i wouldn't expect it in return. >> you wouldn't exinvestigate $53. 000? >> i would like to try some at some point. >> have we on, i'll bring it. >> zach "danger" brown, "fast money" is coming up in a moment. melissa lee, what's on tap? >> we're making potato salad. we're going to eat it and not share it. so there. >> all right. melissa. >> we had a melt june in momentum names. we will give you the top three picks in each sectors that are buys on this pullback. >> over to you, guys. >> all right. thanks. "fast money" starts right now. out of new york's time's square, i'm melissa lee t. volatility index gaining 20% in two days. it wasn't the nasdaq hardest hit seeing its worst three-day drop in two months. the momentum names are behind the carnage we saw on the nasdaq and we are covering moves from all the angles. tun suntrust bob peck is going

to name out which stocks you should buy on the sell-off. we have the top three names that are buys right now. first we got to talk about the melt june and the damage we saw across the board when it comes to twitter, pandora, groupon, amazon, netflix. dan, what does it tell you about the market more broadly? >> i think if you want to isolate these stocks. i think they probably went too far too fast on the bounce after we have that april, may sell-off. there wasn't anything fundamental there. i think it was a snapback. i think the broader market didn't get hit a whole heck of a lot. i think we were 2, 3, a tough stocks at one point. it was an easy beta trait. here you are. all of a sudden you have this risk-off day. bonds were up. people sold the heck out of these things. to me it's probably profit-taking but they also have a lot of memories here him we remember how bad it felt when you had stocks going up for no reason. basically, some of them get a third of their market cap gone.

if you can clip them from recent highs, fine. >> do you expect more of this in summer? we seen utilities did okay. >> dan troublely called it and i disagreed with him. i didn't think you were going to see a sell-off. probably most importantly i was on twitter. so i was hoping you would concede on the sell-off. i am on southern. i think the way to play this is to play it with safety calls here the utility name going into the back half of the year. i think you are going to see this short lived with twitter. i don't think it will be a long event. >> we saw this in april/may. the momentum names only work because you think that there is going to be growth in the future. so this morning we came in. we saw german exports down, production down in germany. most of the european stocks were down. this is a repeat again. whether we go down 20 or:30%, i don't know, if you have any type of profit like dan is saying, you want to get out of these

things as fast as possible and let the dust settle. >> karen, we saw volatility mix up 20%. you buy protection when it's lower? >> we buy protection when it's lower. now the question is what do you do, is it high enough to sell that protection? i don't know. i'm hanging on to that protection for now. but the stocks i want to own still haven't come in enough. i'm not going to own a tesla either way, up high or lower here. twitter i'm not going to own. >> i'm sorry to interrupt you. we haven't even really seen a billing pullback. look at the s&p, 19, 21 is a 50-day moving average. 1,800 is the 100-day moving average. we will see some testing of this level. everyone spoke about the mid-term election year where on average historically you see an 18% correction. with the incumbent president you see a less of a correction than that. we haven't had it so far so people wrote that off. i would probably say five. >> you want to talk about

protection and why are you not monetizeing your hedges just yet? it's a narrow draw down from the highs today. this afternoon in the qqq which is basically 25% of it is apple, google and microsoft. there is a few other. the top ten names make up 50% of the weight to me, august, five weeks away, august expiration, i bought the august 94 puts. i paid $1.25. that's where they break even. that's how quickly you can get protection in the options market in big liquid things. we're talking about names the vol is not that cheap. the pandoras, that sort of thing. i'm also, people, you may fall off your chairs here. i'm long call spreads on 26th around pandora. i'm not selling right now. i bought the qqq puts. i think they probably have some good stories that hang in there. when you try to find a muhammadal reason to own it. >> that hedge didn't work well on the last sell-off you had. you had the apples in it. >> they're down a whole heck of a lot from the april/may period.

