better. >> an i-pocketbook. >> or like joan rivers a toe ring. >> "fast money" is coming up next. melissa lee, are you wearing an iwatch? >> no. i'm wearing a good old fashioned watch. >> so you know what time it is, don't you? >> yes. it's time for "fast money." have a great weekend, guys. see ya. "fast money" friday starts right now. from the nasdaq market site in new york city, i am melissa lee. breaking news this afternoon on what could be the biggest ipo ever. alibaba expected to price between $60 and 66 bucks a share. more details on what it means for the chinese internet space. that is coming up. but first this has been a big week. a cease-fire in russia and ukraine. and this morning a worse than expected job report. all that news pushing the dollar

up more than 1% for the week. the tlt down nearly 3%. and the s&p 500, well, it's basically right where we started the week. so what will it take now to really shake stocks? bk, what'd you make of this? >> i tell you, this week there's an awful lot of good economic news. the jobs number this morning, there was really nothing in that that said you need to sell stocks right now. i would argue even if you take it on the face of it that it was weak, it just means that rates are going to stay lower for longer. i think at this point you stay long stocks. i think the reason we've been sideways is because we had this big meeting. then we had the jobs numbers today. cross assets are not working that well right now. but i think you stay long u.s. stocks. >> i don't think there was anything in the job numbers today especially when you weigh in the fact there was some wage growth. ultimate wli if you look at the six-month average and twelve-month average, we're in

the best job growth year since 1999. i don't think it has to do with this government, by the way. but this is a case where you have fantastic data. so i think what brian was saying is that the fed coming out of the picture and if you had a weaker job number today it means you could have less central bank involvement. in our market right now that means stocks have the punch bowl still at their feet. the yields went up this week. we were seven or eight basis points higher on the tenure. i think that's the direction. it's not going to be dramatic, but the data globally was better. this is a case where we do have a great backdrop for stocks. and you have a fed which is -- >> so basically the fed has another excuse to remain in and so therefore that is good for stocks because rates will stay lower even longer. but if we had had a good jobs report, pete, that shows the economy is getting stronger? how can that be?

>> i think you're probably right. but i think when you really cut through all of this, the decision comes down to is the bonds a place to be or is it in stocks? i think when you choose stocks you're on the right side of the decision making right now. because when you look, folks are looking for yield and growth. what actually reacted today? look at some of those big pharma names. look at the way merck traded today. when you look at some of those and start to look at the big cap tech, those were areas that were strong throughout the day. others caught up, but those were leading us off the low. i look at the big cap tech with the dividends. and names like intel, hewlett-packa hewlett-packard. there's a reason to stay out of the bonds. i think they'll stay down until august at least. >> i agree with pete if you're looking at it as a yield play. but if you're in it because the instrument appreciates what tlt has done despite this week to the tune of about 15%, then that's a pretty good percent.

the answer to your original question, a move to the upside in rates. i'm not saying that's going to happen. i'm still in the low rate camp, but this was a difficult week to be in their camp. >> should we expect -- should we now expect something different because we got this jobs number? >> not necessarily, no. listen, the data was very good. this jobs number, people were talking before this that there might be some change in the language that for a considerable period might be taken out of the language. that's most likely priced into the market. i don't think the september 17th meeting is all that important at this time. if we get low rates because money is coming from europe and japan into the u.s. bond market as a relative value trade, that's going to be positive for stocks. in the short run, let's talk six months a year, then that's positive for stocks. >> the one thing clear and different this week is this will add volatility to markets. that will be painful for some in stocks. >> one move, apple was down almost 4%. the drop coming before the

product launch next week. in the past we see relative run-ups ahead of the iphone 5, 5s announcements, it was different. only raising .5%. so how does this mean for how it will perform after the announcement? walter, good to see you. i feel like this is everybody's favorite parlor game surrounding an apple launch. what will it do into the launch and after? why will this year be different? >> it should be a big event. they changed to a 2,000-person venue from a 200-person venue. i think everyone kind of knows what's going to happen. it's been leaked a number of times. what happened last year was there was an expectation for a low-priced phone to address the market in china, brazil, other emerging markets. that didn't happen. there was a huge selloff afterwards. then the stock was $76. it's now $100. maybe that was a good time to buy. this time around there's

