remember this -- people first, then money, then things. now, you stay safe. bye-bye. is. this is "options action." >> the only theveng we have to fear is fear, itself. >> you said it, fdr because the vix has fallen to a new eight-year low. we'll tell you how to protect your portfolio. plus, ichaos. >> get in crash position. >> we'll tell you why apple's historic seven for one stock split can cause mass confusion

and rare opportunities for you to make money. we'll show you how. and streaming mad. >> i'm mad as hell, but i'm not going to take this anymore. >> netflix is lashing out to internet providers. does it give net flex the upper hand? we'll have a special report. the action starts right now. >> back on the nasdaq market, i'm melissa lee, have no fear the vix volatility index hitting its lowest levels since 2007. is this a good sign or a bad sign for the market. how can you use the low vix to make if money? let's get in to find out. you may be trouble when the resident bear gets bullish. >> i think it's really hard to look at the vix with the ten hand him here. we haven't seen it in a very long time and say all is well. it is well, the s&p is at all time highs, here, we keep grinding higher. so when you look at that cart right there, it shows the inverse relationship between the vix and s&p but it doesn't speak

to health, it speaks to complacency. that's one of the things when you talk about how do you use low implied volatility? you can put on protection. things with a nice dividend, things that are working, especially the last thing for those trying to peck a top in what is summer trading right now. you know the old mark saying, never try to short a dull market. >> so the vix is sort of screaming like kevin bacon at the end of the "animal house." all is well. the thing i would say when complacency is high, risk is higher than it it would be, if you have a high stock with a short interest, you often expect those people expressing skepticism are there to find the market at fault. right now with the options markets are saying is it can only go in one direction. that's up. >> the vix is not telling us anything we don't know from the market, itself. trading has been futile as the

market has been futile s. there any incremental wisdom that the vix went to low marks. >> what are the charts? >> it's grinding at the bottom. again, it's coincidence, it doesn't lead, anyway. >> that's the good fuse, though, actually, one u one thing is the vix does get to basically a floor, so there is always going to be some movement in the market. as long as it's moveing a little bit. >> that will create a floor for options price, it's a great opportunity to use options for now, they can't get them a lot cheaper. >> in terms of the s&p chart what is that? >> it's the definition of complacency. if the corrections are good, the word implies it's incorrect to go too far without a pullback. we have gone 18 months without a pull back. not good. >> equity, bonds. >> this is the worst week for bonds in months. so, you know, complacency is all over the board there. >> let's look at trade, you are

looking at ge. >> this is bullish. this is a trade. if we're going to two the s&p is going to continue to go, one thing we have been talking about the iwm, russell 2000, if the small caps join the party, ten it's probably on, you know what i mean. some of this stuff will start to play catch-up. one of the thing i was looking at is part of the thesis is if global growth, if everything is getting better, then you want to go for laggerings and cyclical names na will benefit from cyclical growth. ge is one of them. down 3.5% for the year. we have a five-year chart, that chart right there is the price. to me $28. that's the previous high. that's the quote last tick of 2013. that's what i want to gun for. in july, they report on the morning of july expiration, july 18th. options are cheap t. stock looks poised for a breakout. if there is any good news, joy global this week.

>> monster move. >> the earnings -- >> take it easy here. >> hold on. it was up 11% in two days. it broke out to 52-week highs. this is the same trade, targeting ge's earnings when the stock was 2712 today i bought the july 18 call for 16 cents, that's less than 1% of the underlie, if that stock gets back to the highs, it breaks out, asymmetric. you are risking little. >> ge is $270 billion. all it does is inmoo, it's a high beta stock. ge is a gdp stock. >> the largest market cap company in the world went up 15%. >> in a straight line. >> wait, i think there is an opportunity here. first of all, i want for the point out something, ge is trading below multiple. it's cheaper than the s&p t. second thing is take a look at how much she is spending.

16 cents. that's a little over a half a percent of the current stock price. here's something else. those options aren't going to decay that rapidly. here's the reason. they have highlighted. they have earnings coming out that day. there will be a bid for optionality going into that event. this is a really cheap way. this is the options are cheap. >> okay. last, to carter's point, ge does not have the same data as global. do you think they will meet expectations or be beat by one penny? that's as exciting as it gets. >> at 2,000, they will get back to their highs and earnings callous are the way to do it. i'm not say by or at the money call. they're dollar cheap. >> moving on the stakes are high between the buffering battle between netflix and verizon.

