money, then things. now you stay safe. bye-bye. this is "options action." tonight -- ♪ perhaps you should, because solar stocks are showing signs of a big comeback and we'll tell you why. plus, consciously uncoupling. >> that's how i work. >> no, not your divorce, gwyneth. we're talking about how amazon is breaking up with retailers and how that could spell trouble for the online giant. and leaving las vegas. >> you're so cute. >> investors are busted betting against sin city. but is it time to double down?

"options action" starts right now. live from the nasdaq market site, happy friday, everybody. here are the traders in times square and los angeles. we'll get to them in just a second. before all of that, we're going to start with apple, because reports of a new larger iphone coming in september have apple's fans and investors all in a tizzy. just how likely is it, though? cnbc's john ford has been working his sources on the phone. he joins us on the phone with the very latest. john, do you think a september release is in the cards? what do your sources say it's going to look like? >> mandi, i do think september release is reasonable. that's the cadence we have seen apple on lately and considering that carriers aren't keen to let people upgrade early, introducing a phone much earlier than that probably wouldn't get much of a big marketing pop that apple likes to look for. as far as the size of the phone, a bigger phone seems likely

based on some of the potential -- the component leaks that we've seen out of asia. that's where we tend to get the best signals of this. but this latest report about two bigger phones, 4.7 inch and 5.5 inch, there are some things in this that make me and some others a little skeptical, particularly the idea that the display resolution would be significantly higher than that of current models. if you got a bigger phone, of of course it's got more pixels. but adding more density in the pixels, something apple has indicated they don't see as being necessary and would actually add complexity to apple's process. there are some things in these latest reports that don't sound quite right. >> and the other thing i'd be worried about is whether or not a larger sized iphone might cannibalize ipad mini sales. >> that's something that apple would worry less about, because the iphone tends to have higher volume sales and higher margins than the ipad mini does. so if you're going to cannib

cannibalize anything, you want to cannibalize it with an iphone. that would be a good thing as long as they sell a lot of them either way. >> apple has been pretty stubborn about making these changes, at least under steve jobs. if they do go to a larger phone, what does it say about apple and samsung? did samsung win? >> you could certainly interpret it that way because they did champion the big-phone movement. but apple has walked back some of the things that steve jobs said, like about smaller tablets. we do have an ipad mini now. tim cook has been walking back the language about a larger iphone as well. talking about mainly the technological challenges in making the number of screens of the quality that they would need in order to do that. of course, they're working on sapphire glass as well. there are all sorts of advancements in the components that they could point to as saying, well, our real problem with it was we didn't think we could do it with high enough quality, now we feel we can. >> thanks for giving us the skinny on what's going on with the potential new iphone.

what does it mean for apple shareholders? let's try to find out. do you see this as a game changer? >> i don't know if it's a game changer but it certainly is necessary. we've already alluded to the fact that apple had stubbornly clung to the idea that a smaller handset is the way to go and makers are proving that's not a case. i used to own an iphone. i myself bought a larger droid because i wanted the larger screen. this is a very, very cheap stock. that said, i don't think that an iphone six is going to take that back to double-digit, top-line revenue growth. you can take a look at the fact that this things raiding probably 8 1/2 times its earnings when you take out the cash on its balance sheets so the stock is absolutely cheap. but it's no longer a growth stock so don't expect that. microsoft has proven that you can keep these low multiples for a long time if you lose the growth that you once had. >> we need to think about apple stock in a different way.

what is the trade on this? >> you need to think about it in a different way, because in general i want to own technology, i've been doing that, slightly overweight for that for my clients, myself. one thing you have to take a look at, the market feels a little frothy. technology, some of the growth names are starting to roll over. this is exciting news for apple to go along with microsoft 365, going on to the ipad, that will help sales. i want to be a buyer of apple but you have to look at other ways of defining your risk. i think there is some risk over the short term in the stock market in general where volatility's rising, fears are rising in the marketplace. you play with long calls or you get some sort of protection. sort of roll out your stock position, no reason to be naked long stock. >> what do you think? >> i think that's absolutely right. i think if you look at the option buying today in apple it wasn't impressive even though they had some news. it was about a third less than you would have expected on a normal day. i think mike is right when he says this is not a growth stock anymore. i do think you have to look at a different way to play these.

