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trade in the market t. action starts right now. live from the nasdaq mark, i'm melissa lee. these are the traders in time's square and san francisco. growth stocks are continuing to lead the way. are they your best bet for the last four months of the year? carter, we got to start off with you. growth is where it's been at? >> that's right. many ways it's more of the same. it's this unrelenting. uninterrupted bull. but growth stocks are important in the sense that there is not a lot of growth in the market. people are willing to pay any multiple. tesla, fet flicks. biotechs in spectacular an area where if you look a certain names, they have the growth that's exceptional. yet you don't pay a high multiple, gilead, a chart shows the four multiples much higher, get the same growth rate out of

gilead than the others. >> you can see this reach for growth when you look at the sectors, for the month, can you see biotech outperforming a broader indices. alsoings gopro, mobileeye, at least having monster runs. >> as soon as august, all these growth funds kicked in. we mentioned growth sector stock peckingier. those too grow at a valuable surprise what you want. sometimes you have to do a little research. you don't have to pick the most known nooims names like tesla. you get names like a gilead out there that sort of had that forward looking p that suppress. other fames in technology are also doing well, net app, other names in biopharmaceutical, jazz pharmaceuticals. growth there with the pe

multiple somewhat suppressed going out a couple months. >> how do you look for this reach at growth in the market run? >> you know water interesting to me, it seems that people are willing to pay for growth. celgene and gilead, not only are they trading at a multiple based on forward earnings, these are companies that have a long track record of earnings and revenue growth. you compare that to gopro or tesla. tesla has yet to prove itself. this is a situation where obviously they're going to sell a respectable number of cars. if you take a look at those multiples, say you you need a million dollars of revenue per cars sold, that's a lot win compare it to other businesses in the space, biotech, that's not true. you can take a look at these companies, versus old health care companies, leak johnson & johnson, these are cheaper. >> we are for the cushion on gilead, we are taking a look at

biotech, will is also a potential for consolidation, which has moved a lot of these fames recently as well. >> certainly the single story biotech companies, a lot of those are getting snapped up as the larger biotech companies are looking to make sure they have a broad portfolio. gilead has a decent portfolio t. blockbuster is their help teets treatment. actually their cancer treatments show a great deal of promise. the hepatitis, the holy grail is for an all oral solution. that's essentially what they're working on that. truck alone, zivaldi had a billion dollars more than they expected. this company is trading 12 times earnings. >> what's your trade? i'm sure a lot of people really want to foe. i'm sure they feelitative complete lid missed out of this. >> this is the most unbelievable

statistic this company is up 400-fold in the last 20 years. you think you could go back and bite for a quarter. right now it's looks like it's gone straight up. it's hard to get in and purchase a stock. i will use options to make a bullish bet. i think the best way is look out to january at the 110 call spread. you can spend a little over $5. options have been cheap. here it's not as cheap as in some others. the stock is. this the a way you can get nice upside exposure looking out the next four months or so if it continues to rally and you are risking 5% of the stock price if it doesn't. >> i leak the trade this is the trade you like to look at. if you look at the trade and the other growth names out there, i think you can aplooty same sort of structure, calm spread that's

slightly out of the money call spread you are trying to get some value here and apply those to growth names that have had a tremendous run, those there have had the same value and roundedness that gilead has. >> the stock is steep day-to-day. it's not a mature move. it's a steep intermediate move not so ma cure to suggest it's exhausted. >> is there is some upside. >> we think so. the markets is held up surprisingly well, some options traders are seeing more gains to come. susan lee has your options action debut. >> hi, melissa the emerging parents etm is up some 8% this year remember some options trade, think it's going to go higher so some of the day's biggest trades we saw, bullish bets on both the eem and brazilian stock. one trader making a pretty big wager the brazilian etf is headed up to $60 by january

which would be a 12% rally. meantime, we saw a major the trade in the eem, basically, using the options to go long a million shares on this popular etf. it's a bullish bet there. as you see, melissa, big money on big moves hopefully in the future. book to you. >> tanks so much. so can the bulls be proven right? the chart master, carter, what do you see? >> sure, there's lots to look at. let's figure it out together. the first is the setup here. which is to say emerging parents have not participated to the extent the u.s. market has par tis pitted. here it is visually if you want to see it. this essentially is a five-84 chart, juxtaposeing subpoena 500 with the eem that is incredible. meaning we haven't seen the lift we have seen here in north america. is the spread the past couple

