for the rough week for stocks, and that is china. the shanghai composite hitting a six-year low. let's go to jackie deangelis, the host of the groundbreaking

"futures now" on cnbc.com. jackie? >> it's the one thing that could be a bigger worry than the fed tapering right now and that's a chinese contraction. hsbc's flash pmi number, which predicts manufacturing activity, came in at a nine-month lie of 48.3 yesterday. a read bloeg 50 indicates contraction. so this number was taken as a strong stine that china could be decelerating, was a bigger concern might be the chinese credit crunch. news that seven-day borrowing rates touched 28% on thursday. that news spooking the market. rumors about a major chinese crisis, like a leaman-like type of default quickly flew around. the rate has since cooled, as the people's bank of china has apparently made more funds available to banks. but major concerns still stand, like the fed, china central bank might be losing its taste for easing, given that concerns -- and that concerns that banks -- that banks have begun to -- excuse me, take excessive risks.

trouble to get the words out tonight. but as you mentioned, melissa, that has weighed on chinese stocks and that really is the question for how much longer will it continue to weigh on those stocks. back over to you. >> thank you very much, jackie deangelis. all right, and so there are names that might be oversold on china, concerns here. >> what she's saying about there's news there might be a slowdown in china. have we not had news there might be a slowdown in china for the next nine months? this is new news. one of the things you can look as an example is the price of commodities and one of the other things you can take a look at is chinese electricity generation which has been in a down trend for half a year now. basically, everybody's view on china has been that their economy is slowing. and you have seen that in the emerging markets and you have seen that in the miners and you have seen that in the construction and mining names. anything china related has been getting hit. and as i look at the that, these are the types of things i like to see, which is we're starting to see concern even in our own markets. the markets don't always price securities correctly. we look for situations when

things get a little bit too cheap. and i started to take a look at some of these miners and i'm thinking that maybe, i might actually take a risk and take a bullish bet here. catching the falling knife, folks. that's what i'm going to try to do. >> mike is placing a bullish bet on freeport mack by selling a put. the normally you want to keep the stock above that put. that allows you to get the money you put in. but because you're short the put, you could be forced to buy that stock at the put price, even the stock sells below that level. >> i'm keeping this one pretty simple. vol got a pop today based on the news -- i mean, this week, i should say, based on what's been going on. this stock has continued to get hit. i'm going to collect about 85 crepts, a little over 3% of how much you're risking. you could be forced to buy the stock at that lower strike price. but once i'm having the stock put, net of the premium i collect, i'm going to be buying it at about a 12% discount to

its current level. that's going to be a one-year low. >> disaster, disaster, disaster, disaster. this is going to be -- >> but the stock is already quite cheap. it's one and a half times bought. >> but selling a put on a stock like this could actually be a little dangerous. >> this is going to be ground zero. if china implodes, ftx is going to zero a in a heartbeat. zm it's already ground zero. >> let me tell you something. this is one of the worst head and shoulders tops long-term that i've ever seen. the close below 30. this is an absolutely -- >> you know what, we're going to bring carter in. carter braxton, what say you about fcx? >> it's a very poor chart. >> a man of few words, but very potent words. >> it's got lower lows and lower highs. i think the interesting thing here, the difference between these two trades, implied volatility in pepsi is really low. dan's trying to take advantage

of that implied volatility in freeport. very high. >> so do you think to rethink this train, mike? >> look, i'm a contrarian a lot of the time. i'm a contrarian when the staples were rallying and i'm a contrarian here. >> can i wrap this up for you. i look at the way currencies are moving around, the way bonds are moving around. this thing is in the middle of all of that. and if we really do see some sort of acceleration -- >> not in china. >> a great investment strategy but it's an investment and if you buy it -- >> again, as mike said, that's a trade not for the faint of heart. if you've got a question, send us a question right after show on our website. scott has a trade you can get long, bank of america for pennies on the dollar. you'll also find some great trader blogs, education material, and exclusive trades. it's all online at optionsaction.cnbc.com so take a look. here's what's coming up next.

why are they taking aim at brad pitt? it's a hollywood feud of the highest caliber that could lead to a blockbuster trade. we'll have the shocking story. and is gm a lemon? shares have gone in reverse this week, but one option trader says don't take it to the scrap yard yet. he'll explain why, that's when "options action" 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. i'm julia boorstin. it's another big weekend at the box office, with paramount's zombie action picture, "world war z," opening in 3,600 theaters nationwide. last night, the film grossed $3.6 million, putting it on track for a $45 million weekend here in the u.s. now, paramount spent around $200 million to make the film, plus tens of millions of more to market it. it's a bigger risk on a original content than some of the established mans like "ironman" or "man of steel" we've seen so far this summer. looking to recoup its costs and build because, paramount and theater chain regal introduced the first-ever megaticket. $50 bought access to a wednesday prescreening, a digital downloading of the film, 3-d glasses and a limited edition paurs. the test was successful now they're looking for way to roll out more megatickets with future films. it's not quite the $150 tickets george lucas predicted when i

interviewed him last week, but it is key experimentation to help the studios grow profits. >> and how is the summer box office shaping up? >> so far, it's been very strong. so far the summer is up 12% over last year, and with these gains so far, it looks like the total year will end up over last year. >> all right. julia, thank you so much for your time. julia boorstin out in l.a. now, media stocks, of course, have been one of the hottest trades this year, but there are signs that there could be some trouble here. let's call to the charts and find out why, with the man who was actually, probably didn't know this, runner-up to brad pitt for people's sexiest man of the year all the way back in the year 2000. now, of course, congratulations to carter, but carter, what do you see in the charts? >> sure, thank you. so i have three charts, the first is a comparative chart, just what you said, melissa. here is a picture, five years, of the s&p in green, but four major media stocks.

