bye-bye. this is "options action." tonight, holy ship. >> say what? >> shipping stocks are riding high. could their rally signal smooth sailing for the market? we've got a special report. plus, it's an early christmas for iphone lovers. so what do early sales figures mean for key apple suppliers? we'll break it down. and blackberry shares get gutted but could somebody bid for the company? >> live at new york city's time

square, i'm melissa lee. these are the traders here on the desk. the dreaded t word could be on sooner than we think. gold getting crush on the day. where are the opportunities and risk in the market now. let's get in the money and find out. utilities, dividend stock we watched them dip this week. it says it all. >> the action wednesday after the no taper amount. it had a lot to do with positioning. the markets had been positioning for a taper. we didn't get it. you have this knee jerk repositions but where are we now two days later? the yield on the 10 year is 15 or 20 lower than a week or so ago. we'll see a retest of 3% on the 10 year yield and it will start to taper at some point and that's why you saw it get slayed. the xlu and some of these bond proxy names that got a reprieve. >> one of the things you have to pay attention to here is the fact that rates didn't really

drop that much. you get something that should have been bonds and you didn't get a lot out of it. if you're in the bond proximate sis that's a dangerous play to be. you're making a play that you think that rates aren't going to go higher over the short or longer term and it's a dangerous thing to do and i would be a seller all of those proxy stocks. >> that's because people got caught wrong footed after the fed came out. i don't think it was that big of a surprise. but it's a matter of when and not if they taper. they're going to. they have to. they'll begin before bernanke leaves at the middle of january. so not only are bond proxys having trouble but the stock market was sick today. the s&p all day today upper level to the lower right. wrong direction. lower lows all day i. was ugly and they didn't rally that much but people are lining up to buy protection. they want to buy puts because the tarp has to start.

it has to. >> it should do that because the evaluation, how expensive puts are isn't that bad. volatility on things like etfs is low and on single stocks it hasn't fallen that low. if you're thinking about overriding your single name positions or buying etf protection that makes sense here. >> if i'm sitting at home and i i believe that the markets are setting up for some kind of decline or consolidation then the stock i want to be in are the ones that are dividend paying stocks? >> possibly. there's a couple of ways to think about it. first half of this year when rates were low, we had a 10 year yield at 1.6% at one point in the spring, we had seen this flock of investors looking for yield and we saw a lot of stocks. consumer staple names trading at historical high evaluations and getting pushed up, 3, 4% yield. we saw it in utilities.

these are names that i don't really -- like mike just said, i don't think you want to be in right now. if they do taper it will be because the economic data is improving and then if the global economy is improving, you're going to be in cyclical names. i want to take a look at names that were the beneficiaries in the first half of the year. the evaluations are getting stretched and implied volatility is low and they don't set up anymore. >> you're looking at johnson & johnson with a 2.9% dividend yield. >> we have this october 30th meeting. i think october has the potential to be a bit volatile here. when you look at that chart right there that speex as something that's performed well. the company has done a nice job but it's setting up to be a technical pattern that looks like a head and shoulders stop. that could be played out in the last month or so. johnson & johnson has implied

volatility. i want to buy a put. i'm looking at october, the october 90 put for 1.35. it's less than 1% of the stock price. my break even is $88.65. i have their earnings event and macro stuff going on. i have technicals that look dicey and the stock is trading at five year historic cal so this is the sorts of bets you want to try to make in low ball environments when you think all the inputs are mispricing the potential. >> when you take a look at something like 19 times earnings in some contexts that might not be expensive and in others it can be very expensive. johnson & johnson is going to go up with the rate of inflation which is right now fairly low. you have to say this is quite pricey. the market itself is looking rich to me here.

this makes sense. you're not going to get any money if you try to do a spread either. >> the stock maybe pricey. auctions aren't implied volum y volatili volatility. finally, j and j really ugly last 15 minute of the day today. this makes sense. >> all right. better grab a band-aid. dans push defines his risk to $135. let's move on to apple, it's new iphone went on sale today and demand was pretty strong or perhaps supply was weak. john ford is out on the cnbc's west coast bureau with this, john. >> supply is a big part of this. the reason why if you go to the online apple store right now you'll see 7 to 10 business days is what you have to wait for shipping on the white or black colored iphone 5 s.

