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. today was the day the market called bs as least when it came to cold stocks. netflix, 3d systems and solar city got crushed in today's session. is this much-needed consolidation or something more troubling? dan nathan, these are 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 en masse 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 relative to the gains we've seen. think back on netflix specifically, we started wondering about the valuation, here we are, 50, $60 before he decided to exit the stock. just because it's off of $450, that doesn't make it cheap. when i take a look at, this i think dan is right. some correction of sorts in these types of stocks does seem like a good idea. i don't think this really is one yet. it needs more significant declines. >> dan is absolutely 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 bigs 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. 3d down 40%. melissa, do you buy these names? you probably buy 3d. netflix, you got to really believe this story. >> so if we are to think that there's perhaps a bigger pull dash back to come or a defined pull-back so far in these jai-alaiing flames, we've seen a rotation in the large cap technology names. does that mean 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 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

3d and perhaps an opportunity here? >> i have to be frank. the 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, the stock was up 400% in the year prior to the january high. 400%. it's since come down 40%. that reminded me of tesla, it rallied 40% 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% since 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 -- it broke an important support level at $'60 yesterday and again today, so i think that's the revulsion state. as a trader, i want to see a pop-back possibly back up to 70. >> all right, walk us through the trade. very simple one today. >> yes, sure. listen, i know that this sounds crazy. implied volatility in the 3d systems is a relative cheap. i bought the call, the max risk right there, why didn't i do a -- not do the 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. i like the risk-reward here.

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 obscene, 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 tesla, and i don't see fidelity piling in and buying billions in ddd. >> 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. >> 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. this stock could be up 10% to 15% on the slightest bit of good news. that's what happened to 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 set you back nearly $6,000. 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. gold is down 3-4% over this past week. you can thank the fed and the perception that it can raise rates sooner that it expected. it's on the decline now. the annexation of crimea by russia happened without bullets flying and the stokt market hit a record high. 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. you called a rebound earlier,

very accurately we might add. are you still bullish? >> we are. when you're cascading look this and you violate, make a low and then violate it, look what starts to happen 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 above the down trend line. it's the import of the strength that began this year. or you can do it this way, rely on your 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 in 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 could talk about the fact that extraction costs are very high. we can talk that perceptions on rates are probably little 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. all i'm going to do here is look out to june. you can buy the gld, 135 call. 3.5 bucks for those.

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. >> dan, would you do this trade or rather hedge a portfolio by buying protection on the sp 500? >> carter nailed the bottom. at the end of last year it was a very, very oversold condition with poor sentiment. i don't think you can make the same arguments about gold. i don't really believe it's a fantastic hedge. if anything, treasuries have shown us to be a better hedge. i know they've had a pretty similar rally off an oversold condition. i do believe, if you know what hit the fan, i'd rather old treasuries than gold. >> some people think gold is a cure for all that ails them. we have over the course of the last several weeks seen bul lish gold buying, the 20-year long dated treasury etf.

i don't think you need to think about this as a hedge. this is a trade on gold. it's that simple. >> if you believe what carter has to say, then this makes sense. i hate gold. i don't think it's an investment. i don't think you ought to be putting money in it. no more of an investment than antique baseball cards. a man has to know his limitations and biases. if i were to do anything in bold that's bullish, i would define my risk because i don't believe the whole story. >> this week scott has a trade to maximize your profits in spy and dan has a trade in linkedin. the web is future. you'll find trader blogs. check it out. here is what's coming up next. pining for the '90s? so is the market. we'll tell you why traders are betting big on '90s names like microsoft and hewlett packard. >> we think it's a canary in the

coal mine for the rest of the group. >> he warned about the biotech bust. now the chart master tells you what he sees next when "options action" returns. [ 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. ♪

