[ thunder crashes ] [ evil laughter ] tonight. casino stocks have been on a hot streak. we'll tell you why their luck could soon turn. why is this man's company flashing a warning sign for the market? we'll reveal the special report. >> talk about the ultimate defense. >> if it doesn't fit, it must quit. >> not that type of defense. how can you play the reality?

the action begins right now. nasdaq markets in the heart of time square, i'm lisa. this is super hot texas and one name we're watching. apple shares. this is the new ipad air went on sale. one man has been pounding the pavement and doing checks. gene joins us on the phone. what's the headline? better than expected line so better than expected sales? >> yes. keep in mind expectations were pretty low. the bigger ipad has one arm tied behind the back. it's 20 to 30% of total ipad units. we weren't expecting to see anybody in line today. we saw modest lines. >> the biggest launch is the let in mini. what could we gleam about the december quarter?

>> that's going to roll out in some couple of weeks. it's 65%. this is going to be the one driving the ipad units. that's 25% of apple's business. that's important it gets off to a big launch. this is not as critical. as far as the december quarter, still about the iphone, 57% of sale this is quarter, obviously off to a fast start. having a hard time. production is the key for that december quarter. >> great to speak to you. thanks for your time. dan, what's your take for apple going into what should be a strong quarter for apple? >> gene does great work checking out those lines and getting a sense of what early sales are like. some of the rumors for the retina mini is before christmas shopping quicks off. the pricing for the ipad,

they're defending the margins. they reported their q 4 earnings. this quarter you had the disproportionment amounts of iphone sales. you have the ipad miniseason. i think this stock sets up interesting here. got to unchanged on the year before they reported earnings. it fell back, consolidating a little bit. you probably see another run at the 2013 highs which was five, five, five back in the first week of the year at some point as we get closer to cyber monday. >> do you think 555 is in sites for this one? >> here's the thing you have to look at. we have carl in the picture. there's a lot of cash on the balance sheet. shareholders may be encouraging to do that in their favor. that creates a level of support. the market is extremely strong. this stock relative to market

prices at least in return of multiples is fairly cheap. it seems if i was inclined to make a bet, it would go up to the levels described. >> gene makes a good point. you have to be excited about apple to be excited about the news today. volume was little less than an average day. calls relative to puts not particularly bullish. fire calls relative to each you see on an average day. the interesting thing about margins, the fact the iphone 5s is strong, speaks to good margins. last month, people were worried about the afterlelele because of margins and newer margin phone. turns out that's not a problem. >> you're bullish if you think pit goes to 555? >> yeah. i see potential down side to 495. this is a 50 day moving average.

on the upside, highs of the year a 555 a plus or minus $25 move from here. i don't think that's a great risk reward to buy the stock. i want to set up options trade giving me better leverage to the upside and defines my risk. >> let's get to dan. we want to crack open the playbook. it's a bullish strategy you buy one call and sell two against it. to protect yourself you sell one higher. this sounds trick kit. you want this bo to go to two strikes you're short. that's where you make the most money. that's your target for the stock. >> when stock was 5.18 1/2 i bought 525, 575 for $4. i bought the 525 december calls for $15. i sold two of the december 550 calls at seven each for 714 and

bought two december that cost me $4. between 579 and 571ic make up to $21. i want the stock to go to 550. my max risk is to 575. i could lose up to $4 and between 571 and 575. here's the deal. i'm setting the limit price. i'm willing to risk the stock is between 529 before the expiration. that's all i'm risking to gain $20. that's $52,000. five to one payout and risk $400. let's move on to the story you may have missed. the casino stocks. we have more on this story. >> gaming stocks in focus.

october was a record month for the casino business in the biggest casino markets for ma kau. that is a big record month. shares line win, las vegas wins has been riding stocks. lvs and wynn on 50% of the year far out gaining s&p 500 and dow industrials. >> thanks for. that should you play the hot hand? some call rain man's news. hi carter. >> hi there. by our work these stocks have priced in this good news. they barely moved today with good news. let's look at charts. here's wynn. we like to measure this with viewing average. the presumption is you're getting this kind of thing next. look at longer term.

you're as far as you can get. when you're this far above trend this is when you come back. look at longer term chart going back to early 2000. this is not a time to be buying principle. it's a time to harvest gains. there's something else about the chart. we're up against the internal trend line. that's a give level. more often not, it's right to bet against something that's come up to a level like. that we say harvest gains. >> carter, thanks for that. do you agree it's time to take profits? >>ty do. i think what's interesting here actually is that the levels that carter talking about are kind of consistent with how much over the historical multiple turns wynn is trading. for example, depending on when looking to price to earnings or revenues to enterprise value, this stock is trading 10 to 30% richer than the kous of two years.

it's trading similar to its peer group. our expectation would be the market is going to basically price the stock back to its more conventionalle multiples. that would see the stock dropping down around the 150 level. when i look at this, the fundamentals line up nicely with carter's work. >> what's the trading? >> this is a situation the market is strong. i'm not inclined to make bets. thyme going to set up a calendar put spread specifically going to buy the march 160 puts. $8.25 and sell december against hit to help finance the trade $3.50. that's going to set up a net deputy $4.75 or $475 to make a bet this stock is going to drop down to 160 or perhaps lower. the nice thing, the data input is going to decline longer even

if the stock sits here. >> dan, do you like this? >> i do. it's tough to buy premium with a name like this. i like the strikes. you have a good shot of this consolidating. >> wynn macau had a block buster bond sell last month. there's a huge appetite. mike thinks it's going no where until december. i think this is the only way to express hit. >> send us a tweet. we'll answer on our 101 extra after the show on our website. tonight scott looks at how you can profit from oil slides. you want to check that out. here's what's coming up next. it wasn't exactly a military victory. coan carter made a bet. they got the direction wrong. they didn't lose that much on the trade. plus, sound the alarm.

