this is options action, tonight, holy ship. ♪ >> shipping stocks are riding high. could their rally signal smooth sailing for the market? we have a special report. plus, it's an early christmas for iphone lovers. >> santa! >> what do early sales figures mean for key apple suppliers? we'll break it down. and fade to black. blackberry shares get gutted, but could someone bid for the company? the action begins right now. >> the nasdaq market in times square. these are the traders here on the desk, so much for that tape. stocks getting whacked and concerns of the dreaded t word could be on sooner than we

think. interest rates sensitive stocks in gold getting crushed on the day. where are the opportunities? wea where is the risk? utilities, dividend stocks. we watched it this week. it says it all. >> the action on wednesday, after the no taper amounts to, me it had a lot to do with positions, the markets have been positioning for a taper, we didn't get it. you have a knee jerk repositioning, but where are we now, two days later, the yield on the ten year is what? 15, 20 bips lower. so we'll see a retest of 3% on the ten year yield. it's probably going to start to taper at some point, the fed will taper in the next couple months, that's why you saw the xlu and some of these bond proxy names, that caught a reprieve. >> i think one of the things to pay attention to here, the fact that rates really didn't drop that much. you know, so you get something that should have been bullish for bonds. you really didn't get a whole plot out of it. if you're into bond proxies, that's a dangerous place to be.

valuations for these things are at historical highs. you're making a play, that you think rates won't go higher over the short or longer term. that's a really dangerous thing. i would be a seller of all of those proxy stocks. i don't think that's what you want to be. >> that's because people got caught wrong footed after the fed came out. i don't think it was that big a surprise, but it's a matter of if, and when, and not if they tape are. they are going to. they have to. i think that they will begin before bernanke leaves at beginning of january. not only are bond proxies having trouble. the stock market was really sick today. the s & p all day today, upper left to the lower right, wrong direction, lower lows all day, it was really ugly. people are lining up to buy protection. they want to buy puts, because the taper has to start. it has to. >> it actually should do that, too. because the valuation, how expensive puts are isn't that bad. you know, volatility on things like etfs and indices is quite

low, on single stocks it hasn't fallen as much. from my perspective, if you're thinking about overwriting or thinking about buying etf protection for your portfolio, that makes sense. >> really cheap given where we are on the calendar. >> dan, you are bearish on the markets. >> speculative. >> if i believe the markets are setting up for a decline or consolidation, the stocks that i want to be in are the ones that are dividend paying stocks. >> possibly. there's a couple ways to think about it. in the first half of the year rates were low, historically we had a ten year yield at 1.6% at one point in the spring, you know we had seen this flock of investors looking for yield. we saw stocks, some consumer staple names trading at historical high valuations, they were just getting pushed up, 3, 4% yield. we saw it in utilities. to me, these are names i don't -- like mike said, i don't think you want to be in. if they do taper, it's going to be because the economic data, they said they are data dependent is improving.

if the global economy is improving, you're going to want to be in cyclical names that will benefit a lot of names. so to me i will take a look at names we are the beneficiaries in the first half of the year. valuations getting stretched. volatilities low. they don't set upgraded. >> you are looking at johnson and johnson, 19 current, and 2.9% dividend yield. >> to me. i just want to look at short data into october. we have this october 30th meeting. i think october has the potential with all these budget debate to be a bit volatile here, when you look at the chart there, that speaks to me of something that's performed well. the company has done a nice job in a difficult environment. but it's setting up to be a technical pattern that looks like a head and shoulders top. that could be played out in the next month or so. johnson and johnson has low implied volatility. to me i want to basically just buy a put. so i'm looking at october. when the stock was about 90, i bought the october 90 put for $1.35 a little less than 1% of

the underlying stock price. my break even on the down side is $88.65, so to me, i have their earnings event in october expiration. i have all this macro stuff. i have low implied volatility. i have technicals that look dicey. and the stock is trading at a five year historical high on a pe basis. so to me, this is the sorts of bets, that you want to try to make in low vol environments, when you think all those inputs are mispricing the potential. >> when you look at something called 19 times earnings, in some context that might not be expensive, in other context it could be expensive. those are companies experiencing no grow. johnson and johnson will go up with the operate of inflation. so when you look at that, you have to say to yourself, this is actually quite pricey, it's trading more than the market. the market itself is also looking rich to me here. so i think absolutely this makes sense. you won't get any money if you try to do a spread either by selling lower. >> the stock may be pricey, just