>> you are in a pandora of a 26th, you won't make that back up on the qqq put. >> i think the yelps are garbage. i think twitter is a high quality game that may have some starts here. i think this is something that can probably work. >> by the way, we will talk more about what we you a, tech names, ibm as well as microsoft and the interesting reversals we zay saw, namely in the airline session, they got crushed. meantime, social media soft getting smacked. one name was the poster child, though, for the sell-off. we are talking about twitter dropping 7% clocking in its worst performance since may. the next guest says there is a surprising reason behind the sell-off. bob, good to see you. >> thanks, for having me. >> this is a reason that has not been talked much about in the market. what is it? >> not only do you have the pullback, but there was a third party report that came out last night t. same report came out a

quarter ago. it did an amazing job of nailing what their monthly active users was going to be. this report was highly anticipated. it came out last night. it indicated it would be lower than the consensus, it was around 265, 2367 million or. so as you know the users is a big driver of twitter going forward, also drives a lot of the sentiment going forward, i think they get disappointed. >> so you think this third party reported was spot on the last timing. you did not publish a report today. does that mean it's not changing your outlook for the stock? >> yeah, correct. in fact, we will hold a call for investors. the creator of this report on thursday, investors can dial in and hear the analysis behind this report. at that point we have more information. we'd like to talk to investors. >> so twitter, bob, closed around 2731 around that level. you have a 45 price start around the name. if you go out for monthly active users, you go out to mopub, tap commerce, they're expanding

their tenticals everywhere. it's not just about twitter. >> i can't agree with you more. mopub we think is the under asset for twitter. we had a conference call for the mobile app installs for facebook, he krould called mopub for twitter. he said this will be huge for them, several million as we look over time. it's a rare mobile advertising network, facebook and google being the others. >> that layer is extremely valuable to the advertisers. >> let me ask you, it would seem to me a lot of twitter holders don't have a deep, deep understanding of their business. >> right. >> so when they look at some met trek to decide sentiment. is that the most important one? would they look at revenue? what do you think is the most important to lock at? >> when we upped the stock at $22, your call was this doesn't have to be facebook. it can be a smaller user base. their monetization levels are so much lower than facebook's, there is for the reason for

that. twitter's is less than 23% on units alone, pricing alone, they can make the numbers work and the stop work from here without having those user numbers re-accelerate. >> is this a buy on this pullback? >> we think so. they fired their coo. we'll see what they talk about product development there. they hired a new cfo to come in there. someone very prominent in the industry. i think getting a pullback here the monetization r carry it the rest of the year. >> brian kelly, it a buy back? >> no, i don't think so. >> is it a buy down another 7%? >> at 35, i'd take another look. that's a tig technical. 35 wath was the breakout earlier in the may. what i'm worried about is when these stocks brake, you have exactly what dan talked earlier, where people remember getting crushed in these things and they just want to get out. >> i would say, listen, the stock bottomed to basically 30. it went to 42. if you get to 36, that's where the 50-day moving average is. that's probably a good level if

you are interested. i want to make one point about that report. i got to tell you, you are talking about active users. i think they said they had 2355 million last quarter. look at what happened in june, we had the nba finals and the world cup. i'm all over twitter. we were just in the green room before. i was getting updates on games on twitter. i'm telling you, this is massive for real time search. nobody is doing this. >> you think they got it wrong or you think maus don't matter? >> i think they do matter. maybe the first two months of the quarter were not great. i think twitter and guys will start getting this. it's about what's going on right now. how do we get people engaged? that will be the story next year. >> by the way, bob will be back to give us his three top picks. they're all momentum names, be i the way. meantime, let's get an earnings alert only a co a, beating the top and bottom line. the alluminum maker confirming

its alluminum demand growth for 2014. let's get the trade here. obviously, you look to alcoa, because they beat into autos, bk, you are short, how does that fit in with this? >> i tell you what, he talked about how strong the aerospace is, he talked about the pipeline for aerospace. i think they're lite late on this we have known about that. we saw the air france warning today. we've seen lufthansa, what delta said. there is an overcapacity of planes at this time. i think that feeds into alcoa. if i were long alcoa, i'd be taking profits tomorrow morning. >> i agree on everyone knew the story on the f-150. i think we have been clouded with xm and the recalls, i think there is a lot of more room to grow on that side of the equakes. granted stock is up 40%. you can't argue they are taking a bit of a profit. much more room on the upside on that. coming up next, it's been a rough two days for tesla. the electric car maker is faid

facing trades out of china. why this may be only the beginning of the sell-off for both tech and the small caps, whether the nasdaq can see a drop of 10% or more, that's later on in the show.

getting hit in today's sell-off. bank 06 america and deutsche bank cautioning on more weakness ahead t. city of boston also getting closer to signing a deal with a casino developer mohegan sun. >> i think ultimately winn will be okay. i think the real story when i looked at the story was mgm. a massachusetts casino resort lmpbs for the casino in downtown springfield. so i think the real winner is mgm. also, if you go to november, they can reverse this whole thing and there is no casinos in massachusetts at all. so you have to really wait to see what happens in november, but i think if you are playing this mgm is in the prophecy. >> in the issue of whether the casinos are not. that's not a reason to buy.