[ 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. you can put in your head and shoulders top, your trend line. any way you cut this, the presumption is lower. we think it's a canary in the

coal mine. >> that was carter worth making a pro dixon last week's show. biotech got its brains beaten in. do you see more pain here for the sector and for sell gene. >> you have a fairly well defined trend here. the presumption is that we'll ultimately break trend. sell gene is leading the way. it has broken trend. what's so remarkable here is the precision of that top, the absolute mirror image of that top. the neckline, you're hovering at these lows and ultimately that is a very powerful setup for a break. the objective is this gap down here, if it continues, the biotech will finally break trend as a group. >> bad news potentially

according to the charts. it was interesting because we had the letter from the democrat congressman questioning the high prices of drugs. at the same time, sell gene had approval for sore attic arthritis drug and still it's trading much lower. >> this stock is being punished and carried out on the group. there is one thing i have to say about the group. when you look at it fundamentally it's hard to argue it's expensive. i can see the trend line carter is referring to. what i think i want to do with this trade is take some of the profits, use just those profits to push basically press a bearish bet by rolling up and down a little bit. you need to take a little money because it could bounce off the lower line there. i just -- the stock is too cheap. >> dan, what's your take on

this? we can say these biotech stocks have done extremely well, the trailing pe are 40 and the forward pes are somewhere in the 20s. >> you started the show off asking if i thought the move in thigh fliers was a problem. i would make an argument if a sector like biotech -- sell gene, biogen, gilead, if these were to break down, these would be a problem for the market. on a forward earnings basis, growth stories, certain defensive characteristics about the sector. if this sector breaks down, then i would like for other things to come in and that would be a warning sign to me. >> i want to go back to whether this is actually a canary in the coal mine. we have the nasdaq performing down 1%. biotech, the biggest daily decline since october 2011.

>> scott, what do you think? >> let your profits run. this trade mike made was a bearish trade, working perfectly. don't get in your own way. >> right here we're facing decay on this trade. i think you need to take props on the bearish bet because the valuations are compelling. up next, why is everyone talking about michael jordan and kurt cobain? because '90s are hot again. there's another '90s name poised to move. we'll tell you what that is when options action returns. ♪

♪ ♪ ♪ [ 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.

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♪ [ 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. ♪ ♪ ace of base, michael jordan, all staples of the '90s. hewlett packard and microsoft have been surging this years.

what do you make of the resurgence we've seen in these old tech names. you're looking at another '90s name as pee tenl candidate for a breakout. >> well, you know, you just named it, microsoft, it broke out to a 14-year high this week. hewlett packard, 2 1/2-year high. 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, they gave a downbeat outlook, cisco. they reported back in february, gave a downbeat outlook. a lot of exposure to emerging markets. the sentiment is really bad. here's the thing, with the s&p

where it is, we're going to go higher in 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. in may you'll get the next earning report that could be a positive catalyst. when the stock was 21.70, i 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. take a look at dividend yield. .8% compared to microsoft's plus 2%. >> there are ways to return money to shareholders.

if the market suffers any pullback you have a company that will deliver two bucks in eps this year, 2.10 next year. take a look at what your alternatives are if you're long equities in general. you think this stock is going to trade down. 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. microsoft, em clfrnlths, hewlett packard. this dog hasn't moved. something's wrong with this thing. >> 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

time and liste, i defined my risk, the call is cheap. if the stock breas 21 i'll probably be able to break these calls for about half of what i paid for them. >> last word. >> gld, you get less opportunities to make levered bets. >> cheap for a reason. up next, the final call from the options pits. [ 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. ♪

[ 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. time for the final call, the last word from the options pits. dan in san diego? >> with ddd down 40% from the highs, i'd rather play it from the long side than press the short with defined risk. >> carter braxton worth. >> if you have nice games in biotech over the last two or three years, take money off the table and try a little gold? >> scott. >> a high trade that yield seekers love. >> look for sentiment shifts before you make your bullish bets like gld. i would not get into ddd.

>> what did you call it, a piece of junk? >> junk. >> we'll leave it there. i'm melissa lee, thanks for watching. check out our website, optionsaction.cnbc.com. see you next friday for more "options action." "mad money" is coming up. >> announcer: the following is a paid advertisement for the hurricane 360 spin mop, brought to you by telebrands. a revolution in floor care has finally arrived. in the next few minutes, you'll be introduced to a floor-cleaning system that's lightweight, leaves your floors gleaming and dry enough to walk on in seconds; picks up giant spills; eliminates the need to sweep, meaning you spend less time mopping. a system that people all over america are loving, a mop that spins away the dirt and comes with its own washer and dryer and is the only mop where your hands never touch the dirty water. it's literally a revolution