time warner, disney, comcast, viacom. these have tripled, quadrupled the performance of the markets. that's the basic backdrop here. and at this point, we think they're overdone. let's look at viacom in particular. the first is the stock with the moving mechanism. there's a general rule, when you're this far below, your smoothing mechanism, it's a pretty good bet you're going to get back in touch with it. we think the stock is too far above the hundred-day moving average. a move to the 150 would be a 10% decline to about 60. now, take a look at the five-year chart. again, same chart, but with some lines drawn. this is the exact same chart as the other that ied a, removing the smoothing mechanism and putting in the channel. as a basic rule of thumb, you're at the top and you want to fade it, bottom you want to buy it, so forth and so on. we've come to the top of this channel. if we were to get to the bottom, we're talking about something that's worse than 60, more like 55. split the difference, let's say this goes to 57, you've got a meaningful 10, 12% down from

here. >> would be 10 or 12% down from here. mike, what do you think of viacom?% or 12% down from here. mike, what do you think of viacom? >> this is interesting. this is one of the times when you look at valuation and say, this thing is trading about 16 times earnings and 14 times forward earnings. that looks fairly cheap. maybe even relative to the market. there's a reason why it's cheap. this is a company that has seen some serious revenue declines over the course of the last 18 months or so. when you take a look at a business, this is not what you want to see. it should trade at a discount to the market. i do think it's stretched. and i don't see any reason why that situation is going to reverse itself. fundamentally, i have no interest in buying into no growth, low growth, or negative growth businesses such as this one. >> you're obviously bearish. you're going to try to take advantage of the fact you have a volatility pop. i'm going to call the 65 calls for $2.25. buy the 67.5 trades for $1.10. i'll take in at $1.10, which is 40% between the difference between the strikes. i'll keep the money.

and obviously, if it goes up, my risk is going to be capped if it goes above that 67.5 strike point. >> you'll be shocked. >> you hate the trade? >> smoothing mechanism or not -- >> yes? >> smoothing mechanism or not -- >> this is like frick and frac. >> i don't think this chart so bad whatsoever. and i know mike just talked about a revenue decline, it's marginal. low single digits. this is trading 14 times next year earrings, domestically focused, the opposite of the pepsi trade. i kind of like this thing. if it comes back to its 200-day moving average at 60, i would be a buyer. >> i don't think there's enough vampire and zombie fans in the united states for this to really do well. one thing, these options very thin. not a lot of them trade and this is a spread. you've got to be careful. you have to watch your execution. >> carter, tell dan why he's wrong. >> well, the reality is, it is overdone. and we saw the group. all of them are overdone. you can pick any one you want. this one has a potential

catalyst if the movie doesn't do the zombie trick it's supposed to do. and the growth is, as mike put it, stalled. >> you dare do go against that man with the beautiful body? all right. coming up, it was the trade that literally drove off a cliff. we're talking about mike's gm trade. how does he intend to fix it? find out when "options action" comes right back. [ 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. time to get called out. we take a look back on trades that have not worked out. a couple weeks back, mike took gm shares for a spin. it's been a bumpy ride for the stock, but he hasn't lost that much and here's why. on "options action," just because you risk less, doesn't always mean you make more and unfortunately, that's just what happened to mike's bullish bet on general motors. mike wanted to take shares of gm for a spin. >> they're really, basically firing on all cylinders. >> one problem, 100 shares of the stock would set him back $3,500. so to make a bullish trade, mike sold the july 34 put for 85 cents. now, to keep all of that, mike needs gm shares to stay above $34 through the july expiration. but if it does fall, mike

wouldn't see losses until gm dropped below that strike price by more than that 85 cents he took in, or below $33.15 by july expiration. but mike, let's slam on the brakes here. because since you're obligated to buy the stock at $34, if it slides below that level, you'll be on the hook for some serious money. can't we do better? >> buy the 33s again. >> that's more like it. so to define his risk, mike bought a lower strike put, specifically, he bought the july 33 strike put for 55 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 85 cents he collected by selling one put and the 55 cent he spent on that other put, mike took in a total credit of 30 cents. and that's the most mike can make on the trade. but by taking in that credit, mike's doing something pretty amazing.

he's managing to make money whether gm goes up, down, or nowhere at all. and even if shares of gm fall belows 34 bucks, mike wouldn't see losses until the stock falls below that high put stock price by the 30 cents he put in. below that, mike will see losses, but by buying the 33 strike put, mike has protected himself below that level. and since the time of the trade, gm shares have dropped 8%, making this trade a loser. so with time running out and the trade turning the wrong way, "option action" fans everywhere are hot on mike's trail and they all want to know the same thing. >> what is the world coming to? >> and more specifically, what is mike doing now? >> what are you doing now, mike? >> i'm staying in the trade. there actually isn't that much more risk in it. >> coming up next, the final call from the actions pits. [ 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.

final call. scott? >> this week's web extra. how to define your risk without limiting your up side. >> dan. >> put spreads in pepsi. >> mike? >> good opportunity to sell some premium. >> our time has expired. i'm melissa lee. thanks so much for watching. check out our website, optionsaction.cnbc.com. i'll see you monday for "fast." don't go anywhere. "mad money" with jim cramer starts right now. >> hi, i'm lisa varga. i'm 40 years old, i've never had cosmetic surgery and i'm not afraid of high definition cameras. bring them in closer, guys. closer. good. now, do you want your skin to look as youthful, fresh and line-free as it can? well, get ready, because i'm going to share with you right now something every woman should be doing and the one thing i do every single day. what is it? well, 3-1/2 years ago, i first began using my radio frequency dermawand.