knowledge there's maybe a different sized phone, maybe new products, maybe new services. so i think there's less risk of this expectation of what the management should do and just delivering on what people are expecting anyway. >> in terms of the how apple does the month after the launch, what have you found and do you think it's going -- how do you think it's going to trade this time? >> for the last three years, there's been a selloff in the month that follows. if you look back, you could have bought the stock at lower levels. there's the risk that the hype going into the quarter can lead. the difference this year is the stock really hasn't rallied. if you look on an imper kal basis, it's up 5% but so is the market. the stock was up 12% going into this event last year. but there hasn't been a relative rally in apple stock. >> you're saying because the volatility has been dampened going into the launch, the performance after will also be muted. not really expecting too much of a selloff at all. >> i think there's more

confidence in management. it's hard to remember a year or two ago when there were articles talking about how tim cooke, his job's on the line. now you've had a complete shift where there's faith in the management team. you have guys going out saying this is the best product portfolio in 20 years. there's a greater confidence. when there's a greater confidence, stocks are a function of growth and risk. if there's the perception of less risk, then there's less risk the stock is going to sell off as a result afterwards. now, if they deliver terrible m products and consumers don't buy it, all those things get flipped on its head. then all the stories we heard two years ago and cooke and is he going to deliver the products, they all come back in. but for the current month, i think investors will give him a pass. >> what is the biggest risk? what particular product or what is there out there where you say right now they may not be able to deliver? >> the biggest risk is is that china is the largest operator in the world is talking about cutting subsidies. in the u.s. market which is still the most important market,

u.s. represents a third of iphone sales in the launch quarter. those are making it easier for people to upgrade to new iphones. as a result you've got a big risk in china but that offset by the opportunity that exists in the u.s. more importantly from an investor standpoint, we're already looking at double digit growth. if they can give you an inkling. adding another hundred or 200 basis points of growth reduce the risk profile that investors have in this stock and they're willing to pay a higher multiple as a result. growth and risk. if you're less fearful that we're going to have another 2013 and no one knew where maher gins were going to go. people will be willing to pay more. >> walter, thanks for coming by. you said you'd be a buyer at $88. >> i know pete's in the other cam. timmy is as well. i think we're going to find out

over the next ten days or so. i still think the way it's set up, we had this huge run-up not unlike september of 2012. the pattern is hauntingly similar. all right, people have pushed back on me the faculundamental' little bit better now. but you could see a disappointment. you could see the stock trade lower. >> i think what walter said, i would emphasize it's not about hardware anymore. it's about the smart wallet, the smartphone, the virtual wallet. these are things that did not exist before. and we're getting a bigger screen which is something i feel apple has given in on and joined the ranks of the samsung. absolutely buy the stock. i was going to buy some the other day. pick some up soon. >> you bought on the weakness the other day. >> i did. but i'm in the options and i have a spread on. i'm expecting it to get above

$105. what we have to remember is the repurchase program. if this stock starts to slip, that's the point that's in place. there's the buyers. the buyers are apple themselves. i think they would start to buy when it gets down towards one of the moving aempbls which one of them sits around 96. breaking news on the alibaba shares. expected to price near $66 a share. and tesla ceo says there's one stock that is too expensive. his own. find out what other traders say are too expensive. coming up.

moments ago alibaba disclosing the size of its ipo and it will be the biggest ever in the u.s. the company is looking to price between $60 and $66 a share. the company is expected to price on september 18th and start trading on the 19th. now, following the road show of course next week. tim, what do we do in the leadup here? >> i tell you, i think the chinese internet space is going to catch fire. it's not going to be about people raising and selling cash and knocking down a lot of these names. baidu i think will ultimately trade higher.