buy a put, you don't have to get too cute. buy at the money put. finally j & j really ugly last 15 minutes of the day. i think this makes sense. >> better grab ape band-aid. risks are just 135 bucks. big story of the day, that's apple, it's new iphone went on sale today, depending how you look at it, demand was strong. or perhaps supply was weak. jon is out with more on this. >> melissa, it really seems like supply being weak is a big parts of this. that's what i'm concerned about. the reason why, if you go to the online apple store, you'll see seven to ten business days you have to wait for shipping on the white or black colored iphone 5-s, it's october for the goemd. meanwhile, on the 5-ct's shipping in one to three business days. a year ago, with the iphone 5, you saw supplies basically

maintaining until halfway through saturday. and there wasn't even a preorder on the 5-s. normally with a new design, apple is particularly supply constrained on these designs into q-4. but this is an s release, normally they don't have to redesign the entire thing. their supplies tend to be better. so what i would look for, if i were an investor, how quickly is apple able to replenish these supplies? there will be a lot of questions about that on the next earnings call in mid to late october, because normally, if they are supply constrained, they haven't fixed that, even by october time period. hey, you can't make money off of phones you don't have in stock. so it's a good problem to have up to a point. >> right. at the same time, it makes monday's number dice each. it's going to be hard to interpret that number. correct? >> it's going to be i think pretty easy to interpret it in the sense that, again, you can't make money off of phones you don't have in stock. so if the number comes in under

6 million units, some people are going to be disappointed. something else i'll point out again. expect to hear an ios 7 upgrade number from apple, if that number is well above 100 million, better than last year's number for ios-6, that opens up lots of possibilities of what apple can do with this ecosystem, that means those people are able to listen to itunes radio. they are more likely to upgrade to itunes, in icloud, lots of ways to make money long term. >> jon, thanks for that. jon fortt joining us from the west coast. could all of this be good for apple suppliers. let's get more. he's taking a look at a chart of qualcomm. >> this is an excellent chart. i have two short term, one long term. what's key here is the authority of the 6970 level, it's been in effect 18 months, and a series of high or lows, as you approach that level. what's also important the stock is a big underperformer, up only

9% on the year versus the s & p up 19. so if you're an underperformer, tension builds. recently it's an outperform, it's outperforming the s & p. that's an ideal setup to be an underperformer of late. take a look at the chart. the breakout here is very important in terms of the level. the long term chart, the all time high, the dot com is 100, 99 anyway. this setup is powerful. we think you've got a big 10, 12% move here. ideal for buying. >> ideal for buying. mike, the other fundamental part of the story, it's not just an apple supplier, it supplies to all phones. it's agnostic. >> all of them. i mean, this company actually we were just talking about multiples, this one is 20 times earnings. it's a very different story than johnson and johnson. this is a stock that managed to double revenues in five years, quadruple eps, they have $30 billion in cash on the balance sheet. and pretty much it doesn't

matter who wins the smart phone wars. they get a piece of the action. so from my money, if you make a play, this is the way to do it. that said, i expressed a little bit of skepticism about the market more generally. so my inclination is to use options to express a bullish view. we were talking about volatility being low. i think the answer is simply do something straight forward. i will go out and buy the january 70 calls. i could pay $3.25 for these. less than 5% of current stock price. if the stock rallies i'll have opportunity to spread out or let them ride. and it's not that hard for me to imagine this thing coming back to 60, if the market starts to roll over. >> these are smart strategies. this could be considered a stock replacement strategy, if you own it. the stock rallied from 60 to 70, it's at this really important long term resistance level, that carter just identified. so here when you think about it, you have two earnings reports between now and january expiration. you are risking $3.25, you know,

