this is "options action." tonight -- >> i'm back, baby! >> the housing market is having a serious snapback. we'll give you the play. and apple has been on an incredible run. we'll show you how to make money. and we're doubling down on

herbalife, and we'll tell you why. the action begins right now. i'm melissa lee, and here are the traders here and in austin, texas. how did u.s. stocks respond? by rallying. let's get in the money and find out. is the market right to shrug all these things off? >> well, 490 of the s&p 500 companies have reported earnings, 7.5% growth year over year. and a fed that may start to get a little more confident in the economic recovery and start to raise rates. the vic closed below yield.

so, it does feel very complacent. especially when you consider the dax was down from all-time highs a couple of weeks ago. and we got a read of euro pmi purchasing. it was down. ultimately, if they can persist, and all the geopolitical risks can have an affect. >> mike, what did you make of the week? >> one of the points i would make, with the geopolitical issues, some of the things to worry about, whether or not we're going to get involved and if it's going to be in a big way. the middle east, it's like a coal fire that never goes out.

and the other thing is, with weakness in europe, italy, spain, looking at possibly negative economic growth there. that promotes the central banks to try to continue to lubricate the economies. a >> carter, what's your take? a staggering move in the markets, but yields just want to go lower or remain low at this point. >> well, a week -- this is status quo if it continues. and things that were very cyclical, industrials snapped back. the thing that dan speaks of is very important. europe is in trouble, and their

rebound this week just sets them to get in trouble again. >> or, it's a late stage phenomen phenomenon. >> let's talk about the trade today. uso oil, down 15%. a lot of people talk about oversupply, but the trade i want to do is a little, it's a little contrarian. the crude has been down 12% since the june highs when isis started to make inroads in iraq. now, i want to fade the complacency. i think things are going to continue to get worse over the next few months. so, uso, i bought a risk

reversal. i leveraged the upside. sold one of the january puts, and bought the 0.75 call. long down 5% at 33. i'm selling the 33 put at the 52-week level. i don't think we'll have this crater below the lows. >> and the ctf-uso, it's a play for usi. >> well, energy stocks bounce much more than crude in the event of some sort of scare.

you're not going get a big move out of crude, not like the energy stocks. >> mike, how do you like the trade? >> well, i like it. if you're looking at land drillers, and the oil service traders, a lot of global exposu exposure, that's another way to take a potentially bullish bet on crude. >> and we've seen brandt, down for the month. reacts more to isis than we thought. >> well, when the uso was 39, we put a put spread on it. and it made a good move. i'm using uso as a conduit. >> and brent is tracking dollar

for dollar with uti. and it's a dollar-based thing, as well. not just the politics. >> and apple, ahead of its iphone 6 announcements, traded higher today. so, the chart master has made it over to the plasma, and we'll break it down. carter? >> i've gone back in time, if you will, take a look at where apple is. i'm going to switch to red here. here's the all-time high, two years ago in september of 2012. a split-adjusted price of $100. and lets go forward, clearly developmental, breaking above its downtrend.

this is as of about eight months ago. you can wait, go a little further, and wait for a formation like a cup and handle if you like that kind of thing. but this kind of setup projects right to the past top. and this is where we are now. we've returned to where apple was. in principle, a stock that gets back to a well-defined past top, it responds to it. that means that apple is likely to be somewhat fallow here. nothing wrong with it, but it's not going to get the performance that you just enjoyed over the past many, many months. so, it broke its downtrend. it's at the top now.

in principle, you're likely to be a bit fallow here. hold your positions, but look at options here. >> well, carter and i, we put on a bullish bet on apple. but it's getting towards the upper end of its valuation range. it was a successful company, but the stock was cheap. we can't really say that anymore. the iphone 6 release coming out. some news about potentially some issues with the screen. but this has been a good stock to buy the rumor and sell the news. and with that in mind, a lot of people probably hold the stock. they don't necessarily want to buy it. one of the things to do, one of

the most common and successful options trades there is. a covered call. look at the levels that carter gave us. the november $105s, about 90 days to go. you're going to be collecting about 3% of the stock price. if you can do that four times a year, that works out to about a 12% reduction to the cost bases. and the exit price more like $108.30. so, that's a good way to play apple at these levels. >> if you were with apple, and saw the record highs today, what would you do, dan? >> well, if you were inclined to say, we're going to have a september 9th event, the launch on september 19th.

if you put out an order for the stock you might as well put out a call. i don't get it here. i wouldn't be committing new capital here. but if you're in the bull camp, i wouldn't commit more. it will sell well, and people are expecting something on the wearable front or new services, you could see a $110 stock, but i don't see it right now. >> carter, anything to indicate it will remain here? >> well, one thing worth noting, this is a two-year time frame that has elapsed. september 12th to september 14th. s&p up 36% in the period. at this point, apple was 5% of the s&p.

but it's less now. value is here, but it should ultimately go higher. >> -- they've bought $53 billion in stock. so, i think the symmetric chart there looks good. forget taxes, i think you see a profit there. >> and check out our website. the hottest news and exclusive trades. you want to check it out. here's what's coming up next. a huge options bet today has the entire market buzzing. who was behind it, and what's the best way to cash in? and housing stocks are starting to mount a turnaround.

is a rally ahead? we'll give you the moves, when "options action" returns. 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.