>> that's a buy on vip. it's all based on the cow. >> what do we know about -- >> when was the triangle of death, right? >> that's horrible, hugging this $200 level here. the other thing is the bust up in one of the biggest junk ets there, somebody made off with $1.3 billion. next up, tesla is dropping 34%. they are facing a trademark lawsuit from a chinese business man demanding tesla stop all sales and marketing activity in the country. let's bring in colin rush, senior analyst, good to see you. >> thanks, for having me. >> a lot of companies get over there in china, there are all sorts of trademark problems. apple had it with the ipad. we get that happens. what is more troubleing is that the head of china operations at tesla said in january to reuters that this trademark dispute was resolved and now here we are months later and apparently it's

not. to me that's a credibility issue, which is a much deeper problem. >> i would disagree t. chinese courts have ruled in favor of tesla. this is a las gasp attempt to extort money out of tesla. it cost him roughly $30,000 to file this lawsuit. for him, it's a shot at maybe getting a little money and creating some noise on this issue this issue is 99.39% dead this lawsuit goes nowhere. >> this beijing court date is nothing? >> they will go through the proceedings here. tesla has the law on their side. judgment is on their side this is an obvious attempt at extortion that i don't think has any merit or traction going forward. >> i'm wondering, colin what your to the are, there have been some reports, a exceptcompetito yours, tesla will need a big boom if order to make the second

quarter products. is there any reason to believe maybe they are back end loading the quarter and depending on a strong june? >> i think you need to see a strong june from these folks. the demand levels for tesla are not diminishing. they were actually continuing to grow. we know they have an awful lot of inventory on boats in april and may and those deliveries were happening in june. we seen for the indication they will miss that guidance and certainly the full year guidance suggests we will see a big third and 134th quarter 30% from q23 levels. as we look forward into the back half of the year, we see very strong fundamental also. the real issue for this company and at these prices are really the long-term drivers of growth and value creation is the model in early 2015. the gen 3 a couple years from now, continuing to see those projects move forward. >> thanks for your time, colin

rush. brian kelly, what's the capital here? >> i think at 2315 you got to see if it holds this level. last week i to the tesla broke a bit. so i've stayed away. i don't think this is a big deal in china at all whatsoever. i know there might be some credible problem. eventually, it's a small deal. i think what you need the see is, is there any sales momentum here and then is it a car company or a solar company. if are you betting often that longer, 215 might not be a bad place to shoot against. >> in light of the lines in these names, tesla didn't do too badly. >> it didn't. this likes to test a lot of the averages. the 100 day is 16-and-a-half. the price point has to hold ha level or else it will test all the other ones. but you really have to look at it as coin numbers will probably be better. they're way behind an all their alternate driven vehicles. i think you will see that ramp higher and those sales will be good going forward. still ahead, consumers beware, our own dana than is

back from the crypt with his latest triangle of death trade. later the top three momentum names to buy on this sell-off and the names just might surprise you. you want to stick around for. that back in two. the cadillac summer collection is here. ♪ ♪

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the concernings alert on the container store which is getting kreemd in the after hour session, don. >> those container shares are moving lower after the company reported the first quarter in essence a loss, 7% a share. sales came in a bit light at $173 million t. company gave guidance for the 2014 year below wall street expectations.

the stock is down about 14%. the ceo said in the release, this is interesting, while consumers are buying homes and automobiles, most segments of retail are like us seeing more challenging sales tan we had hoped in early 2014. he said while they're pleased in the first quarter, in order to preserve their brand and protect gross margins with edid not accelerate our promotional levels in what continues to be an emotional consumer environment. it looks like they kept people higher to preserve margins. in the end, those sales coming in worse than expectations. the forecast did not provide any enthusiasm. back over to you. >> thank you for that. karen, are you in this trade. >> we are short a little of the container stores. it's a great company. it's a great concept. although, you were talking about. >> it's a little overwhelming for me. >> that's my personal feeling. >> they didn't miss badly.