for the potential of maybe that $10 breakout. to me, with the market at all time highs, i think these strategies, whether you're bullish or placing existing view make a lot of sense when implied volatility is low. >> i agree. one thing to think about doing, you might sell that 77 half call, sell it for 75 cents. reduce the cost of the whole thing by a quarter. my rudimentary math skills tell me that would be about 11% or carter's target above where the market is at right now. >> got a question out there, send us a tweet at cnbc options, we'll answer it. tonight scott has a bullish trade on general motors. in addition to scott you'll find great trader blogs, educational material and exclusive trades, so check it out. here's what's coming up next. >> get on board. >> it's easy to grin, when you're ship comes in. >> shipping companies are on fire. could their turn around mean more gains for the rest of the market? we've got a special report. plus black friday, blackberry shares tumble as

smart phone maker says it will take a billion dollar chart, is the end near for this highflyer. right after this break. [ 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 to options action, shipping stocks have been anything but slow moving tankers, they have been more like cigarette boats these days. a few big names in the industry have been real standouts take a look at shares of navios, the greek shipping logistics company, the stock more than doubled this year, then dry ships, also based in greece, this stock has surged up 140% during that time. now, both of these companies own and operate large shipping vessels, some are used to carry

dry bulk products like massive amounts of iron ore or coal, others are tankers used to transport things like crude oim. now, many traders use stocks like these as barometers of the overall global economy, if expectations are there for global growth these stocks rise and get a pop really when there's macro economic catalysts like when the fed decided to keep its monetary stimulus program intact, melissa, back over to you. >> thank you, dominic at headquarters s. it too late to get in on these names? let's go back to the charts and check in with carter. what do you see? >> sure. who you are in the market and what your timing is, time frames and buying and selling. let's look at a few charts. first the aggregate, this is the baltic dry index, five year chart. what's important, the daily rate to haul things like iron ore or corn or coal has tripled in the past 18 months. and we're at 1800 now, what's important is this basing took

place right at the '08, '09 low. we didn't violate the crisis low of lehman and bear sterns and madeoff. it has tripled off the low. but is it too late? when you look at a top like that, obviously this is the china explosion and so forth. but in many ways, to say it's too late is a silly thing. not that anyone said that, but i wouldn't think that. now, let's look at some ways to express this in the marketplace. this is the guggenheim shipping, it picks up many stocks. just to give you a look and feel, it has the hallmarks of a bearish to bullish reversal, which is to say a very weak thing that's coming to life, just like the baltic index itself. now, moving on to a pick, let's look at dry ships. a very aggressive move, after a big base. the thing is basically doubled from two to four, closed today at 350 on a dip. now, again, is it too late. look at the long term picture. you almost won't even be able to

see. this thing was 120. it's at 3.5. we say you could make money to 5. >> make some money to type. mike, what do you think of dry ships? >> fundamentally, a lot of these companies have a lot of problems, this stock actually is lower than it was a couple years ago. the enterprise value of the business is actually much higher. the reason is they have been accumulating debt. they were accumulating debt because they haven't made money. they won't make money this year and haven't for two years. that said, the way i look at this is not really about the fundamental story in the ships. it's really more of a way for you to make a play on more of something like a commodity, which is the ship rates, which as carter pointed out, have risen sharply, and could continue to go up a little bit more, so when i take a look at something like this, i feel like it's a levered way to bet on that. i wouldn't look at this company, though, and say i'll put this thing in my 401(k) and hope it sits there and makes money. because it's not going to. >> your trade is? >> the trade is again, i'm going

to use options, in this case, options premiums are extremely high relative to price of shares. i'll buy the december 3.5, 4.5 call spread, pay 50 cents for the 312, i'm spending 25 cents for a $1 spread. that's a pretty good risk reward. as we saw, the stock was at 50 cents higher, not that long ago. can you see this making money quickly. >> dan, just quickly. >> to me, i don't like trading dollar stocks with options, i'd trade the stock and play the momentum, if you think it will go to five. >> you sound like you don't think it will go higher. >> the momentum trade made it double in a shorts period. but i keep a tight spot on it. >> blackberry shares got hammered today. will anyone look to buy the company? or will they fade to black. we'll tell what you savvy options traders think, when we come back. stay tuned. ♪ [ 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.

