this. people first, then money, then things. now you stay safe. bye-bye.

this is "options action." tonight -- that's what investors were saying this week, why gold could be flashing a secret buy sign. plus, weird science. the hot biotech sector has suddenly gone cold, why there's even more pain to come and the '09s are back. that's because tech names from the early '90s are on a serious run and the action is about to get hotter. "options action" begins right now. i'm melissa lee, these are the traders here in times square and sunny san diego. netflix, 3d systems and solar city got crushed in today's session. the cyberof something more troubling. let's find out. some serious moves to the downside we're talking about. >> yeah, they were. listen, i'm in the camp that this stuff is healthy.

when you see, you know, manias, talking about the 3d stocks, when you see these things come unwound, these things will go somewhere more rational than where it's been of late. i don't think you can ring the bell and say there's any sign that high-flyers are coming down enmass because of the price action. >> is this a good time to get into the names like a 3d, netflix or priceline? >> i think you make a very point by saying they had a huge run-up. we're talking about relatively modest decline to the gains we have seen. think back on netflix specifically, we started wondering about the valuation, here we are, 50, $60 before he decided to exit the stock. so, when i take a look at this, i think dan's right, some of correction of a sort, it does seem like a good idea, i don't think this really is one yet. it needs to have more significant declines. >> dan is right. this is healthy in these names. everything that's worrisome today, is the fact that the s&p made an all-time high and really had an ugly day rejected that all-time high, you know, the fixed bounced off at 14, ended up at 15. people are buying protection. back to these high-flying names, there's a big difference between 3d and netflix, netflix not that far from its all-time high. melissa, do you buy these names? you probably buy 3d. netflix, you got to really believe this story. >> there's perhaps a bigger pullback to come, a very defined pullback so far in these high-flying names, large-cap technology names, does that rotation will be short-lived as well, mike? >> you know, it's interesting. i think that this rotation is probably going to last a little bit long, lot of people calling

for some weakness for a long time, if they get some momentum u they're going to pile into it, a little bit of legs to the

down side in this space. >> dan, you're taking a look at m d and opportunity here. t valuations haven't made any sense. i think 3d topped out with the market cap on $650 million in sales. you know, the industry, the sector, the technology, it may have legs for years and years to come, but the stocks were never going to grow into those valuations. you had this stock market mania, it was up 400% it has since come down 40%. that reminded me of tesla, it rallied 400% up until its september high, at its january low, it sold off 40%. they don't just come unwound in one fell swoop, they have that sell-off, tesla almost rallied 100% from that low. looking at 3d the mania may not be over. yes, some cold water was thrown on the party. to me, there's an opportunity the support level at $60 yesterday and again today, on pretty good volume, i think that's the revulsion state. >> all right, walk us through the trade. very simple one today. >> yes, sure. listen, i know that this sounds crazy. volatility in 3d systems is relative cheap. i bought the call, the max risk right there, why didn't i do a spread? because i think the options are

relatively cheap. if i get the move in the direction that i want, i may look to sell the higher strike -- my break even is 61.70 on the upside. very oversold. >> if you're going to make a bullish bet in some piece of junk like this, i think probably, call is the only way to do it, i understand why someone might do it, one of the reasons tesla rebounded we started to seeing some of their cars on the streets, whether the multiples were quite on scene, people were projecting some pretty astonishing numbers. they had high profitability especially for a car company, there was a little fuel to that fire. massive institutional interest in that stock. >> so you don't see the bounce coming? >> no. >> fundamentally you don't like dan's trade -- >> no. tesla was propelled by massive institutional interest. >> there may be a bounce here. but dan is right, when you're going to spit into the wind and you're doing that with that

chart by going long you have to define your risk. why not sell a put spread? in a situation like this, i want to risk a little to make a lot. not the other way around. you can say whatever you want about the direction for 3d. but if you're a bull this is the way to trade. >> it dan, if you have to buy into a piece of junk like this and spitting in the wind, what do you say? >> that's the beauty of the trade. look at how bad this sentiment is. tesla back in january, the story looked dead as a door nail. i love hearing people saying stuff like that about my trade. buying 100 shares of 3d systems that will cost 5,600. gold, the metal sector suffered a serious slide. dominic chu is back at headquarters and roaring start