the sales weren't off. nothing was terrible. it was a little weak. but when you are priced for perfection and growth and decent margins. >> you are short. >> by the internet. you miss by a little. this is what happens. >> 28% short interest, are you worriedrd about a blurb of anything, an activist, somebody trying to figure it out? >> it just came public. >> she has a good point. she said priced for perfection. when we head into q23 earning, forgot alcoa and this other stuff. these are priced for perfection. if bob is right about twitter. that one pet trick is off people are holding on to, they get killed. i think you have to be cog fizant about that. >> shares of wal-mart, it wasn't that the best performer on a down day for the dow. earlier today on "squawk box" "squawkon the street," take a

look at wal-mart u.s. ceo president bill simon had to say. >> the unemployment numbers have been difficult to read with the number of people dropping out of the work force some. i think it's going to take a while, six months or a year for those numbers to balance out. you will see a drop in the rate. then as more people come back into the work force, that might change again, hopefully, after six years, we're starting to gain little traction in the u.s. and that traction is coming at the top end. i think the middle and down is still challenged. >> bill simon has a good reputation of being a solid executive in the retail industry. at the same time the stock has been a labyrinth compared to the s&p. anyway you look at it, one year, five years, ten years. so is this a wal-mart or a consumer problem? >> it's the wal-mart. their company gets hurt the most by rising gas prices, which we've seen. >> now they're back to pre-iraq levels. >> yes. >> so that's, i think that's probably one of the reasons why

you are seeing a strength in the stock here, right? if you are thinking oil is going lower, then you might want to hop into wal-mart here. >> i think it's somewhat of a problem like you are saying, that customer base is a difficult one. but i also think the market never likes wal-mart. it's boring. it's not interesting. it's defensive. amazon, which actually has lower sales, however, trades at a multiple 50 times the multiple of what wal-mart is. so that's not really fair either. i think it's not ever an interesting fame. so it doesn't get direction. >> to get revenue growth. this is staggering. to achieve 1% revenue growth. that's an additional $35 billion in sales. >> north of a billion dollars is there i think the big take away from this is yesterday the market came in based on pulling forward the fed raising rates, because things were going to be a little bit better. if he's right, we can put that on the back burner. the fed is going to go back to

2016 verse 2015. so i think the market has a lot more more to run. so if he's right the market actually does better. >> a quick poll here, any buyers in wal-mart? currently, no, across the board? >> with the buy. >> all right. that's whapt to get at. >> that brings us to our newest candidate for the triangle of death. dan is taking a look another a wal-mart competitor. that would be, dan? >> target. let's do it. here's a company that's had a whole heck of a lot of bad news this year, obviously, they were dealing with the after math of the data breach. there was a management change. look at that chart, there, that's a four-year chart. it's a textbook head and shoulders top. one of the things i want to bring up is really important, the stock is probably at an inflexion point as you get to that lower right corner of that triangle, it's at the downtrend. that's like to me if i was long, i would be looking to take some profits if i'm a trader. i'm thinking of a short and pressing it into their august q2

earnings. this is probably a good entry point if the thing fails right here. again, there is one input into a broader story. there is a lot of things going on right here. it caught my eye. the setup looks better on the short side tan it does for a breakout. >> we can put that up. if it does break out at that right corner, what does that leaving the death's triangle, where does it go? >> if it establishes a new range, that's great. if it breaks out and fails, you want to press the heck out of it. if it gets back towards that 55 level where it seemingly made a double bottom earlier in the year, that's also another point. but 10% away. we saw it in lulu and the other patterns lagging the consumer names, within they broke those levels, they went much lower. >> after the break, a deeper dive into why the charts are saying we could see more than 8% move lower in both the nasdaq and the russell 2,000. plus with the biotech well over 23% today wrerks looking at

opportunities within the carnage. the three names that survived right now from the street's top ranked analysts later on in the show. .

