first, then money, then things. now you stay safe. bye-bye. ♪ i can't dance but i can throw the field ♪ this is "options action." tonight, drug super bowl. a massive drug conference next week could make or break a number of by yo tech stocks. we'll give you the inside special report. plugs -- ♪ take my breath away >> that's what traders are saying about the market. and one stock has quietly been screaming higher in the wake of apple's deal.

>> isn't that special? >> we'll tell you what it is and how you can profit. the action begins now. >> these are the traders here in times square and beautiful colorado. in a month, momentum names are gaining momentum. look at stocks netflix, yelp and tesla. let's find out right now. mike, i got to go to you. these are serious things. despite your skepticism, they look like they're on the mend. >> i have a lot of skepticism about these stocks in particular where the multiples are hard to get your arms around, net flex around 140 bucks. the others, don't have momentum to speak of. carter was talking about penthouses going for $250 million and beach houses for 167 million. i don't really know to make of

the valuations for any of these things but obviously they've been propelled by a lot of cheap money and a lack of any place else to put them. the market has been strong and it's going to support these stocks and the vicks reflect that. >> once you're deeply overhold, there's a tendency to bounce. we're in that camp. they figure it out together. >> dan, it is puzzling. we're witnessing the russell, right? we have this bounce-back in very high momentum names. >> i would say a lot of these bounces -- all bounces are not created equal. netflix rallied 30%. it's a very specific story. we know there's very large players involved. there's a whole bunch of competition issues going on. who knows what the partnership landscape will look like at the end of the day. that stock went from 300 back to

400. i would say that's a no. i got ripped off often the short side the second time. the rest of the names, though, some of these other names, i got to tell you, i'm not impressed with the bounce in amazon, in yelp, and linkedin. the s&p closed at 1900. all of the indexes closed up to the year. the russell still looks sick to me. >> the structure of the russell is terrible. that's your point. we know the s&p is virtually unchanged. under the surface, parts are getting hurt and bouncing back. yet equities have gone nowhere. there's a visual on the screen that shows the aversion that's taking place. this looks at the russell growth

and russell value over the last two years. you see how we've had a reversal of fortune, a collapse in growth and emergence of value. look at the same chart on a five-year basis, the spread is quite epic. you should not be chasing some of these bounces. >> that being said, i just got to make one point. you also can't short a dull market. i tried to. last week on the show, we talked about the eye on the bell breakout. that's the one to watch out for. that close at 1900 looks like one of the most beautiful consolidations you can see. >> there's a big difference between sitting here and saying we're going to try to short this and say i'm not going to participate and chase winners in this situation by going after the momentum stocks. i think we're probably all on the same page. i don't see how people get enthusiastic if you look at what is going on on the surface.

>> tonight you got a traded on twitter. walk us through what your thesis is here. >> it's kind of disconnected from the market. looking at the stock today. it last the lowest closing low ever at 30.50. to me, this is one that, the fundamentals are what they are. we don't know yet. the company has not demonstrated that they are going to be able to engage users the way people have come to expect facebook did right out of the gate. their user growth is anemic. they've had two trades that have been public and they really missed on those levels. to me the next identifiable catalyst is going to be the earnings in mid-august. that's going to really be the opportunity where investors and analysts alike -- let me tell you, analysts are very mixed. they're going to have an opportunity to really see if

this company should be a publicly traded company. i'll make one point. twitter has an $18 million market cap. if this company would not have gone public it would have been one of the hottest private companies out there. think facebook paid 19 billion in cash for what's app. i want to put a trade on here. i think 26, ipo price, there will be big, big support. this is a trade i want to do. i'm going to define a range where i get long on the down side but also on the up side. >> i do like this trade, because one of the reasons, this is a spam before they had the ipo. a lot of people speculated what do you think the company is worth? 2015 revenues for twitter probably around 2 billion bucks. take a look what happened at facebook. that's a really good example. you have stock which you have

here. this is a situation where they are starting to see some great. this is unlike netflix and tesla's in the world. >> let me h lay out the trade. it's called risk reversal. today the stock is 30.65. i want to catch that next earnings elent. today the stock was 30.65. you could have sold a 26 put and used the proceeds to buy a 37 call for 1.45. that would have cost you nothing. what you've done is create a situation where you put the stock to the down side. you start losing from there. at 37 on the up side, you have unlimited risk. there's a lot of asymmetry to this trade. between 36 and 37. you wouldn't lose anything. here's the thing. mark the market, between now and then as the stock got closer to 26 you lose money and made money