months a bit of a foreshadowing? we think it is nice steady uptrend. tracking its line and no problems if you will. yeah, nice channel, if you will. here's the issue. we are right back to the top. do you break out here or not? this 45 level, keep that in mind and look at, here's our line again and look at the weekly chart. well defined topic 45. well defined topic 45. the presumption is this time after you pro the past top, you exceed the past top. the set upis right not only on the daily, setup on the weekly. keep this many mind. we think we will hit 50, 52. a nice 10% move here. now, here's our line. here are our tops. here's the presumptive breakout take us to this level. now this level if we get there,

it means a very important thing has happened, same long-term kwlart no lines. if when asked, we think we're going to do this, we are going to exceed the upper band of this well defined wedge, important development. we like eem resolute and relative to the s&p. >> carter what is that level are you pointing to? >> you are talking the trend line here? >> yes. >> this is where we are now. 45. not some at this time key level for the, well, i lost my chart. it's the key level for the here now. it's the long-term kye level. that gives you a double setup. >> so carter says it looks like this is upside. brian, what's the trade? a simple trade. >> the fundamentals are there for tradeling forward pe trading at 11, that's ridiculously cheap if you are looking for value in this market. you do ven to worry, well, it going to get past this resistance? i don't know, you simply buy a

cull. these calls are cheap. volatility is suppressed. you have a 50% discount to where they were in terms of volatility. you go out and look at the october 45 call. what i sime simply want to do is pay a dollar. my break even is doctor 46. it's basically a 6% move to the upside. you almost use lever annual. >> that way you get the limited upside potential. listen, if we go down, people are looking alt these charts saying, hey, it's only a matter of time going out to the upside. if it sells off, i still like going to these calls you go at the time upside, boy a call for a buck. >> mick kei, would you see the index on this? >> i the a lot of people look to the emerging markets and think there is a lot of material and things like that in there. it might be a surprise to learn the eem include taiwan, semi-and

samsung and a lot of financials. fact that valuation which you might attribute to something like a caterpillar and other stories people think are not good in the commodity space. >> that only represents about 10% of the index, i really like the trade. >> carter the first slide that you showed the s&p 500 and eem, you implied there will be a catch-up there. what is the probability the s&p 500 will moo et the eem? >> there is that possibility convergence is both entities, one moving up, one moving dun or the rate of change, meaning the s&p continuing, but the eem advancing alt a more brisk rate ooechlter way, we say convergence in there more more point that, too, i think the eem catches up, the u.s. dollar is reaching the currencies. we get strong data out of coin and a weaker challenge globally. i think are you if good shape here buying that call. >> got a question out there,

send us a tweet for everything options action, check out our website option action@cnbc.com. here's what's coming up next. be afraid. be very afraid. >> traders are getting worried about september. we'll tell you why it may not be as bad you think. did you foe that cars are making money? a surprising and delicious trade when options action returns. ♪ [ bell ringing, applause ] .

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well, after a nice august, does september swoon ahead? that's something a lot of traders are thinking about. we want to hear, that's all we have been talking about as we go into labor day. >> form amelie in september you hear the markets down in september. certainly that's the case. the question is does it always happen in the vix? when you look back historically, it's about a 50-50 chance when you go back to fine 91 the vix is actually up. one ting that's interesting in the last decade. that's a lot less, you really had two major spike in the vix and volatility in september t. rest of the year you can see in this market we actually saw the vix go down. certainly it's a conundrum here on whether you want to own

volatility. i think when you look at any of these spikes. they are hard, they are sharp when they happen. that's why they head into these fall months, when it does happen, it gets difficult. >> walk us through in terms of what we are seeing here in the s&p 500 and on the vix. >> typically you look at the vix and s&p, they're negatively correlated. when the market sells off, it sells off a lot faster tan it does when it's rising. when you look at these financial crises, whether it was europe or our tech downgrade, you see when credit deteriorates, these spikes in volatility happens, the market deterior its quickly, when there is pent up nervousness, you can find these spikes in the vix happen sharp and hard. that basically what you are seeing in the s&p a market that sold off hard. >> i think there will be some people out there who say, brian, you trade volatility.