. >> welcome back to fast 340i7b. we are live in time's square t. nasdaq composite, the russell 23,000 were dropping more than a percent each. is this just the start of the sell-off? let's go off the charts with carter braxton. carter. what do you see? >> well, it's not so good. both of these indices have been poor year-to-date. you suffer a 130% draw down and nasdaq peak to trough and up only 5% on the year. let's look at charts what is important about this of course is at least the nasdaq was able to make a new high whereas the russell failed around is failing right at the high t. trajectory is the same, it's stronger being the, na. here's the bigger problem. if you are in a steadily orderly

up trend, which is the case with the nasdaq, you continue to respond to the top and bottom of your channel perfectly. when you do violate as it's done here and you get trapped underneath it. it's not a good circumstance. >> that itself the definition of a change in trend. guess what's happening the same thing in the russell. same channel, same deterioration. same attempt to get back on schedule and same trouble, right at the lower end of the bend. now, pick one stock that's symptomatic of this. here's priceline. same general proposition over the past year-and-a-half. same trouble. then failing right at the lower band of the channel. the presumption is this is a fairly major topping out formation t. implications are not good for the russell or the nasdaq. we think you are talking act moves that are 38 to 10% lower from here. >> for each indices, the nasdaq and carter 23,000? i'm interested, you saw today

and yesterday pretty broad-based sell-off when it comes to those types of names. are we seeing? you talked in the past inzors having gone in, they want to get out, are we seeing that dynamics in the marketplace? >> some of the aggressive period were the high flying growth names. think of something like a fet flicks, which is a rebound all the way to its past top. when you do rebound aggressively. having sold off in a proceeding way aggressively, you return to a level where people want to get out, having been made whole. so that's the damage done here. the burn is very much on the bulls. we're having a lot of breaks in trends, typically, it foreshadows further weakness. >> carter. thank you pretty scary charts. >> when we look at the fundamental also, last we had good pmis. today we had that european data. we are hearing wal-mart say so at some point the market has been on the fed will be back, we

have low rates. at some point if that belief breaks, then you absolutely get lower prices like carter is talking about. >> dan, you know what i noticed in today's session, you said the stock could not go down? >> it didn't stop. listen, when you look at the qqq you look at the iw on the russell. translator two different things than the other things. i would say that russell chart is a textbook double top right there. it's not something you want to lean against and probably play for a new high t. other in the qqq again, it's leveraging these big names. i will tell you this, if they disappoint, they're so crowded, google and apple. apple went parabolic again, people. i'm not hating on it. i tell you that's what it did. if there is a reason to sell it. the qqq is going down. >> you agree? >> no, well, i'm sort of caught in between here. i actually own apple and for me 85 was where i buy the other

half or above par. so i think it will break one way or another. if it breaks to dan's point i buy it 85. to the upside i'm a happy buyer at par if it reaches 100. big movers of the day, a drop for seadrill. >> i thought the terms looked attractive to seadrill. 23-to-2-and-a-half%. i think it was an overreaction. >> drop for j.p. morgan down 23%. >> listen, it's not going to be a great quarter t. news about jamey wright diamond is weighing on investors, the euro stock the euro bank index closed down almost 3% today, it looks ugly. i this i some u.s. investors who have been hiding out in, ba, u.s. banks, may be thinking twice about it heading into the q23 reports. >> 23% beakers. >> the chicken parts of the names, they have been on fire.

pilgrims plead hitting new highs. if it was bk buy and fry. i love chicken. >> another stock is up 52% microron. there is nothing wrong with taking a profit. d-ram and nan probably the supply falls short in the back half of the year. i would be a boy on weakness. >> you will pop for spicing things up. last month, pepsico canada mixed the roulette with doritos. videos of people buying into the spicy chip versus gone viral. hundreds of chips on youtube show people in agonizing pain after taking the doritos roulette challenge. for the word on when it will be available in the u.s. one can only hope. >> good time. >> that's like if game. let's check back only a oka. it is still here in the after

session. morgan brennan has been back at hq with the very latest. morgan. >> thanks, melissa. the call is still going on, seeing, highlighting the fact that all of alcoa's business segments did post profits both over last quarter and this year, pulling out two themes, talking about strong operational performance and also talking about the portfolio transformation as the company continues to focus and invest on its downstream and mid-stream businesses. those are tied to products, not nearly to commodities and the price of raw alluminum. so that has been a big theme over the last several quarters for the company. he is really highlighting that on the call a few head winds pulled out in the earnings call, prices continue to be an issue, lower alamede prices and currency fluctuations as well. reaffirming their alluminum

demands for 2014. also, talking a lot about aerospace saying 38-to-39% global outlook for that industry for the year as well. of course that's a big area of growth potentially for the company moving forward. melissa, back to you. >> thanks so much. dan, you actually saw a big trade only a co a? >> options volume was selling the january 13 puts. they sold about 15,000 on the day. that's a bullish trade. they're basically drawing a line in the sand at 13 saying i would buy it there. they will take some premium in, if the stock is above it. biotech stocks an internet stocks, both got a beating today. what is the best way to play this? two top analysts naming the stocks you should be buying in the red. more "fast money" coming up next. really... so our business can be on at&t's network for $175 dollars a month? yup. all five of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day.