as the stock got higher. what this is doing is creating a wide band for something that's going to potentially be a volatile situation, a very controversial story. if you get a move like facebook did. once it goes to the street. this stock could bow $45, $50. skipping up. >> you get the longest stock as it's put to you at the ipo price. they're doing three times revenues. >> right now, we're stuck where the lock-up came. there's no indication you should do anything but take a really wide band. >> have no fear here. the 14-month low today, tell us what they do for stocks. hi. >> here's how it lays out, melissa. the market could go in terms of volatility. it closed down to low 11 1/2 today.

what is crazy, the vick's only got below that 11 1/2 mark one other time. what really happened recently when the vix has fallen. you see on the chart, we circle the amount. it's come ahead to a near-term weakness or pullbacks. on the other hand h-options traders are not predicting very much turbulence. many of those calls were sold at the bid price, meaning that a lot of traders are betting a spike in the vix. they are selling any upside in the vix. a very interesting trade on volatility to watch. back over you to. >> thanks very much. don. the vix have all-time lows and investors become too complacent here. let's check in with carter. >> what's interesting, while the vix is depressed the swings are extreme. the real issue is breadth.

it's a very important thing and it's weak for months. here's one way to measure it. i've used a very broad index, the entire new york stock exchange stock only. basically, you have a series of higher highs and higher lows. we now have a stall that's taken place for about 4 1/2 months. breadth has not improved even as the market has gone higher. look at this another way, this is even worse. this is the s&p over the past two years and yet, if you track the percentage of stocks in the s&p, or the new york stock exchange composite that are above their average. this peaked almost a year ago and has been declining ever since. that's a function of fewer stocks actually participating in the rally. now, at this point, we're to go and look for complacency. i want to show you a few comparative charts.

here's the dow jones itself versus the 2020 transports. this is the two-year chart and the spread is quite extreme. look at some longer term charts. this is the five-year comparative chart. again, dow jones industrial 30, versus 20 transports. the spread is quite epic. here's ten years, you're starting to get the message and here is as far back as we can go to the 1980s. this is not sustainable. and our bet is that this is where the complacency is as great a risk as anywhere. so, a one-year chart of the transports looks quite orderly. but the principal is this. we're so far above trend at point, it's a well defined trend. you want to basically play for a meaner version trade. that you're at the top of the channel. just as it fail, fail, fails. we bet it will stall here. we will go short. >> how do you implement that,

mike? >> i think the easiest way to do this. bear in mind what don was talking about. people selling out near volatility. i want to go to the fact that they're grossly underpriced. buying september puts in iyt, i can play $6 for that. then i'll sell the july 1.40 strikes against it for $2. what's interesting, i get net long option, ob royviously, volatility pops. i take advantage of that by seeing an increase in value. the other thing is, if institutional traders are selling, vix calls are right. we might see a brief period of low volume tat into it. i'm using these options to help finance the fact that i have long puts overall. >> dan, i think you like this trade? >> i do. a little over a month ago i tried to pick a pop. and it went straight up.

if you do this, you're helping to finance owning those puts. because, listen. in this market it looks like it will break out. iyt will be a big part of that. you want to help finance the downside if you're looking to look at the newer version. if you have a question, tweet us yat cnbcoptions. you want to check it out and see what is coming up next. >> drugs and money. >> sfinger, man. stinger. >> we're talking about the biggest drug conference in the world fr world and could make or break bio techniques week. >> and the good, the bad, and the ugly. dan had a number of winners and losers, we'll tell you which ones he's sticking with and which ones he's folding when

"options action" returns. ct sho] [ 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. it is the farm suital equivalent of the super bowl. game 7 of the nba finals in the world series. all in one event. hence the sports music. talking about next week's asco conference. meg terrell is breaking that down from head quarter, meg. >> i will say this year is

pharma focus. of course, it's the bier teches that always move. there's names that we're watching closely. there's a data drop a couple weeks ago. one of those names is insight. they have a hot drug in immunotherapy. analysts looking for more data that could reverse the declines we saw on the earlier data. another company we're looking at is clovi as. another one with an approved drug, ariad, who had a new drug on the market. we'll see which patients it might be used best in and there was a big mover in. pharmas. brist bristol-myers. they'll have a lot more data at the meeting they'll be looking for. whether they turn that decline down after they got that

down-grade, melissa. >> meg, thanks for that. >> one of the things you see, most of those names peaked in march. >> the big space bio tech is interested in is oncology drugs. the cancer drugs. the real growth opportunities. the thing about playing any one of these, they play at astonishing modules. there are actually a lot of companies not trading in obscene multiples, one name that comes to mind is cell jean. the way to capture those plays without taking the risk. would be on the names of incyte and clovis. one way is to play ibb. take advantage of the fact that options prices are up. jefferys is holding one. i would simply sell a put spread on ibb.