it's october for the gold. on the 5c it's shipping in 1 to 3 business days. a year ago with the iphone 5 you saw supplying maintaining until halfway through saturday and there wasn't a preorder on the 5s. normally they're particularly supply constrained on these designs but this is an s release. normally they don't have to re-sign the entire thing. their supplies tend to be a lot better. what i would look for is how quickly is apple able to replenish these supplies? there will be a lot of questions about that in the next earnings call in mid to late october. normally if they're supply constrained at launch they haven't fixed that even by october time period and you can't make money off of phones you don't have in stock. it's a good problem to have up to a point. >> at the same time it makes monday's number a little bit

di dicey. it will be hard to interpret the number when it does hit. >> it will be pretty easy to interpret it in the fact that you can't make money on phones you don't have in stock. if it comes in under 6 million units some people will be disappointed. something else, expect to hear an ios 7 upgrade number from apple. if that is well above 100 million, better than last year's number for ios 6 that opens up possibilities of what apple can do with this ecosystem. those people are able to listen to itunes radio and are more likely to upgrade to itunes match and they're in i cloud. they can make money off of those people long time. >> john, thanks for that. so could all of this be good for apple suppliers? let's get more. he is taking a look at a chart. >> this is an excellent chart. let's have a look at it. i have two, one is short-term and one is long-term. what's key is the authority of

the 69, 70 level. it's been in effect for 18 months and a series of higher lows as you approach that level. what's also important is the stock is a big underperformer, up only 9% on the year versus the s&p up 19. so tension builds and it's outperforming the s&p since the june low. to be an underperformer since late but more recently an out performer. take a look at the chart. the break out here is very important in terms of the level. the all time high, the .com is 100, 99 anyway. this set up spouerful. you have a big, 10, 12% move here. ideal for buying. >> ideal for buying carter says and the other fundamental part of the story is it's not just an iphone supplier, it supplies to all phones. >> this one is also about 20 times earnings but this is a

stock that managed to double the revenues in five years. they have about $30 billion in cash on the balance sheet. it doesn't matter who wins the smartphone wars they're going to get a piece of the action. for my money if you're going to make a play this is probably the way to do it. that said i already expressed skepticism about the market more generally so my inclination is to use options to express a bullish view. volatility has been low. i think the answer here is to do something very straightforward. just go out and buy the january 70 calls. i can pay $3.25 for these. that's lez than 5% of the current stock price. i'll have an opportunity to spread out or let them ride depending on how it goes. but it's not that hard for me to manage this thing coming back if the market starts to roll these. >> these are smart strategies. this could be considered a stock replacement strategy. the stock just rallied from 60 to 70 and it's at a long-term

resistance level that carter identified. you'll have two earnings reports between now and january expiration. you're risking $3.25 for the potential of maybe the $10 break out. with the market at all time highs these sorts of strategies whether you're bullish or placing an exist view make a lot of sense when implied volatility is low. >> you might sell that 77 half call. you can sell it for about 75 cents. reduce the cost of the whole thing by about a quarter and my math skills tell me that would be about 11% or carter's target above where the market is right now. >> send us a tweet and we'll answer. tonight, scott has a bullish trade on general motors. you'll find great trader blogs, educational materials and exclusive trade. check it out. here's what's coming up next. get on board. >> it's easy to grin when your ship comes in. >> shipping companies are on

fire. could their turn around mean more gain for the rest of the market? we've got a special report. plus, black friday. blackberry shares tumble as the smartphone maker says it will take a billion dollar charge. is the end near for this one time high flyer? more options actions after this break. >> options action is sponsored by think or swim by tdameritrade. [ 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, more like cigarette boats.

a few names in the industry have been real standouts. take a look at shares, navios maritime, the greek logistics company, the stock has more than doubled this year and dry ships also based in greece since its slow in november of last year, 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 oil. many traders use stocks like these as barometers of the overall global economy. if expectations are there for global growth, these stocks rise and when there's macro economic catalysts like when the fed kept the monetary stimulus program intact. melissa, back over to you. >> is it too late to get in on these names, that's a question at this point? let's call back to the charts and check in with carter. carter, what do you see?

>> answering about later, too late is who you are in the market and what your timing is, time frames and buying and selling, and let's look at a few charts. first the aggregate. the baltic dry index, a five-year chart and what's important is the daily rate to all things like iron ore or coal has basically tripled in the past 18 months, and we're at 1,800 now, but what's important is this basing took place right at the '08-'09 level. let's look at a long-term chart just to put this move into perspective and puts into question whether one is too late. 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 etf. it picks up many different stocks, but to give you a look and feel, all the hallmarks of a

bearish to bullish reversal which is to say a very weak thing coming to life just like the baltic index itself. moving on to a picks let's look at dry ships. a very aggressive move after a big base. the thing has basically doubled from 2 to 4, closed today at 3.50 on a nice little dip. now, again, is it too late? let's look at the long-term picture, you almost won't be able to see dryships. this thing was 120. it's at 3.5. we'd say you can make some money to 5. >> make some money to 5. >> mike, what do you think of dry ships? >> fundamentally a lot of these companies have problems. this stock was lower than it was a couple years ago with you the enterprise value is actually much higher and the reason is because they have been accumulating a lot of debt and accumulating a lot of debt because they haven't made a lot of money. they won't make a lot of money and won't for the last couple of years. the way i look about this is not the fundamental story in the ships, really a way for you to