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she can print amazing things, right from her computer. [ whirring ] [ train whistle blows ] she makes trains that are friends with trees. ♪ my mom works at ge. ♪ . today's social media sell-off just might be a golden opportunity to jump into high flying names. let's have the top picks to boy on this pullback. bob, you got three west virginia are they? >> the top three, one is amazon rolling out in new phone,

whether you think the penetration subbase 5, 10%, we think the numbers for 3q haven't been adjusted yet. >> you actually think the phone will trickle down to a result? >> the top one estimate for this quarter coming up 3q you think a million phones at $600 or so. the price point. it's an increase. i think that's important. you look at amazon, they have the top revenues. that's growing north of 30%. >> all right. next one. >> number two, facebook. nanigafs put out their report on what the quarter looks. audience u once again, triple pricing. it looks good. we will hold one with their marketer. it's a strong quarter. >> the third? >> the third is google. i look at franchises upon pullbacks. one of the best business models on the internet, dominating their core. >> on facebook, we have made a

point on this show that they use their stock as a currency, as an analyst, how does that factor into you saying buy. it seems the company is telling you this is probably overvalued. >> yeah, particularly related to $19 billion. what does that tell you? we won't know if that's a deal for probably a couple years or so. what you do like to see the tech is riddled with a company that made big game channeling investments. google did this, facebook, what's app. you are seeing growth north of 37%. incremental margins around 80% t. core chugs away. while they can make these acquisitions of these big bets. >> let me ask you about google. a story they couldn't confirm about the youtube revenue. >> yes. >> do have you, first of all, where is that from? do you think there is anything to it? >> it came from a blog source the information which did some work on it. we were estimating the revenues

were around $134.5 billion. it is unclear. we may never truly know. one thing we do know is that you can talk to wpp, our advertising agencies, they'll tell you that they can't get enough quality premium video advertising opportunities as google builds that with youtube. they've going to have more of those dollars come to them. >> bob, thank you. bob peck, suntrust. do you agree with bob on any of those three picks? >> none. listen, he's a great analyst, facebook is interesting, the growth will continue until it plateaus, then the stock won't wompblg it has to me a doctor 160 million market trend cap. i want to make a point about google. youtube with $3.35 billion if revenues is one of the largest media properties of sales top pence google nobody thinks ability. if you put a ten, 11, 12, multiple on those sales, this thing can be interesting. to me that could be one reason google was weak today because people were disappointed in it.

>> spinning it out? they'd never do that. >> maybe they do. at some point google will have large numbers. they will look at. >> you can spin it out for evaluation purposes without having control over it. >> to get people thinking about it. you asked bob, what do you think the revenues are? it's piaa in the sky. no one know, they don't break it out. >> let's talk about the huge break june in biotech. it's down 7% this week alone. biotech, cell genes, which stocks should you buy on this dip? let's bring in deutsche bank analyst. robin thanks, for coming in. >> large cap two reasons, they're launching a hemophilia drug. number two this company has binary events that are not in numbers. expect the stock to move 30 to 100 by the end of the year.

they could stop progression of ms rather than slow progression of ms. >> you said the stock could move $30 to $100 per share this year. >> on that date. if it works, either way. no, only upside. we do not see a lot of downside in the numbers. i think expectations are very low. for the proof of concept for the biology here. very interesting. >> all right t. second one is a small cap pick? >> small cap pick, tesoro, kind of off the radar screen. number one tape have a drug that already has good data. they will launch it next year. number two, they have a drug going to be launching or new data on ovarian cancer. we think that drug will work. peep think it's a $23 million drug. we think it's a $3 million next year. rare and small cap biotech, a good management team. this team has been in other companies before. they've sold companies. we know they can execute. >> is this a company that can be a takeout target?