if you get that dreaded buffering sign who is to blame? julia importance joiborsen join explain. >> it's tough to know who to blame, net flex to you through a spiderweb of connections, which means plenty of opportunity to break down, they send it to a third party data center and verizon to its hub and 9 million internet and subscriber homes. there could be issues with a wifi or netflix player. so verizon along with comcast has an internext e connect deal, netflix plays verizon for a direct connection to provide streaming, other providers, like at&t and cable which don't have an internet connect deal haveen an extra step. it goes through a transit provider this paid deal has paid off for netflix subscribers on comcast, streaming speeds have

improved more than 50% since february. verizon speeds have increased slightly sense their deal was made over a month ago. it can take a while to implement those changes. the buffering battle back and forth between verizon and netflix isn't hurting either company's shares, but this weekend, the pressure is really on for them to perform and avoid that terrible buffering. melissa. >> julyia thanks for that. let in flicks in stock is rising 25%, finishing up in 18 of the last 21 trading session, but that has people worried. carter, what's the problem here? >> i think what you said, that's lot of sessions up in a row. let's look at the chart and try to figure it out together. what we have here from this low point is a 45% advance. it's not so much about percentage. it's where we return to. if you were to look at this top and where we are now, this is exactly 28 days down, exactly 28 days back. we've returned, if you will, to the scene of the cream. this is where the stock really

plunged and now you've returned to where there is memory, which is to say dead bodies, people who bought poorly, endured a lot of losses, now have the chance to get their money back t. presumption is this ricochet of 45% reached a level where it stops. two other ways to look at this, here's the same chart, we move those drawings, broadly speaking, if i were for the give you a trend line of sorts. we've come back to the throat, if you will, the underbelly of the trend line, that's also a difficult level. fine. ultimately let's say this was going longer term and you were to tall this an epic cup and hand him. yes? a cup and hand him forms, when it gets to the top it consol dates or backs away a bit before ultimately going higher. we think we are at that moment. again too many sessions up in a row. we would fade the stock. try i to sell short if you can. >> carter is clear about where he thinks the stock is going to

go. dan, what do you think? wall street is getting more bullish because of the international component "orange is the new black" we have another season of" cards" is in the works. >> i think they have to show they will get leverage off it. ultimate ultimately. i've had my best and worst trade over the last two months, both being short the fame. i'm out. it's on my band list. mike. >> at a $27 billion enterprise value, any one hit is probably not going to propel it that much further. >> that said, this is a name i have been long skeptical about. this is a company that has been seeing about 20% revenue growth and finally looks like this, actually, some of that flowing at a bottom lean at a good rate. still the valuation rate is nose plead territory for most companies, even those growing at a rapid rate. i'm incleaned to go with carter

on this one of the things we were talking about is options are cheap. they're not as cheap in a name like net flex. there is some of that skepticism based on the valuation and the stock that's baked in. what i will do here is simply put on a calendar put spread the one i'm looking at is the august 380, january put spread. i will buy those longer dated puts forrant 30-and-a-half bucks, sell the near dated ones for 13.5 dollars. that fear data a option will decay more rapidly than the longer data one. if it stays here, i have ways to win. if it declines, i have ways to win better. there is a chance that longer pit will value. >> as you said, pike, you have been skeptical of this name because of the valuation for a long time. is it j you the technical picture carter lays out that makes you want to put this on, we could have made a similar

trade marx many times. we could have lost a lot of money. >> actually, if you dade trade like this you would not have lost a great deal of money. this is a situation where we are looking for the mark to grind and the stock to kind of grind and maybe go a little localer. these are the two ways we can win here. the only way you lose is if it rockets from here. i don't see that happening. >> if you want to buy a put, you have to payment it. on the tech physical also, this thing came all the way to the prime. it will probably kiss the prom queen here. i think you will see 450 in the cards, if you own puts, you have to finance it. i really like the calendar. >> it's in the prom queen a. new one. not surprised. all right, got a question. we will answer in our 101 web action after the show. in addition to that, you will also find great trader blogs, education material and the most hellacious optionings in the options pit.

some call it derivatives, you pa i want co check it out. here's what's coming up next. it's the split heard around the world. >> this is plenty nerve racking. >> not you, gwen, we are talking apple split. we'll explain why when "options action" returns. [ male announcer ] what if a small company became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. 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.

one is the loneliest number. >> that simple fact could lead to complex problems for options traders when they start trading on monday. mike koe, aka, the professor, is breaking that down for you. explain what we need to know interest this is what will happen. we will see adjustments to the options contracts. let's start off with a simple example and assume pre-split you own one january 700 strike call. we now it will be a 17 for 1 split. what you need to do is take the number of contracts you have, that's nice writing, multiply that by seven. one times seven, seven contracts. the streak is also going to be adju adjusted. 700 divided by seven, 100. if you own one january 700 strike call before the split, after the split, easy, seven

january 100 strike calls, it's gets more convoluted when you deal with the strikes that aren't very di visible, if you own one, will you have seven contracts, you need to divide that by seven. >> that gets to 92.ex-. wound u rond it to two decimals, seven, january, into strike calls. the premium will be the same. you take however they are trading for, divide them by seven all else equal come monday. >> is there a magic to the 1700 or 14u6789 post split? >> there are two things. while stock doesn't have a change in valuation after a split there is a lot of psychology of that, we know in a way it does, two, there is something about past tops, we have a big stock that's acting well, a lot of them in here is not expensive, hoifr want to measure that, i would say 700 is in the cards. >> dan what do you think? >> i agree, it's back to the old prom thing. it's gotten up here, it's 8.5%.