for gold this year. so entering this week, gold was poised to have the best first quarter of any year in the last 27 years, but now, it could just be the best first quarter since 2006, it's still impressive but well off that break-neck price. you can thank the fed and the perception that it can raise rates sooner that it expected. it's on the decline now. all of those things dampen demand for gold. the question now becomes du the down move persists or do bargain hunters step in and keep this bull run alive.

>> thank you so much, dom. let's hit the chart master, carter worth. are you still bullish. >> we are. when you're cascading look this and you violate, make a low and then violate it, look what happens here. we have this massive low in june as everyone knows, again, we have a rally, put this in contrast, same chart, it's a major break above the down line, so we have a well-defined double-bottom, here's the rally of this year, massive rally, put

this in context, same chart, let's draw that double bottom again, that's a major break among the line. import the strength that began this year. or you can rely on the smoothing mechanism. here's our double bottom. has now gone flat. the definition of a bearish to bullish reversal and finally, let's put in the context of where we have been, this is the peak of gold for the gld, this is the low, and we have thrown back now about 1300. it will take you to 1500 and basically, that's where gold is headed. we closed this week at 1350. the gold played on the long side. >> mike, you agree with this? >> i'm not typically a gold bug, but i will say this, gold is a sentiment trade. we called talk about the fact that i think the perceptions on rates are probably a little bit -- they're getting a little bit

ahead of themselves. as a sentiment trade it makes sense to me. the good news is, this is one of those places where it's relatively easy to do this using options because they're quite cheap. you can buy the gld, 135 call. 3.5 bucks for you. between splitting between the regular junes and the quarterlies. you can look at either one of those and it's a good way to make a bullish bet through the end of the second quarter. i think, you know, options are cheap. i do believe if the you know what hit the fan, i'd much rather own treasuries than gold. >> we have been seeing bullish gold buying. that is obviously some hedging

activity. in is a afraid on gold and that's simple. >> a man has to know his limitations and his biasses. i just don't believe in the whole story. >> if you have a question out there, send us a tweet. >> you're right about treasuries, because we have over the course of the last several weeks, we have seen some bullish call buying. that's some hedging activity. you don't need to think about this as a hedge. this is a trade on gold. this is trade on gold. >> if you believe what carter has to say, then this makes

sense. i hate gold. i don't think it's an investment. it's no more an investment than baseball cards are. if i were to do anything in gold that were bullish, i would define my risk. >> if you have a question, send us a tweet. maximize your profits in the spy. a trade in linkedin. the web is the future, what can we say? the exclusive trades. check it out. here's what's coming up next -- ♪ everybody dance now ♪ ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today

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>> that was carter. carter sees more pain here for biotechnic biotech and -- it's about to go flat. put in head and shoulders top. you can put in your trend line the presumption is lower. >> that's our own carter making a bold call on celgene. biotech got its brains beaten in.

carter more pain for the sector and for celgene? >> you have to assume there's more. the chart of the nasdaq group itself. you have a fairly well-defined trend here, the presumption is we're ultimately going to break trend. that can't last forever. celgene is leading the way. what's remarkable the presession of that top, the neckline, you're hovering at these lows and ultimately that is a very powerful set-up for a break. this gap down here, if celgene continues, the biotech will finally break trend as a group. >> mike what do you see specifically? we had the letter from the -- >> i think you need to take a little bit of money because it could bounce off the lower line there. >> dan, what's your take on

this? we can say all these large biotech stocks have done extremely well, but to mike's point, the trailing pe and forward pes are somewhere in the 20s. >> you started the show off asking me if some of these high flyers coming in was a problem. these are some big names. if these things were really to break down the way carter is saying, that would be a big problem for the market.

