first, then money, then things. now you stay safe. bye-bye. this is options action. tonight -- >> i can't do it. >> that's what gold investors are saying as bouillon hits a four-month low. gold flashing a secret buy sign. we'll tell you what it is. plus, how high. >> kiss the sky. >> no, not those guys. we're talking about bond prices which continue to go up. we'll give you the best way to cash in now, and terminated to buy apple ahead of next week's worldwide developer's conference? before you do, see a shocking chart that tells you exactly

what the stock does right after the apple ceo leaves the stage. the action begins right now. >> live from the marketsite in times square, i'm melissa levy. these are the traders in new yorken an austin, texas. beneath the calm surface, troubling signs today in high growth land. check out twitter gives up most of this week's gains. so lar stocks also falling hard. check out sales force.com, the company off by over 3%. is this price action a response to a huge week or maybe a sign to sell? let's find out. dan, what's your make of this action here? >> it's reminiscent of a lot of action we saw in april and early may when the s&p was chugging along but small companies represented by the russell acted very poorly and saw the rolling selloff in high valuation sectors. it was solar, it was biotech and social media stocks and 3-d printing, computers.

i looked at it today, the s&p is sitting at an all-time high yet, there's a lot of weak action amongst those sectors. it was reminiscent of the prize action when people were really scared a month ago. >> take a look at big cap gains, apple for instance, when apple turned, that's when the s&p 500 turned, as well even though they got a nice trarthd price by goldman ahead of the worldwide developers conference. >> we have expressed a lot of concept tickism about the market. today if you're trying to look for something to found about, you could take a look at some of the sectors that underperformed like energy, for example, and materials which were the two worst ing it sectors in the s&p. still both at pretty much all time highs right here. the other thing we should be looking at is the fact that volatility in all of these is at all-time lows. that is the opportunity. if you want to be a poly anna

and be glad about something, that's probably where the opportunity is right now if you're looking at the s&p, you could spend $5.50, that's not what you're risking from today to tomorrow but till the end of december. this is a phenomenal opportunity if i was going to continue to have any kind of long position in the market to use that. i have not sold any stocks till now. i'm not committing any new money to the market. >> what's important is today's actions, these were the best performers on the week. it just shows how tentative and kep tickle people are. you come up to friday, people say i got a nice bounce and not going to hang around. big selloffs in names that were big winners monday thursday. >> all bounces weren't created equal. for everything that looks fantastic in high valuation land, there was a couple things like priceline and netflix blews the doors off. eye popping sort of things. then there's the sales force.comes, amazons and a whole host of others that had anemic

rallies. the lack of relative strength off these bottoms after 30% peak to trough selloffs is really troubling to me. >> we're taking a look at crm. >> here's a company that reported earnings. on the surface everything looked pretty good. in the forefront of a great secular trend within software and computing in general. today, is the stock opened up 3% on a deal that they did with microsoft. it's a big partnership they're launching into. this is the sort of stuff you'd want to see. what happened, it immediately got rejected. the first tick of the day was the high of the day. the stock closed down 3.5%. that's sort of relative underperformance is what you lean on rather than trying to pick tops in strength. on a one-year basis, this it is one of the worst charts i've seen. it is a textbook head and shoulders with 50 being a massive neckline. you want to press this is sort of weakness.

we have a chart. the price of options versus realized volatility, how much the stock has been moving around, options are relatively cheap right here relative to how much the stock has been moving it lately. >> you're taking advantage of that in your trade, a simple straightforward trade. >> i want to look out to august and give this time to play out. today when the stock was 52.80, i bought the august 50 put. above 50, i risk that $2 in between $4 and $50. i can lose up to 2. below that i have a lot of profit potential. i didn't spread this root out of the gate. if the stock moves towards my strike, i'm going to use the opportunity to turn it into a calendar. >> how does the opportunity look to you, carter? >> the 45 level, there's a big gap. and that's ultimately where the stock looks like it's going. good trade. put it on and press it. >> mike, i have a feeling you like this trade also.

you're like three peas in a pod when it comes to being bears on these names. >> we should fade it and go the other direction. one of the things dan is doing in this name he was talking about how expensive options are relative to how much the stock moves. in general, the price of options has been incredibly low. this is one of those situations where you don't use spreads. you have to look this as an opportunity to buy outright options and then you look to look into spreads as the underlying moves. that makes a lot of sense. what's interesting is next week is june. august isn't as far out as we might think. i wouldn't mind going further out. those longer dated options tend to decay more slowly. when vol's low, vo mind buying those. >> i'm not trying to pick a top. a couple weeks ago we said if this breakout fails, do you it with we fined rick. the jury is still out. this could up another 25, are 50

points before it's said and done. when a stock like crm cannot rally on a week like this, this is the sort of action you have to jump over. >> it did rally on the week but gave it back most of it today. >> what is the risk of technology going up and bringing it up given the s&p was the best performer. >> the s&p tech is so adopted by microsoft and apple, it is unlikely that is going to collapse the way a crm can collapse. >> it is not a small company. >> it gets to the issue of momentum, carter. >> those stocks are mot moment if you mean stocks. microsoft, cisco and apple are practically utilities. they're not overpriced. that's why the xlk is holding up so well. >> it was the story of the week. the ferocious rally in the bond market. hitting its lowest level since june. the xlu which tracks utilities