i'll tell you this, if it gets up there, they disappoint on the products, recode was suggesting it could be in the offing in the fall. >> that is going to be the most epic double top you have ever seen. >> pike, what happens to the cost of premium, is there anything that changes? does it become more expensive at all? >> that's a great question. it used to be if you went back ten years ago, there was a common sense that lower dollar stocks could move more on a percentage basis, so the premium would actually rise the idea was it was easier for ten stocks to more $1 than a stock to move ten. they recognize the valuation of this company probably shouldn't become a great dear more volatile because you have increased the share counts. i'm expecting it to stay about where it is, if you take the premiums divide by seven that's

probably where that will end up. family dollar, surging, prior to that we did see a large bullish options trade. hmm. he will tell you what it was when we come back. .

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.

welcome back. i'm aymon javers in washington. we have seen a lawsuit filed in the united states district court for the southern district of new york. this is a class action lawsuit filed against 13 different stock exchanges on behalf of one customer, a harold laneer, it's been filed by a wrath of prominent lawyers, including at least one of the lawyers who was involved in the massive toke settlement back in the late 1990s, what lanear and the lawyers are alleging in this case is apparently that the exchanges violated contracts with their customers by providing high frequency customers preferred access to data. let me read you a little bit from this complaint filed on may 22nd. it is just becoming public this afternoon. they're saying the subscribers

paid hundreds of millions in subscription fees to the exchanged defendants for the provision of data in a non-discriminatory matter. the defendants breached the contracts including the duty of good faith and fair dealing by providing the subscribers for the value or which they contracted. they did this in engaging in side deals to provide faster advanced access to market da that that breached the subscribers contracts and designed to enable diplomacy to generate profits for themselves. so this could be a significant new front in the battle over high frequency strai trading now we got what appears to be a significant and large class action lawsuit against the exchanges. melissa, we've called all the exchanges for their comments on this this is just breaking. we are getting our first look at it as we speak. >> thank you for that. news that carl icahn took a stake in the company.

carter took to twitter in the a disclosed 345er7b9sment. the news was preceded by bullish option trades, two-and-a-half calls traded for every put. so, peek, what's that to you? >> first of all, unusual buy always stands out. that's why we call it official. the fact that somebody is a 5,000 lot of the 61 strike calls, i think that's pretty interesting. dan was pointing out the inspiration. >> let me just say this, though, we love to make it sound a lot more experienced tan it is, let me tell you what happened here. it was a roll. a trader sold 4,000 of the june 60 call to close. they were already long and rolled them out to july 26 expiration, 15,000 of the july 61 calls for i think about 205. this person already had this bullish bet on. they rolled it out t. company is

set to report judgment 10th. >> enlarge it a bit? >> enlarge it a bit. if you see 100, 100, 100, people picking at these things, you wouldn't see it in a big block. let's be frank. >> you wouldn't do it like they did in clorox and stuff leak that. >> i mean, look, it was a large bet. they were bullish before. >> stocks act for a while. this is actually been going on several months. it's a trend, it looks that way, it's really changing. >> let's look at other unusual options trades. we saw a bunch of them we did see a big spike in the 'em equity side and a worried trade on the options side. >> general morts. i know that meet was talking about the for trade earlier. what happened is it's much of the same kind of activity. people are taking advantage of the fact that options premiums are low. they have made profitable profit

itself and are extending their bets out. what we saw specifically was a buyer, a substantial buy of the 49 i 3943 call spread going up to at the present time. teams in many instances, they are going after the previous highs in that case, general motor itself, it was 41-and-a-half bucks. >> he doesn't hear so well at his age. one of the things. >> european mountain curie. >> gm is very fascinating too. >> that is also fascinating. >> they closed up $9.5 on the day. the trade is 59,000 calls, 18,000 puts. most of that options activity took place in the last couple hours of the day. for the news. >> coming up next, final call from the options pits. [ male announcer ] what if a small company became big business overnight? .

ing ] [ 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. carter. last call time. >> on any given day you don't

need to monitor the vix ticker. >> gr call. >> options remain cheap, buy them. >> our time has expired. i'm melissa lee. thanks for stopping. see you next week for more "options action." stay tuned. "mad money" starts at the top of the hour. . 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,t