on a forward earnings basis, they're relatively cheap. so, this sector breaks down technically, then i would like for other things to come in. >> carter, i want to go back to you whether or not this is a coal mine for the broader market. we had the nasdaq severely underperforming earlier today, it was down 1%. biotech, biggest decline. >> in the period of where things might get iffy, people look for things that do well. this is one of the best performing areas of the market. celgene's stock didn't act well. >> these stocks are getting killed. why in the world do you want to take profits, this trade mike made was a bearish trade it's working perfectly. don't get in your own way. >> yeah, one thing right here we're facing a little bit of decay on this trade. i think you need to take promise props on that bet. they'll look at that and start buying. coming up next -- why is everyone talking about michael jordan and kurt cobain, because the '90s are hot again. another '90s name poised to move. we'll tell you what that is when "options action" returns. [ indistinct shouting ]

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[ bell ringing, 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. ♪ ♪ ace of base, michael jordan, all staples of the '90s.

as well as certain tech stocks. hewlett packard and microsoft have been surging this year. another '90s favorite potential can't -- candidate for breakout. >> well, you know, you just named it, microsoft, it broke out to a 14-year high this week. hewlett packard, a year and a half high. and emc. they have a lot of momentum here. i can't tell you the fundamentals are particularly great for many of them. the sentiment was really bad lot of those stocks were rallying. one stock fits the same big, a monster buyback, but it can't get out of its own way. cisco, they reported back in february, they gave a downbeat outlook, they have a lot of exposure to emerging markets, the sentiment's really bad.

here's the thing with the s&p where it is, we're going to go higher in the next month or so, the rally has to broaden out a little bit. to me, you know, i just took a look at the calls, the options are pretty cheap and they're trading at the low end of the one-year range. when the stock was 21.70 today, i just bought the may 22 calls for 55 cents. if this stock gets any momentum and the sentiment shift it's going to be above 22.50 very quickly. >> barclays downgraded this stock earlier this week. it's going to stuck in the range because the dividend's stink. -- ditch -- dividend yield stinks. one reason why it may never see this catch-up trend. >> buybacks are probably better from a text perspective.

you have a company that's going to deliver probably 2 bucks in epps this year and 2.10 next year. take a look at microsoft, if you think the market is going to pull back, you think this stock is going to trade down 10%? i don't believe that. this thing is trading cheaply and consistently delivering more than 20% -- >> dan, you know as trader that relative strength matters. all of those other stocks you mentioned have been going up. this dog hasn't moved. something's wrong with this thing. >> but here's the thing, guys, as a contrarian trade, you're trying to get in before anyone else identifies it. i want to get in there ahead of time and listen, i defined my risk, "the call" is cheap. if the stock breaks 21, i'll

probably be able to break these calls for about half of what i paid for them. to me it sets up nice. >> last word. >> gld, you get very inexpensive opportunities to make levered bets. coming up next -- the final call from the options pits. ♪ ♪ ♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade.

[ indistinct shouting ]

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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. ♪ time now for the final call the last word from the options pits. dan in san diego? >> with triple d down 40% from the high side, i would play it from the long side than push the short. >> carter? >> if you have nice gains in your biotech stocks, take some money off the table and try gold. >> a high probability trade that yield seekers love. >> mike. >> look for sentiment shifts before you make your bullish

bets like gld. i wouldn't get into 3d. >> what did you call it? >> a piece of junk. >> we'll leave it there. our time has expired. i'm melissa lee. for more "options action" check out our website on cnbc.com. see you next friday at 5:30 for more "options action." have a great weekend. "mad money" is coming up next. paid presentation for derm exclusive instant anti-aging, brought to you by beachbody. [ cheers and applause ] >> wow. hi, everybody, and welcome. i'm deborah norville -- journalist, author, wife, and mom -- and today i am joined by grammy-winning music superstar chilli of tlc. woo-hoo! [ cheers and applause ] and television phenomenon turned entertainment reporter mindy burbano stearns. [ cheers and applause ] now, what i