>> what about the numbers? >> when you're looking at this, sort of a stock replacement kind of strategy here, i want to play for the upside. what i'm going to do is risk less to make more. one of our favorites here on the show. basically, taking a look at two weeks out, the weekly april calls, by selling the 550 calls for 220 what i'm going to do is finance a purchase of a longer dated call to come after the upcoming quarterly earnings. i buy the may call, $9 you're outlaying for this trade, rather than buying an outright call of $11.20 in may. reducing risk here. i don't want to see apple rally above $5.50 over the next couple of weeks. after that, when that april call comes off the board and expires, hopefully it's expired worthless. i have all the upside from there on out. if the market struggles the next couple of weeks this is a perfect scenario for me to continue to get upside exposure after earnings. >> i have to say i'm perplexed here. we're talking about an iphone 6 release. that is not going to happen in

april, may. yet may is the option that he's looking to buy here. i love long calendar spreads, basically when you're buying a longer dated option and sell the near dated ones. but i think in this case, take a look at what the potential catalysts are for apple, you've got to take a look at maybe pushing further out, buying a longer dated call option. scott sometimes refers to the fact when you do those, they become super calendars. you can continue to sell the nearer dated options against it. i think you want to get a longer dated option. >> let's take a look at solar stocks which suffered a very difficult week. an upgrade on one particular name set off a flurry of bullish options trading. >> investors didn't take a shine to solar stocks this week, they lost about 6% just on the week alone, sunpower down 3%. some better news did came today raymond james upgraded solar city. options traders wanted in too. they bought a ton of calls on

sunpower, first alert and solar city. in fact, in sunpower a whopping nine calls traded for every put. we saw the same and similar bullish action in first solar and solar city. option traders clearly feeling the selling might be over, perhaps feeling a little sunnier about solar stocks. i couldn't resist. >> touche, thank you, sheila. could now be a good time to get into solar stocks? let's check in with carter. carter, what do you think? >> it's a great time to take advantage of certain stocks and solar city would be one of them. i have two charts. one without the 150 day, one with. without, let's start there. you have a six-week selloff from 55 to 35, down 35%. you have a six-week sell-off from 65 to 42, down 35%. again, we have it here, 87 to 57, down 35%. it's exactly the same by our

work as the other two times, take advantage of the weakness, take advantage of the weakness, take advantage of this weakness. here's the chart, what we know is you have these heavy volume bursts up and light bull-packs. heavy volume bursts up, light pull-back. and we're off the 150 day, off the 150 day, off the 150 day. this is when a great time to buy the stock, we like it a lot, all sorts of upside potential versus downside risks. >> great time to buy the stock. you said it, carter. what's the verdict from you, mike, on this? what's your trade? >> one of the things we often try to take the technical view and then the fundamental view. fundamentally, this is really trying to imagine what might happen. the multiples here on these things are astronomical. over $5 billion enterprise value on a company with less than $300 million in revenues currently. elon mufk is asking us to imagine an electric car in every garage. solar panels on every roof

storing energy in the batteries of that car and i think that's what people are looking at here. of course that hope means the stock is volatile, when stocks are volatile options are expensive. i'm going to looking to sell some here. sell the may 60, 7.5 put spread, collect 40% of the distance between the strikes, collect that money if the stock stays here or rallies higher. if it goes lower the most you're going to risk losing is the additional $1.50 that could be worth but i don't think it's going to go there. >> do you like this trade here that mike just laid out? >> i do. i think he's selling into weakness carter about and i think the stock is oversold a little bit here. to go to that point, the fear in the options market right now that we see traders panicking, we're seeing traders sell out their insurance. mike is trading with this sort of situation here. selling out those puts, collecting some premiums, so as it stays above that price point and that price target, he gets to collect that premium and it's a winner for him. this is a time to take the opposite side of a stock that sold off and play to the bullish