carter worth has detected a serious sales sign in the market that could spell pain for your portfolio. he'll reveal what it is when we return. ♪ [ 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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five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade.

welcome back to options action. let's get you to the headline numbers for warren buffett berkshire hathaway. $228 per share short of wall street estimates. those sales revenue better at $46 half billion. this is $126 thousand. buffett himself said in the past berkshire would buy back its own shares 120% of book value. that gives an imaginary floor for the stock if you will. back to you. >> despite berkshire result, there's a warning sign loom in the markets as a whole. both of them standing there. this is a historic moment for

options action. kick usoff. >> the footbainancials don't ac well. here's stats that back that up. look at the one week performance financials, insurance, broker dealers, banks, underperforming one, two, three months. in fact a fourth and fifth month. it's not a good circumstance. watch these big banks. this is jp morgan. it hasn't made a high since july or august. marcus here in october. same for citibank. hasn't made a high since august. look at goldm magoldmanman sax. here's pay big life insurance company. same circumstance. hasn't made a high since august. these are all topping out

forplafo forplaces. here's berkshire hathaway, hasn't made a high since august. the xlf itself which we think is the entire sector is going to pull the same stunt. it's starting to stall. it is not performing well. here are the visuals. this is the relative chart of the seck tomorrow. underperforming for five months. that's a problem. for what it's worth i'm going to turn to you. market is not cheap. this is a ten year basis, adjusted for inflation. we are basically at the top of a range if you net out 1999 market excess. we're at the top of historical range. that's not a good circumstance. >> that's convincing. i have my own little pen. i figured something out here. you remind me of harold in the

purple kran. if you think the actions in the financial is a warning sign for the market, i keep getting the question. people think as we get toward the end of qe and hint to it in december, we could have trouble in the market, maybe financials tells us that. here's a portfolio hedge if you will. the price of options is really low. i think you look to december 31st quarterly options. you can put on a portfolio hedge for really cheap. this is the quarterlies. they go out. you don't have to do expectations. when spy was 176, you could do 172, 162 december quarterly as a $10 wide for 1.70 paying 2.40 for one of the december 31st

puts and selling one at.70. between 170.30 you could make. you're risking to protect your portfolio down 8%. here's the thing. we haven't had a peak to sell off 38% all year long. you're willing to risk a certain amount of money to make sure you have down side protection between now and the end of the year. >> i like the protection f. you spend the money and end up wasting it, it's not wasting it. it's like spending money on health insurance. you didn't file a claim president. two retreat from this hot seck tomorrow. they'll explain when we come back.

[ male announcer ] once, there was a man who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim 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. ♪ welcome back.

time to get called out. we take a look back at losing trades. a couple weeks back, carter made a bet. the trade has not worked out. they didn't lose too much money. here's why. on option action doesn't mean we always make more. that's exactly what happened. carter thought it was time to get defensive on the defense company a. >> north drop has gone bonkers. >> to define his risk, mike bought january 95 strike put $3.75. now to make money, mike needs north drop to fall below that sfriek price for man 3.75 he spent or before january

expiration. spending $3.75 to make a bearish bet, my point exactly. mike, can't he do better. to spend less, mike then sold january 85 strike put for a dollar and created the put spread. that means he's made it easier to make money. here's how. between the 3.75 i spent on the higher strike and 1 dollar he collected, he reduced the trade to $2.75. instead of needing north drop to dip below 91.25 to make money, he now sees profits if it drops below the 95 he spent or 92.25 by january expiratioexpiration. it is impressive. keep in mind there's a trade-off. by selling the put, mike capped profits to the difference between put he bought and put he

sold minus the cost of the trade. it's a good thing he did spend less. since the time of the trade, northern has flown 20 '01% higher over earnings making this trade a loser. now options actions biggest fans have one more question. >> do you think i'm cute private? do you think i'm funny? >> what they're really wondering is what will cohan carter do now? >> had you shorted 100 you'd be out $1300. had bought mike put spread, he'd be out $245. >> i wouldn't close it. there isn't anything left to close. it's heavily levered at this point. if the market sets up for a pull back, that might hurt the stochlkt it is fully valued for a defense name. we're unwanting military activity. that remains you troo.

my view is you have to obviously stay in a trade. commit the premium, show you might lose it. >> how do defense stocks in general look at this point? >> as steep as they were, they are steeper. if it was bonkers then, it's worse now. principles are the same despite the horrible trade. this is unsustainable. we would stay short. >> coming up next, we have the final call from the options picks. [ 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. ♪ ng, applause ]

five tech stocks with more than a 10%... change in after-market trading. ♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. ever wonder how mike looks

so good? >> here's his secret. the video shows her hair, leg, eye, stomach have been photo shopped. makes you wonder what the real mike looks like. yeah. certainly does. that's tonight's optional viewing. time for the final calling. let's go around the call. mike co. >> i like calendar spreads like the one we outlined. >> cw. >> if you're short seller, short sell. >> scott. >> all about crude oil this week. looks like our time expired. check out options action online. see you next friday at 5:30 p.m. eastern time. have a great weekend.

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