the best performing sector this week in the s&p. often traders weren't buying this move april staggering 20 puts traded today. all told nearly 130,000 puts traded on the xlu today. most activity centered around the $42 strike. if options traders are betting against the sector, should you carter the chart, masters made it to the smart board. carter, what do you sue he? >> utilities is the best performing sector today. best performing sector this week, best performing sector year to date crushing the s&p. is that likely to continue? let's look at a few charts and see if we can figure out together. here's a daily chart over last year and a half. what's important after a huge move off this low to the high of just a month or so ago, this it is an 1% advance. and we gave back exactly a third. and importantly, guess where that are stopped? right at this top. literally to the penny meaning

it found support where it should. where we stopped before we sold off here, watch this. here's the five-year chart, well defined. since the bull market began. we know that securities respond top trend lines. and that's just how it works. it's not because i say so. history tells us so. and we are likely to approach and even just get back to and exceed a little bit the top of the channel. it implies for the xlu a move to around 46 would be roughly 10% from here. let's put the longer term picture. this is the s&p 500 utility sector. look where we are. meaning the action right now the ip applies a breakout above the 2,000 top, the 2007 top. just a textbook conventional buy juncture. a few other things that puts this in perspective. this is the sectors waiting in the s&p. there are ten sectors that

comprise the whole. utilities are right now at roughly 3% whereas on average, since 1990, utilities are roughly 3.75% of the s&p. so this would suggesting that two utilities relative to the rest of the market are underweight. one other thing that might be relevant. yields. these are bond proxies after all. the current yield on the sector is 3.65%. a ten-year treasury is 2.47. that ratio is 1.43. you're paying -- you're getting a lot of yield relative to what you should get out of utilities. this is a good place to be. if there's ever a market selloff, utilities act better than equities in general. >> carter, listen, we've done a million charts together when you look at those uptrends. to me you're trying to get maybe the last buck or two out of this

amazing move. when you think about it, you look back, the xlu is 45. if this didn't have that yield on it, you would be looking to get in on the shortside, wouldn't you right now? >> i've got to tell you. >> it's subjective. you interpret it that way as a triple top. from my point of view, epic breakout potentialings. >> you're take talking about the ratio of the yield in the utilities relative to longer term u.s. treasuries. i this i might be more informative at times to take a look at the spread in absolute terms. it probably doesn't look quite as dramatic income that sense. what i like will xlu it tends to be inflation adjusted which the conventional u.s. treasury would not be. when i take a look at this, i'm kind of with dan in the sense i'm not enthusiastic about trying to essentially short rates when they're already at epic lows which i think is one of the things you're doing here. you do have that inflation component. we do have something else.

in the low rate environment, low volatility, we can still make a bet with carter without actually taking too much risk. >> walk us through the trade. >> i'm going to buy the december 43 calls. pay a buck for those. they're not decaying rapidly. if carter is right, you automobile have a lot of potential upside. if he's wrong, you're not risking very much. from my perspective is, the reason we're going to do this trade is the market is giving us an opportunity to do it cheply. >> send us a tweet at cnbc tweet. our site is options action.cnbc.com. you'll find the hot yet, juiciest options gossip. it will blow your mind. so you want to check it out. here's what's coming up next. the last four times apple's heldity worldwide developers conference, something very strange has happened to the stock. >> i know it looks to you as if the same thing is happening again but it isn't. >> how to profit.

>> plus -- crack is whack. >> and so is gold this week. why a floor could be in store when "options action" returns. ♪ [ 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.

♪ ♪ ♪ [ 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. who says sell in may? axl shares up over 7% this is month. next week's worldwide developers conference could spell trouble for the stock. dan, what do you see? >> you know, it's interesting. this is a name the investment

community has been infatuated with for ten years now. but since that september 2012 you know top above 700, i mean, you know, sentiment has been getting worse. we just had this shift. the stock's up 13% of the year. the company just made an acquisition for beats. they're bringing real creative talent in there and people seem excited. i just wanted to take a quick look how this stock over the last four years has traded into and out of the worldwide developers conference. because one of the things we all know is the company is highlighting their existing products, some new services. a lot of software offerings. in the past they have taken the opportunity it on the introduce some new hardware. okay. so let's look at it. last year, june, 2013, this is the ten days prior into the wwc. circle. this is the day the stock traded higher and what did it do? closed towards is the lows. june 2012 is, same chart. look at this. down 3% on the day, closed on

lows. look at this, june, 2011. same thing. it was trading up. as soon as tim cook or in the past steve jobs dropped that mic, all the anticipation traders sold. there was a lot of pent up demand into the event and it came out of it. lastly in 2010, is the say thing. the way i'm thinking about it, the stock has run up about 8.5% over the last 11 or 12 trading days at almost two-year highs. right up until this week, implied volatility, the price of options was actually almost at multiyear lows. look at this pop. this is demand. people chasing this stock into the conference. so to me, i think you have potentially an opportunity that during this keynote address when tim cook is giving it, if they get toward the end of this thing and the stock is up and there is nothing and exciting i think you sell the stock. you can see 2 to 3% from the highs which it sold off for the last four years.