make a play of more on a commodity which is the ship rates and carter pointed out has risen sharply and could continue to go up more and when i take a look at something like this it's a levered way to bet on that. i wouldn't look at this company and say i wouldn't put this thing in my 401(k) and hope that it sits there and makes a lot of money because it's not going to do that. >> so your trade is? >> the trade is, again, i'll use options, in this case options premiums are extremely high relative to the price of the share so i'll buy the december 3.5%, 4% call spread, sell the 4.5 for a quarter and spending 25 cents for a $1 spread, a pretty good risk reward, and as we just saw, the stock was at 50 cents higher and not that long ago, you could see it turning around and making money pretty quickly. >> dan, just quickly. >> to me i don't like trading dollar stocks with options and i would trade the stock and play the momentum if that's where you think it's going to go to 5. >> you sound like you don't think it will go higher.

>> the momentum trade has made it double in such a short period of time. >> coming up next, blackberry shares could the hammered today, will anyone look to buy the company or will they fade to black? what some savvy options traders think when we come back. stay tuned. >> options action is sponsored by think of swim by t td ameritrade. 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 have a strong brand and a and there was a huge base looking with us. we have a strong brand. we have a clear value proposition for blackberry and different from others. >> that was blackberry's ceo back in march painting an upbeat picture of the company despite the best hopes. been a tough ride for blackberry investors. the question is will anyone come forth and bid for the company or is it just game over? just here on this desk we were all at one point. maybe not you, all at one point blackberry users and we've all switched to iphone for work. >> everybody i know used to carry blackberry and now nobody does.

that's transformative. whatever he says about liking the brand. i think it's become a bit of a joke now. when people are carrying a blackberry most people look at at you and say what are you doing with that thing? that's the honest truth so we shouldn't be surprised by absolutely dismal sales numbers. >> a sea change, bring your own device to work, large enterprises which accounted for a huge amount of their users basically start ed to say 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 all these users were trapped on blackberry giving them the opportunity to try out other platforms and like android so this is a huge, huge sea change. >> carter, i want to go to you in terms of the chart. any sort of floor that you can see for the stock, according to the chart? >> there really isn't. the key is the very aggressive nature with which it's being sold. it plunged on 150 million shares

today gapping down at 70 million shares. the definition of distribution. when people are willing to sell down, 10%, 12%, what they are saying is 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. >> and the biggest option trade we saw today was after the news. somebody sold a bunch of the jan '11 calls for 55 cents. saying it won't get back up into the teens and i'm sorry, 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 q10 before the z-10 but you didn't do that. thought you would compete with the iphone and everything from samsung. i think that they are at a loss. people talk about the cash being the savior for this company, but, you know, they could dissipate all of that cash >> the other thing there was a company in this position, of course, and 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 argument, put this out there just for fun, and that is that the company just dropped in its market cap and that perhaps who had thought of buying the company before just got a discount, so maybe somebody will in fact step in. >> discount is not big enough, $2.5 billion in cash there, but still, you know, the total value of this business is just about 4.5 billion, i don't know exactly where it closed but that's asking a lot. remember what some of these things are worth. is all of that ip worth $1 billion? >> it's going to get broken up, the nokia and microsoft deal, bought one business, it's a $4.5 billion market cap, 2.8 billion in cash, probably an ip and that sort of stuff, to me i don't think anybody buys the whole, they break it up. >> reminder here as we head to break. if you want updates on or trades follow us on twitter at cnbc options and dan posts regular options of his trades and stay posted throughout week at facebook.com/optionsaction.

coming up next, shocking video you will only see here. you don't want to miss it. >> options action is sponsored by think or swim by t td ameritrade. [ 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. 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're looking at a picture of a very young dan nathan. that's right. today is dan's birthday and curiously enough he's only slightly more mature now than he was in that photo. kidding aside, happy birthday, dan, from everyone at cnbc's, and that's tonight optional viewing. look how cute you were. >> were. past tense. >> and you still wear those overalls, right? >> final call now, scott. >> dump the stock at the high, this week's web extra is all about how to do it well. >> dan? >> johnson & johnson, not trying

to pick tops, using it to find risk to lean on weak relative strength. >> mike? >> like the johnson & johnson trade. >> looks like our time has expired. i'm melissa lee. for more option check out optionaction.cnbc.com. happy birthday, dan, have a great weekend. >> announcer: the following paid program for the shark sonic duo is brought to you by euro-pro. [whirring rapidly...] >> both imitate: zzt zzt zzt... [whirring...] >> zzt zzt zzt... [whirring...] >> i have never seen anything like it! >> oh, my gosh, i love the shark sonic duo! the carpet's like new again! >> my kitchen floors are cleaner than they've ever been. [whirring...] >> it's the best cleaning system i've ever used in my home. zzt zzt zzt... [laughs] >> announcer: bright, beautiful carpets, rugs and floors make your home look amazing. but no matter how much you vacuum or mop, you get