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futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with paper money to test-drive the market. all on thinkorswim from td ameritrade. you really find a lot of riff-raff in times square these days. well, the massive herbalife trade today. >> well, his case is very well-known. he thinks the company is a zero. i'm going to break down the

trade, and tell you why doubling down -- let's look at the five-year chart. this is earlier this year, when the stock made an all-time high in the low 80s. some curious purchases, at about $7.20. 28,000 of them sold for not a huge profit. but this big one, the $50 million. he rolled the view out, pressing the short. bought 32,000 of the january 2016 expiration 50 puts. that's at the money. think about this. take the 50 le$50 less the $15. think about it, you would only do this if you thought it was going down to low single digits.

think about how many stocks really go to zero. he's making a much more convicted view now. >> and mike, what's your take on what a trader should do with this sort of information? >> well, i've never really been a big fan of herbalife. this last quarter, you're waiting for some sign of cracks. and i think we're starting to get that. whoever traded this, and if it was bill ackman, that's likely. but with long puts, you have to go out far in time. this could take a very long time to play out. that's assuming he's right. but if i was taking a look at the situation, the risk-reward situation looks a little bit

expensi expensive. i would look at selling cost spreads if i was going to be making a bearish bet this way. >> carter, what is your take? >> it's dreadful. we can all see something is wrong. the $50 level has been breached, and the presumption is lower prices. >> well, i think a tough press at $50, down 35% this year. and bill ackman is laying down the gauntlet to herbalife management. and back in february, they issued a $1.1 billion convertible note. i think they did it to squeeze ackman. they've got nothing left, and he's got the staying power here.

i think a lot of investors think it's an asymmetric bet, but he's pushing it out. >> would you ride along? >> well, i would wait until the high $50s, $60. coming up, is the housing market back? that's next, when "options action" returns. time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade.

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time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box. all on thinkorswim, from td ameritrade. it's been a huge week for housing stocks. the home builders etf is up, but that's bad news for dan. here's why. risk less to make more. and that's just what dan tried to do with his bearish bet on etf. he thought they were on shaky ground.

>> i think it probably goes a bit lower. >> 100 shares costing $32. so, he bought the 31 put for $1. so, they have to fall below $30 by september expiration. but a buck just to bet against housing? let's do it for less. so, he sold the 31 put for 30 cents and created his put calendar. he made money making easier, and here's how. spent a dollar, and collected 30 cents. cutting it to just 70 cents.

so, they need to go below $30.30 by september expiration. but it gets even better. he could turn time into money. but don't forget there's a tradeoff. he needs them to stay above $30.30 before expiration, and fall below after. so, it needs to drop further if he's going to make money. so, now, every "options action" fan wants to know, what will dan do now? >> well, such a sad face. now what? >> well, it worked out

fantastically. the short dated put expired worthless. but a huge rally, some good housing data in the last week and a half. so, i hope you took the profits when it got down to almost $29. it went from $33 to $29 in a month. that's a good clue. to me, it looks like an attractive entry again. >> i would agree. just that, it's thrown back to a difficult level. broke once, recovered to a level where those who were trapped but didn't act, likely to say, i have a gift here, i should come out. and home depot was massive this

week, and it didn't help this group. >> well -- that's kind of what we have right now, a good way to play. the only thing i may do a little bit differently, just roll out as far as i could on the long-dated one. five, or even six months or more, waiting for the market to crack. coming up next, the final call from the options pits. 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.

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♪ when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with paper money to test-drive the market. all on thinkorswim from td ameritrade. time for the final call. the last word from the options pits. >> the simplest trades, are always the best ones. apple. >> i agree, apple. >> and i think the market

environment is just too complacent. >> for more "options action" check out our website. see you back here next friday at 5:30 now. 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, and i promise to help you find it. "mad money" starts now. hey, i'm cramer, welcome to "mad money." my job is not only to entertain you, but educate you. call me or tweet me @jimcramer. anybody who has a high school diploma has t