now, you stay safe. bye-bye. this is "options action." tonight, who are you calling small? there's a big warning sign every investor needs to watch. plus, miss the rally in facebook? scott nations has a way to double your money in just two months. you will like what he has to say. and why are options traders expecting a bombshell from

herb herbalife earnings? "options actions" begins right now. >> we are talking abok making at $300 and change. could 400 be just around the corner? mike, given the reaction in after-hour tradings, it immediately reversed. >> i think wall street optimists are looking in the 270 to 280 a share change. that's 110 to 130 times earnings. i've often said about amazon i sort of thought this was the walmart from 2000. i think people who are long on the stock might use the rational that's their back stop.

amazon will continue to grow, revenues will be higher. ten years from now they're going going to be a multi- of what they are today. i think people are saying someday they'll get that. i'm willing to wait. i wouldn't buy it here. >> they can turn the switch on and deliver it if they want to. >> he is focusing the business on growth. >> exactly. >> as long as he does that, nobody else seems to be concerned about that margin and i think that's the thing. the company is $135 billion. >> how big do they want to grow? they have this gigantic revenue. it's a great service. it's a great service. >> answer me this, scott nations. how much do you buy on amazon today versus five years ago? because that answers your question. >> we just redid a bathroom, we bought everything on amazon but the company still doesn't make any money.

it's a great service, a horrible business. that doesn't mean they make money. >> amazon is trying to sell themselves. they continue to find growth, continue to turn themselves into whatever is wanted by the consumer. >> amazon web services going to the cloud here. >> in is certainly a stock, carter that seems to have no fundamental valuation. >> it's trading at 2,200 pe. but the chart is important here in the sense that if you were to look at the trend that it's been in since the '09 low, you've got almost a ten bagger here having gone from 30s to almost 300, 312 in fact with today's close. we would think the up side is to

the top of the chart, that implies another 7% to 35. momentum is real. amazon didn't budge. had is an important period of momentum and it would be a dangerous to be against it. >> dangerous to be against it. can't be much clearer than that, brian. >> to the momentum point it, took off and led the market may and june and was able to stabilize because of the viacom deal is signed. if you look at that chart, it's trading to the top end of the range. that channel is something to consider. the up side after this is maybe somewhat limited. >> brian is using a call calendar. it's a bullish strike where you -- it requires timing here. you want the stock to stay below

the strike at expiration but above by the second expiration. >> here's one way to play the stock, get up side and use options. i want to sell the august at the end of august month option the 330 strike. i can sell that for about 3 bucks. i use some of those proceeds to buy a 3.30 call. and if the stock trades above 330 after october, that's where i get all the up side. i want this stock to trend side ways to lower to let the august call go out worthless and i own that october call to get all the up side. a couple things go wrong here. if the stock never makes it to

3.40, you would miss out on that 3d. >> you have the accelerated decay of the near option working for you. i like the timing of trades like that. if the market treads side ways from here, you're going to capitalize on that decay. i wouldn't buy the stock. i just wouldn't. i tend to look at fundamentals. this one is hard to explain. the options part does make accepts. >> if you're going to do something like this, you have to do it math advantaged. you've already lost five or ten tiemgs what you could ever make if the stock takes a step back but i think the netflix, the company is going to make a mistake, it's going to come all unwound in a hurry, change the business, do the data services thing you suggested and then the stock will be off to the rested. >> imagine how successful amazon

would be if it had stocks versus options. brian's call calendar offers a big potential payout risk, just $450. let's move on to what will be a big investment for wall street. according to cnbc's herb greenberg, investors will look at more than just profits. herb is back at headquarters with the latest. herb. >> herbalife reports monday. there's no question this will be a really good quarter. here's what you need to watch and listen for. first and foremost, any indication of a slowdown in sales. they lost the second of big time distributors. they say the effect will be minimum but it could impacts

growth. second, in the wake of recent controversy, they are changing the way they do business. and stories have been circulating about whether members of congress are looking to investigate herbalife. >> this one didn't have weeklies. it's one of those things that august options trading around 68, 70. these are big, big moves it's basically expecting. essentially the short dated options are highly -- stocks are trading about 12 times expected earnings for the year. whether it goes this way or that, it's trading at less than the market multiple. the real issue is the controversy about whether or not the company is a pyramid scheme.

i think there's some good chance that it is but i don't think that's going to matter between now and august expiration or september expiration. they're going to continue to deliver similar results. >> what does it trade at? >> i'm trying to take advantage of the fact that those near dated options are very inflated. i'm looking at the august-november 68 call calendar. e i'm going to sell it at a net debit at 3.65. you only got one day to do this trade and that's monday before the earnings come out. >> the multiples are compelling.

they're still growing sales. fundamentalwise i would be a buyer of the stock. the compression is so strong because of all the controversy around the stock. we talked about this in the green room before hand. is the government going to take down just because one hedge fund is short in this thing? i don't know that that's going to a case. thus this is a good buy stock. >> i think what's driving the stock is you have bill ackerman and ikahn meeting out behind the school. >> you have ever traded the stock prior to -- >> believe it or not, yes.

several times in the past. within of t one of the reasons we did that was because of what we're talking about. the headwind has made it very cheap. when i was working at the hedge fund, we were buyers of the stock. it just looked cheap. we had to weigh whether it was a pyramid scheme. >> you have a question, send us a tweet. tonight scott has a trade that can double your money in facebook. you'll also get great trader blocks as well. you'll want to check it out. here's what's coming up next. >> talk about the golden touch. carter and brian bought the bullion boston and made buckets of money. and he spotted apple's buy sign and now he has a warning for

small caps stocks 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. ♪ bulli welcome back. there are good trade, great trades and then there are blockbuster trades. a couple of weeks back that's

what brian had with gold. in fact, it's so good, it's been made into a movie. here's a preview of it. ♪ ♪ >> announcer: it was a town with just one rule -- risk less to make more. be and one brave man came to find one thing, gold. >> the chart is excellent. >> announcer: but he knew it was a road he couldn't travel alone. he needed a partner. >> i think carter makes a lot of great points. >> announcer: two men on the path toward profits but the quest for gold came at a price. 100 shares of g.o.d. costs almost $12,000, but brian had another plan. >> i purchased the july 113 call. >> announcer: they bought the