remember people, seven for one stock split the following week, that's the thing a lot of traders are trying to game. that's going to be the ultimate sell in the news. >> you're going to it be watching this worldwide developers conference on webcast or however and as every minute goes by, at what point do you pull the trigger? for the person at home, do you do they do this trade? >> it's a finger on the trigger trade. we looked at the spike in volatility. that makes options a bit more expensive. i look at the weeklies and look to buy something near the money and i will buy them. in that swoons 2 to 3%, you've got to get out. it's a quick day trade. >> this is a very strong stock gapping up lately. there's every indication it's going hifr. a lot of momentum. fighting momentum like this is wrong headed. good luck for those who dry stloo. >> mike this, volatility at multiyear lows. you can easily make a bet on

this stock and not spend that much money. >> that's what i think you should do. that's the opportunity is to use options because there's an old saying in trading and we've heard it a mill xwron times and it probably applies here. sell the news is what dan is talking about, but selling it on such a strong stock might be risky, use the options to do it and you might get gearing on the downside. >> i would add one more point. we're in uncharted territory to carter's point. everyone's looking at the $700 level. i think it's a really difficult scenario to try to pick a top. i'm trying to identify catalysts and i'm going to play it with defined rick and not making a big bearish risk. >> gold very close 0 giving up gains for 2014. cart ser long gold. stay tuned. [ 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.

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♪ all on thinkorswim from td ameritrade. a brutal week for gold bugs as bullion hit a four-month low. this is particularly painful for cohen carter and here is why. on "options action" just because we risk less doesn't always mean we make more, and sadly that's just what happened to their bet

on gold. carter was into the shiny stuff. >> the gld, we play it on the longside. >> all right, mike said, let's try to strike it rich. but just 100 shares of the gold etf? come on, mike. you know that would set us back $13,000. so to spend less, mike instead bought the june 130 strike call for $3.50. now to make money he needs the gld to rise above $130 by more than the $3.50 he spent or above $133.50 by june expiration. but it gets better. because if the gld does rise, then that call will increase in value faster than the stock, meaning more cash in mike's pocket. translation, since he's spending less, mike can make even more. >> that's gold, jerry, gold! >> but actually it's a good thing he did spend less because the gld has plunged more than 6% since the time of the trade

making this trade a loser. and that leaves prospectors everywhere with just one more question. how will mike and carter fix their trade? before we answer that, perhaps this might make us feel better. had you bought 100 shares of gld at the time of the trade, you would be looking at a loss after 900 bucks. mike's call is basically worthless but he's capped his losses at 345. carter, would you stay long? >> we do. we like gold. a tough week down 3% on the week and almost as cited here back to where it started on the year but the real issue is is the bottoming out action of the past two years legitimate or is it the stall before the next down leg. we think it is the former, it is bottoming out action and the presumption is you have an asymmetrical moment. not a lot of downside risk but upside potential. we would stay in the trade. however mike would choose to do that. >> mike, is carter using the royal "we" or would you agree?

>> you know, i have never really said that i was a big gold bug but i think the options markets give us a little bit of an opportunity here and i'm not the only one that's saying it. there was an institution long in the jewel 29 calls. it looks like they rolled down to the 124s. giving themselves a little chance to make their money back. on the june 130s we probably can't do that but we can go further out in time and get some lower strike calls and i think we probably will get an opportunity to either spread out or sell those at a profit if we get any move to the upside. -think that's probe the way i would play it here. >> i'm too dumb to know why anybody would own gold. i don't know the reasons. i don't get it, but i'll just tell you this. you're talking about gld at $120. when you look at $1,200 in the commodity, i have to tell you, that is the multiyear low. that's that support that carter is talking about. i have to assume there are massive stops all over the place there. so this is not something i want to be long. keep an eye on the commodity 1200.

>> on "mad money" tonight cramer is going for the gold with sage kotsenburg. olympic medalist, plus many recent ipos have been lousy. the ceo of quintiles is joining jim for an interview coming up at the top of the hour. coming up, the final call from the options pits. [ 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.

♪ ♪

♪ [ 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. >> i have an idea for you. >> let's hear it it, david. >> you did such a great job finding micron and then it doubled. then i thought it was good. i thought i could maybe take your advice for the summer. i was wondering, we're trying to get youngblood in at green light, young minds. i was wondering if you maybe want to come intern for the summer. >> exactly what i've got, some youngblood. >> call it the internship around the world. david einhorn offering regis an internship for the summer. no word on whether he accepted. although i know he's psyched to

do it. carter, final call. >> utilities, be there. >> mike. >> d's 43 calls, not the stock. >> cr inputs. >> looks like time has expired. thanks for watch. we're "options action." see you back here next friday 5:30 eastern time. have a great weekend. >> announcer: the following is a 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