side. >> we're watching the stock move up about 1% as well. >> mike makes the point the valuation is very high, that the volatility is very high. options are also very expensive, between four and seven times more expensive than options on the s&p. mike is absolutely right. have an opinion about direction and express it by selling options. selling spreads he's defining his risk. >> the spreads is the key to this. sometimes we like selling naked puts as they say on stocks that you want to own. you wouldn't want to try the catch the knife that we threw to be betting the wrong way on this one. >> got a question? send us a tweet @cnbcoptions. tonight scott is looking at silver. check it out. in the meantime, this is what's coming up next. >> wow, winning. that's how you perceive it. >> it not the casino stocks, they've been on a torrid losing streak. and we'll tell you why it could

get a whole lot worse. ♪breaking up is hard to do >> indeed it is. exactly what amazon and retail stocks are doing, what does it mean for the future of the online giant? we'll explain why 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. ♪ welcome back to "options action," everybody. some breaking news now on general motors, let's get back to hq.

sheila, what's the news? >> breaking news from gm the company is expanding the recall associated with those ignition switches. the number we have 824,000 models sold in the u.s. from 2008 to 2011 will get a new ignition switch. so this is almost by 1 million cars gm is expanding this recall. in the statement, we have the company saying, because it is not feasible to track down all the parts the company is taking the extraordinary step of recalling 824,000 more vehicles in the u.s. to ensure that every car has a current ignition switch. yet another step of bad news for gm, the company expanding that recall in a big way. >> sheila, thank you very much for that breaking news. mike, what do you do with gm. >> if this drops at all, good buying opportunity. this stock is cheap, over $28 billion in cash, trading at a single digit multiple. as many cars at 1 million is, it's not continue quetial to their earnings overall. >> thank you. they say there's always room for improvement. certainly the case when it comes to mike and carter's trade on

whim. this is what happened. the question is how will they trade like high rollers? risk less, make more. that's what mike and carter try to do with their wynn. the casino company was in for a string of bad luck. mike had his own reasons to bet against the stock. >> this is trading almost 30 times, next 12-month earnings, that's troublesome to me. how much better can it really get? >> just getting short? >> all wrong. all wrong, whoa. >> mike, steve wynn has a point. after all, shorting wynn or any stock carries an unlimited amount of risk. to define that risk, mike instead bought the june 200 strike put for $8.90. to make money mike needs shares to fall below $191.10.

it gets even better. if those shares do drop, then that put will increase in value faster than wynn will lose value, meaning more money in mike's pocket. >> and you've hit the jackpot, that's a bull's-eye. >> sure, steve. except that now we have a problem. because since the time of the trade, wynn shares have only dropped 3%. not nearly enough to make this trade a winner. "options action" fans across the world are all asking the same question. >> how's your wife? >> what? no. the question is, how will coe and carter fix their trade? before we answer that question, carter, are you bearish on wynn? >> the truth is while this trade is basically nothing's happened in terms of price, a horrible trajectory, went as high as 250, against us, now it's becoack to where we started. we'd stay short albeit it's not been a good ride. >> how do you fix the trade? >> i don't think you fix it. if you're going to stay short,

stay in this one. this option's gotten cheaper. there was an opportunity to spread it after we put it on. i think if you get another opportunity like that that's what you're going to want to do. next what do gwyneth paltrow and shares of amazon have in common? perhaps more than you think. find out why when "options action" returns. ♪ [ 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.