what you have been seeing is the vix has been dampened. you look at the cart, you see rising pattern or a mid pattern going into the spikes, here we are sort of settled down. >> yeah, we v. when you look at the federal reserve bank and the ecb, all that liquidity that has come into the system has played a pard inpart into the dampenin. the market is not moving. the s&p is moving a half a person at day. there is no volatility. there is no reason to buy a put position, if it doesn't pay off, you spent that money, it didn't pay off. it didn't finish in the money. obviously, we seen spikes before. obviously, if we come off all time highs in the s&p, very, very low levels in the vix. have you to be careful of a little spike. >> i think that's great in terms of the roles around the world is dampening volatility. mike khouw, what does this mean

for you? >> first of all, that's the point. all of these central banks have been giving puts to the financial markets for free, therefore the price of purchasing them in the open market has declined significantly. it's a huge conduction of liquidity every time the market starts to soven a bit. i want to point out one thing, when options prices are low. they are low right now. even if you think the probability of success is less tan 50-50, the amount that you can make if a volatility spike occurs, is going to vastly outweigh that. so your expected p & l is going to be profitable. i think that's something important to remember. when options are very cheap the leverage you get to the upside makes it beneficial to own them over time. so this is a situation where i would not be short volatility in general. not in vix, not in single stocks. >> carter, i want to go to you and talk about the notion seasonality, this has not been the best mont. we are going into a seasonably strong period. is that what you sigh?

>> that's right t. seasonality studies are quite clear t. data is well 19 known. this next six to eight weeks is where the great market collapses have occurred. the month of september being the worst of the 12 months, pacific, it's the only one since 18 fix down more than half the time. on average, september is down 1.1%. that is an outlier. another data that's important. i.t. affects the statistics a lot. that's important t. worst septembers occur within you have a bad summer. we had a fairly decent august, a nice ricochet in response to the good july. if not the set up here now for a cataclysmic september if you look at data as it relates to the preceding month of august. >> brian, i want to go back to you. for the reason for volatility. at the flip side our options bets are cheaper to make going

into the last quarter. so how do you use this information? >> i want to go to mike's point. i think he makes a point about options when you see it cheap, i am advantage volatility, married against a long equity portfolio. whether you buy a calm or a put against long stock or own volatility at some point, i think it makes sense, i'd rather marry stocks with volatility. i think it makes sense, you buy stocks, you buy puts, they're cheap. if not, i see the markets significantly higher. will you win that way, too. >> up next, how can one of the most classic foods make you money? find out when option "options action" returns time and sales data. split-second stats. ♪

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welcome back. pooem some of our biggest fans are if new york city. one of our fans happens to own a classic new york restaurant. take a look. ♪ >> hi, my name is ellen. i manage yona schimel.

a tkn ish. it wasn't the first knish that came to the urine, it was in fact from this family. this is a spinach crisp. this is my favorite knish potatos, spinach, onions spices in a thin dough round and baked. the knish is 350. do you have any options that are cheaper? >> a very good question a. very delicious looking knish by the way, carter, have you ever had one by the way? >> i like pancakes, that looked good. >> i will put the question to you, mike, do you have an "options action" better than a yonah schim el knish? >> i have sales of f-150. if gas prices go up, they started rolling out the new mustang and have good small cars

as well like the fiesta and the focus. one of the things is you can do is go out in time. we talked about the fact that "options action" are cheap and look out for the january 17 calls, a little over 17-and-a-half. you could buy those for $1. >> that is obviously less than $3.5 bucks. in shareness, they are 100 a share. you can spend 100 bucks. i think that's a pretty good value for money. >> so the question now becomes, brian, would you rather own this call or one-third of a yonah schim el knish? >> i think i would go with the knish. mike makes a good point t. value is there. you look at the pes, what ford has done. i don't know, in this market. i think the value on ford, i'd rather look for other place, the airline industry over, the car industry is in a better position here, given where gas prices

are, something like a southwest airlines, something like that, i think there are other better plays out there. the stock looks like a momentum into the upside. i will love it. >> this is cheaper than southwest air on a multiple basis. you know, we have a very old car fleet in this country. we have seen what can happen to the airlines when things go pare-shaped. by the way, loving this call, on an attractive valuation, we participate if the things e thing goes up. we are not taking that much rick. the extrinsic premium, we are up 50%. >> carter, late the charts? >> not a great pattern, auto dealers and manufacturers, you look at those most world over. >> knish always look good, coming up next the final call from the 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.

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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 from the "options action" pit. >> "options action" markets are

saying why worried if you use longs to express you don't feed to. >> i like eem. buy calls on eem. >> we like eem technically and relative to subpoena ap as a pair. >> thanks, for watching. sigh here next time at 5:30. don't go anywhere. "mad money" starts right now v. a great weekend. ♪ >> a better back and a better body. since 1981 that has been my passion. i created teeter hang ups so people could live healthier, more active lives. i know what it's like to have back pain. when i found inversion, it changed my life forever, and i believe it can change yours. i am proud to present the newest and best teeter hang ups. >> if we wanna live not only a long life, but an active, healthy, pain-fli