the one that i'm looking at specifically is the july 235, 225 put spread. sell for $10 and buy for $6 to protect yourself. you're taking advantage of the fact that there is a lot of news in this space between now and the end of june, between these conferences and asco. you collect money as it sits here. >> also, the ibb is so dominated by the big names. and they are not expensive, so you have that underlying component. >> what is your take, carter. we were discussing this during the break. you said, well, you know, i did call to talk back in the end of february, which is precisely the talk, by the way. what do you see here? >> here's the thing. once you have something that's quite extended like the transports now and it does indeed correct a certain percentage. the issue, do you press assure.

fair money, dead money. >> and that's how we're trading it. basically by doing the put sell. >> coming up next, between a winning pandora trade and loser on the cues, dan is going to make more money with tech stocks. find out which "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.

♪ [ 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.

tuck about streaming hire. shares of pandora are up 9% this week. here's how dan cashed in. ♪ >> on "options action" sometimes risking less to make more isn't quite enough. sometimes you want more cash. that's just the case about dan's bullish bet on pandora. dan thought pandora was about to sing a happy tune. >> it could be the sort of acquisition that makes sense for a lot of pocketed players. >> just buying the stock, come on, dan, you know 100 shares of pandora would shed you back $2,000. instead he bought the september

28th strike call for 1.50. now he needs the stock to rise more than 28 ducks or above 29.50 by september expiration, but spending 1.50 to get in on pandora, you're forgetting the number one rule. >> you cannot make friends with the rock stars. >> actually, it's always limit your risk. to cut costs, dan sold the september 30 call for 50 cents. and created a call spread. he did something easier. for a buck 50. he sold the higher strike call. dan is now laying out $1. he needs to rise above 29.50 to make money. he now sees profits if the shares rise above 28 bucks or above $29 by september expiration. >> that's amazing you should work for nasa or something like that. >> or star on "options action"

since then the stock has risen 10%. with plenty of time before expiration. all of "options action" is asking the same question, how can we make even more cash. >> before we answer that, let's see how much dan's already made. shares are pandora are up 12 sps since that. but he bought it for a buck and can be sold today for 1.40. dan, how do you make more cash from here. >> you sit on your hands, you have a lot of time to play out. let's see what people are speculating, who's next. i think this is one where i think do very little. i think you have it right where you want it. we chose out of the money for a purpose. we have a nice range of potential possibility if this stock can go up another 10%, 20%. >> it wasn't all dantastic for you. the bears trade on the cue

struggled. how are you managing this? >> all traders know this. you got to cut your losses. etf broke out. my thesis was that we were going to have large cap strength follow some higher cap higher valuation. it didn't happen. the options i bought were at 50 first of what i paid. so i cut them and i'm going to look for a better entry. >> do you think the entry might be soon, though? >> i think it's very soon. looking -- it doesn't matter if i'm looking at the qs or the russell. the russell is what i'm looking at. i'm interested in long puts here. having some short delta, i don't see how that's a bad move here. coming up next the final call from "options action." ♪ [ 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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[ 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 now for the final call. last word from the options pick. >> bullish reversals. >> carter? >> dow too wide a margin.

sell iyt. frts mike. options incredibly cheap. do not sell them. >> likes like our time expired i'm melissa lee. have a great holiday weekend. see you back here next friday. for more "options action" meantime "mad money" starts right now. paid advertisement for the 21 day fix, brought to you by beachbody. this time, you'll lose weight, get in shape, and stay that way. >> welcome, welcome. thank you, guys. thank you. have a seat. thank you so much for joining us today. as someone dedicated to health and fitness for my entire life, i am so excited to share this amazing program with you today. it's called the 21 day fix, and, believe me, it works. it worked for me. it's gonna work for you, no matter what your fitness level. if you're struggling right now to shed those last few pounds, if you don't think you'll ever