we absolutely have a strong brand. there is no doubt about this. and this brand shows that through the times, through the last 12 months, we were basically, there was a huge loyal base still working with us. that boil base is out there. so you know, we have a strong brand. we have a clear value proposition for blackberry, different than others. >> that was blackberry ceo thorson heins. painting an upbeat picture of the company. it has been a tough ride for blackberry investors. the question is, will anyone come forth and bid for the company, or is it game over? just here on this desk, we were all at one point blackberry users, and we have all switched to iphones for work. >> everybody i know used to carry a blackberry. and now nobody i know does. that's transformative. i mean, whatever he has to say about people liking the brand, liking the brand, i actually think it's become a joke now. when people are carrying a

blackberry, most people look at you and say, what are you doing with that thing? that's the honest truth. we shouldn't be surprised by absolutely dismal sales numbers. >> there was a change that happened. bring your own device to work. these large enterprises, which accounted for a huge amount of their users started basically saying to their employees, you can bring your own piece of hardware, we'll put our own piece of software on it. and all of a sudden now, this is just opened up all these users were prapd to blackberrys givening them the opportunity to try out other platforms, like apple and like android. this was a huge, huge sea change. >> i want to go to you in terms of the chart s. there any sort of floor you can see for the stock according to the chart. >> there is. i think the key here is the very aggressive nature it is being sold. about three months ago it plunged on 150 million shares. today gapping down on 70 million shares, it's the very definition of distribution, when people are willing to sell down, even down 10, 12, any given day, percent, what they're saying, i don't care what the price is, i want

out. that's abandonment and typically not over when that kind of thing is happening. >> the biggest option trade we saw today was after the news, somebody sold a bunch of the calls for 50 cents. they are saying it won't get back up in the teens. mr. ceo saying you have a great brand does not make it so. the fact that everybody who likes your product likes it because of the keyboard should have had you release the q-10 before the z-10. you thought you would compete with the iphone and everything from samsung. i think they are at a loss. people talk about the cash being the savior for this company. but you know, they could dissipate that cash. >> the other thing, there was a company in this position, of course, it was palm. and that was going to zero, except someone made i think a mistake and bought it. i don't think that's going to happen this time. basically this can go to zero. >> there can be another side to this. i'll put that out there just for fun. and that is that the company just dropped in its market cap.

and that perhaps anybody who had thought of buying the company before just got a discount. so maybe there is somebody that will step in. >> discount is not big enough. you have about $2.5 billion in cash. but still, the total value of this business is just what, $4.5 billion, i don't know where it closed. that's asking a lot. remember what these are worth. is all of that ip worth a billion bucks. >> it's going to get broken up. look at nokia microsoft. may bought one business. it's a $4.5 billion market cap. so there is some businesses worth something. there's probably ip. so to me, i don't think anybody buys the whole. i think they break it up. it will be a distressed equity for a while. >> reminder as we head to break, if you want updates on trades follow us on twitter at cnbc options, dan posts updates on his trades. if you're on facebook, stay posted on our trades through outs the week at facebook.com/options action. coming up next, shocking individual yoep, that you will only see here. you do not want to miss it.

i promise you that. back right after this. [ 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. ♪

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from td ameritrade. trivia question, what happened 41 years ago today? well, that man was born in the word of celebrity and options have never been the same. that's because you are looking at a very young dan nathan. >> there it is. >> today is dan's birthday. curiously enough he is only slightly more mature now than he was in that photo. kidding aside, happy birthday, dan, from everyone at cnbc. and that is tonight's optional viewing. look how cute you were. >> were. past tense. >> and you still wear those overalls. final call now. scott. >> buy stock at the high, this week's web extra is about how to do it well. >> dan. >> johnson and johnson not trying to pick tops but using

defined risks to lean on week relative strength. >> i like the johnson and johnson trade. >> looks like our time expired. for more options action check out cnbc.com, see you next friday at 5:30 eastern time. happy birthday, dan. have a great weekend. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money," welcome to cramerica. other people want to make friends, i'm just trying to make you a little money. it's my job not just to entertain but to teach. and that's what i'm doing tonight, call me at 1-800-743-cnbc. there's things i've been keeping from you. it's not fair. tonight i'm going to do something about it. tonight i'm going to tell you who i am and how i got here.