113 call for $5.90. they need it to rise by more than $5.90 they spent on the trade. but seven words changed their lives forever. >> i can sell a july 121 call. >> announcer: to spend less, they sold the july strike call for 1.40 and created their call spread. but they did something else. they made mining profits easier and here's how. between the $5.90 they spent on the lower strike call and the 1.40 they collected by selling the higher strike call, they cut the total cost of their trade down to just $4.50. that means instead of needing the gld to soar above the 118.90, they just need to see it rise above the 113 strike price

by more than the 4.50 they spent on the trade or above $117.50 by july expiration. >> i can't explain it any better than that. >> announcer: well, john, actually you can. because in, cha exchange for reg their costs, they capped their gains for the difference of the strike of the call they bought and the strike of the call they sold and since the time of the trade, the gld has climbed 10%, meaning these two prospectors have struck it rich. in what time has called the most momentous options event of the summer. bryan, carter and john wayne, if he were alive, star in "more gold, more money." rated pg-13 for general audiences. >> before you start buying tickets on fandango, let's see how much money was made here.

had you bought the gld at the time of the trade, you would have made 10%. brian captures the full value of the spread and that was almost 80%. should you hold gold going into next week? let's call to the charts with the man who made the golden call in the first place. carter, what do you see for gold? >> we like it long here. let's look at the charts. this is the last year or so. we know gold has plunged from 1,800 down to 1180. it really got ugly and dropped 15% in about three days, $170 an ounce from 1,350 to the 1,180 low. will you spend a little time stuck here to those people are content to get their money back and they're wanting to get out.

you remove the supply and you can advance further and we think ultimately where we're going is up back to the channel that it was in before the really ugly staff started. we think, 1,395, 1,400 and at that time it's time to basically call it an even out, just get flat. >> with that said, brian, what would you do? >> we run on macro economic theoretical model for or clients. about 50% allocation to gold. i'm still long gld, short at the money calls against it but you have to take a little off the table after this great call. and carter and i, we're in love now. >> i'm glad you admitted that. >> because of that call, i've had a short bet out and i think we put that out on twitter. it's hard sometimes to understand gold. the fundamentals aren't there.

you don't generate cash in this kind of trade. personally i'm not a big fan of owning it but i think what carter sad makes a lot of sense. >> and there's a big red warning sign on the horizon that you'll only hear from this desk. that's after this 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.

♪ [ 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 has been the hottest trade of the year. brian, what are you watching? >> when you look at this this, we saw the red sea part. as volatility started contracting and fear subsiding down here, the russell began a huge bull market. we saw that separate, fear going down, russell making new successive highs and russell vix making new successive lows. but there are concerns to be had here. the last three or four months in the russell, what you're seeing

is those things move together and that red sea is starting to close, right, because what's happening here is the russell vix is starting to move up as the russell is making new highs. we like to see fear subside during those moments in time. on march 15 when the russell vix made a low, it's higher than it was in march. hedgers are out there buying put protection. just simply put, i'm looking to buy september quarterly put for $1.15. the russell vix has come down. options prices have gotten cheaper. $1.15 to spend seems cheap to me. that gives me exposure to the down side and i get protection to the down side. it's a great way to hedge a portfolio or take a short bet on

a stock that's trending higher. >> carter is still in the house. you brought along your own chart. >> and this is excellent work. the truth be told, the russell has achieved a level now which is in principle suspect. if you were to look at the long-term chart of the russell, we have now attained the internal trend line. if you connect the highs of 2000 with the highs of 2007, we are just approaching that level. this this evening is a ramp job and we would fade it. >> i agree with that. the best time to buy insurance is when the market is up and the price of insurance is down. you have both. i think that's absolutely the trade to make here. >> coming up next, we got the final call from the options pit. stay tuned. [ 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. ♪

a salon in tokyo has rolled out a new treatment that is getting second looks. beauticians put snails on the customer's face in a believe that the slime removes patches and moisturizes the skin at the same time. the beautician in charge of the snail treatment said it feels almost like a massage and the procedure is so relaxing, many customers fall asleep. don't fall asleep with your mouth open, the salon uses 5-year-old snails native to japan and can only service one customer a day. the price of this five-minute snail treatment, $105, and that is tonight's edition of optional viewing. time for the final call. scott? >> ick. >> if you missed the spike on facebook but you still have to get long, web extras about how to do that sensibly. >> brian. >> fear is rising in small caps right now. got to be careful. at least take some profits. rotate. do something with your money in small caps. >> mike. >> i also like calendars into herbalife earnings. personally, i'd stick with escargot. >> eat them.

not on your face. i am with coe here. thanks so much for watching. check out our website, see you back here next friday. "mad money" starts right now. >> announcer: the following is a paid presentation for 10 minute trainer, brought to you by beachbody. >> hi, i'm mark steines, coming to you from hollywood, california. we would all love to lose weight and get in shape, right? but the problem we have is time. look, i had all the excuses in the world: i was too busy, i was too tired, not enough time... that is, until i discovered 10 minute trainer. that's right, 10 minutes. look, i'll be very honest with you. i was skeptical at first, and then i heard it was developed by fitness trainer tony horton-- he's the guy behind p90x.