shocking news this week, we learned gwyneth paltrow and chris martin are consciously uncoupling, whatever that means. carter, you're looking at a whole different sort of conscious uncoupling, right? >> that's right. amazon, obviously a big retailer if you want to call it that, is not acting well compared to the market and compared to other parts of retailing. but here's a comparative chart year to date. what i wanted to point out, amazon far and way the worst performer, in turn a part of the internet retailing industry group and that's part of all of retailers which is a part of consumers discretion which is part of the s&p, lot of auto-correlation here. what we have is amazon is worse than any other way you want to compare it. to market, to group, to internet

retailers, so forth. that's a problem, it's also a problem if your chart doesn't look good. that's what i think we have here. if you want to draw the lines this way -- i think i lost my pen here -- here we go, great. we got a shoulder, a head, we've got a shoulder, we have this very well defined neckline. the presumption is a break. these gaps are what are in play. take a look at the longer term picture, it bounces off its trend line quite well and quite precisely. hears our head and shoulders top. the presumption is, at a minimum, we're going to head back towards that trend line that's 300. or 10% or 12% lower. a little longer term, this excessive strength of the past year and a half, we blew through the top of a channel that's been in effect since 2007. and now, to get to 300 will take us to the exact midpoint of the channel. we think that's a reasonable price objective. finally, the really long term chart, this picks up your tops in 2000. not relevant now. what is relevant is how well-defined a channel it's been

ascending. here's the top. we blew through the top. the presumption is we're coming back towards the middle. sell your amazon. >> are you worried about amazon as well, scott? >> i am. not only is the chart ugly. but the valuation is no treat, either. the company's finally making money but that means the p/e is well over 500. i don't think there's anything good going on over at amazon. velocity is picking up to the downside. the interesting thing for the option trader is carter has a downside target. that's about $300. given that we're bearish a downside target, we want to buy a put spread. earlier in the day, amazon, you can buy the june 300. 335 put spread. for $11.75. as with any put spread that we buy, that 11.75 what we pay for it, that's our max risk. more importantly, where do we make money? as long as amazon is at or below carter's $300 price target, we make $23.25. we're only risking 11.75.

stand to make well more than double that because we're buying the at the money put. >> you know, there's only one thing really that you can do with amazon is that is to use options to make a bearish bet, people have been screaming that this thing was overvalued. since it was less than $200 and even before that. you can get your face ripped off if you decided to short this stock or naked sell upside. but this put spread actually has fairly nice numbers to it. you're buying it for just a little over a quarter of the distance between the strikes. you've got to make a bearish bet, enough time out to the june expiration. >> no trader wants their face ripped off. what do you think about it, brian? >> the other thing you've got to look at, whereas we talked about solar city, option traders taking off their insurance, what i'm seeing it looks like they're adding insurance to their position. there's some pent-up nerves about that here. it makes sense to buy a put spread. to play to the short side. the chart does look ugly. a blow-off top could be coming for amazon. >> that's how risk less to make more. coming up next, the final calls 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.

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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. ♪ we'll have it all tonight on "america now." >> don't you dare miss it! >> that was really bulldog, rrrr! >> that was a great moment between larry kudlow and jim kramer from the set of "america now." today you can catch larry's last show at 7:00 p.m., he's moving on to a senior contributor role at cnbc. we would like to take this opportunity to salute larry for all of his service over many, many years. do make sure you tune in later on tonight. it's going to be a very special show. but, now, back to "options action." time for the last final call. the last word from the options pits. scott? >> web extra, how to pick a bottom and sole. >> mike, larry kudlow we're going to miss you but i like

what carter and scott are doing on amazon. technically, fundamentally, it's a good structure and you don't get your face ripped off. >> brian? >> still like my apple play, i think it's a good growth tech name that you can own that seems to have relative strength right now. >> carter? last but not least. >> weakness in amazon, something to stay away from. weakness in solar city something to take advantage of. >> there you go. thank you so much for joining us. looks like our time has expired as well. for "options action" go to our website. optionsaction.cnbc.com. check out "fast money" every day at 5:30 as well. see you then. have a great weekend.

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