>> any small cap company with assets not partnered is a takeout target. >> on tesaro $300 vs. billion, a massive disparity. why are you so different? >> we're early. it's a brand new class of drugs that may work not just in ovarian cancer, but many, many types of cancers. >> you have -- >> we only have $2370 million in our stock, in our model. i think if the drug works in phase 3, that's coming in the next year, can you see numbers creep up as big as 3 billion. >> let's talk about the make the is a flyer. basically, are you to guess, this is a binary stock and this would be what? >> high rick reward upside 100%. downside 20%. that's arrowhead, a no brainer. >> right. so this is a kane that's developing a drug for hepatitis b. the this drug could cure hepatitis b. there is no data in man. when it comes in the third

quarter, we could see the stock move a lot up. >> this sound like a takeout target. >> if successful. over time, these drugs that are unpartnered are definitely takeout targets. >> these are the stocks you are telling clients ar, wr, a buy right now? >> yes, correct. >> robin, thank you for joining us. robin karnauskas of deutsche bank. >> she didn't mention clovis at all. now i have two stocks down. twitter and clovis. for me eade rather play with an index. >> rather than being burned. >> i'm still getting burned go do you cover clovis? >> i can't help you, either. sorry. >> let's move on here. is volatility back, the index is up 18% in the past two days. we will tell you what traders are betting on after the break. of the services your vehicle needs. so prepare your car for any road trip

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dom. >> always an interesting story with these uas or unmanned aerial systems companies, that is drones. if you look at aeroenvironment, that beats the analyst of 22 cents per share, so a positive there. also they report revenues of $73 million versus estimates for $70 million. they also see full-year revenues of between $250 to doctor 270 million. it beats the analysts expectation of $254 million. when it comes to drones the company said it's investing in their business, plan to do so this coming year with more visible in that business. so for this company, an interesting trade, up about 6% in the after market. back over to you. >> thank you, dom. this is something we have been following for a while. we had a ceo talking about the catalyst in the next year or so. >> this is always a speculative

play. it's going up year-to-date approximately. if you look at the market cap, you want to talk about takeout stories, there is a lot of other companies in this base defense companies that are in this space that could easily absorb this type of a stock. but you also are waiting for a little more clarity on drones going forward. there is a lot of grey area as to what the government is going to say about drones and how we will use them. >> another down day the smell of fear, the vix up nearly 20% in two days. some are betting on more vol estimate. dan. >> vix apgss ran hot. two times daily volume. calms out puts almost 3-to-1. we had basically since thursday's close the vix has been up 20% a. lot of traders are taking profits or getting out of july bets that volatility would increase and they were rolling out. there was one trade today that caught my eye where a trader did something called a risk reversal

if august t.vix was 1228, they sold the august 13 put and used the proceeds to buy the august 16 call and that trade cost them 32 cents. they did it 10,000 times, what happens here, remember the vix is a cash settled product here. on august vix expiration the trader would lose money below 1268. that's basically a little above where the vix is now and they would make.po above 1632. one of the things i will make a point here that's interesting, these are not that ambitious of bets here, you think about it t. 2014 average on the vix is 14. the long-term average is 20. the five-year vix plotted against the s&pment this is that inverse relation, this is the s&p. this is vix. the vix is ground to seven-year lows. the s&p goes up every day t. only point i would make for you people out there. the vix people are using as

hedging, it's very liquid. this relationship can continue to go on for quite some time. when you look at it extended, it doesn't pine jump in there and boy vix calls. >> what does it tell you about the puts that you own? >> i should roll down, take money off the table and go higher and sell something. >> check out the we believe site at options action.cnbc.com. coming up next, your first move tomorrow. stay tuned. . if you have moderate to severe rheumatoid arthritis, like me,

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time for the final trades, go around the horn. >> for those of you getting nervous, maybe buy q23 puts. >> nordstrom, i would wait for 70 and two-quarters. >> once again go to the allergan valiant spread. this doesn't trade with the market. if you are worried about markets up and down in the short term, it's a way to get out of the market risk into this trade. >> we talked a lot about potential takeout candidates. one i have been in for a while i

think is control 34 ctrl, down the last couple days. it will be a volatile game i think with everybody getting into home control, apple, google. this is the one to pick. >> alcoa is still higher on the after sessions in an earnings boat. my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm trying to make you a little money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. >>. >> tonight i'm using my bully pulpit here on "mad money" to preach against