i think it will be higher. and what you're seeing a reaffirmation. if you look across the board i think that's going to be a big impact. people looking at yahoo!. they're saying what does this mean for the valuation. people are anywhere between $40 and $45. i'd be on the higher end. and that demands you put a higher multiple on the core business. the parts end up to $40. so i think this is a very, very big event. i think if you're looking to get expose sure to the chinese internet space, this baidu and ten cent are the ways to get it. >> let's say you're a holder of others, should you be worried those stocks are under pressure? >> people wanting to flip in? >> exactly. maybe you only want "x" exposure. >> we talk about that all the time when we get all these ipos and are people going to sell twitter to get into this? i think yahoo! is the best play of all these plays.

i know you've been on it. now it's $40. i think it has $50 written all over it. >> i know timmy's been in it. pete's been talking about it for awhile. i was surprised that it spent most of the year at 35 bucks. it didn't make any sense to me. now we're levitating towards 40. i think it's going to surprise people to move up. i hope pete's right at $50. >> they're only selling a portion of what they've got in alibaba. if that stock moves a little higher, you've got to expect to see yahoo! moves along. >> on the flip side too. >> and i think yahoo! is the story here. you need to watch the reaction to the news here. yahoo!'s had a big move recently. it's definitely set up for a sale. i would be careful going into the ipo with yahoo! that you don't get profit taking here. everybody's been waiting for this. everybody knows it's coming. if you get a selloff, then yahoo! might be a back door way to play. >> let's get unusual activity

here. delta and united continental. >> both were hitting today. delta was on the weekly option september 12th. a week from today those are going to be expiring. you're looking at the 40 calls there. large buying. then later in the day it was united airlines, ual. both aggressively bought. this is a stock that hit new highs today. well over $50 a share. both have been moving to the upsed. ual is finally playing that catch-up i expected. >> you're in both? >> i'm in both, have been for quite a while. all right. elon musk sinks his own stock. we have more after the break. ...for the year. hi. sorry.

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♪ time now for pops and drops. big movers of the day. >> this one has been a disappointment all year. i still think this a take youth. >> priceline down 2%. >> i think a company you should be buying, this was a downgrade. they're saying the competition is rising. i don't think that this is new news. i think this is a rare kind of we dominate our industry stock. take a look. >> had a seeking out article that put the stock from 107 down to 98. now you have to be really careful. >> then a big drop for gap. down 4%. >> this is one that's been on a run to the upside.

but because of the same sales being down 2%, folks wanted to take a little profit today. any further than this and it's a good way to get in. >> and sexist shark. >> what? >> a new study shows when sharks go fishing for their next meal, they prefer men. men are the victims in 80% of attacks. males are suspected to spend more time in this water. >> experts suspect that? they did a sud? are you kidding me? >> i'm not scared of sharks. hey, buddy. >> men lack the judgment to remove themselves from sharky situations. >> i've been in sharky situations. >> nice. >> pete's hair was in a sharky situation in hawaii. >> that's not g-rated. let's move on here. is tesla overvalued? take a listen to what elon musk

had to say about it in nevada. >> i do think people sometimes get carried away with our stock, honestly. and because i think our stock price is kind of high right now to be totally honest. or rather let me put is this way. if you care about the long-term tesla, i think the stock is a good price. if you think at the short-term, it's less clear. >> that statement driving tesla lower by 3% today. this isn't the first time he's made comments about stock price. last time musk cede the valuation was more than any right we deserve. is tesla too pricey and should elon musk stop talking about his stock price? >> of course. ceos shouldn't be talking about their stocks. ultimately this is a stock where i think there's so much good news priced in and now with this

that i characterized as a money pit a couple days ago, i think that's what it is. the cost of doing business are going higher, not lower. this is not a stock you should buy at these prices. >> you mentioned money pit. they need money at some point in time and they have done several secondaries over the last several years. i wouldn't be surprised based on those comments that there is some secondary in the works. >> we should also know that they have cast doubt about fourth quarter estimates, fourth quarter delivery numbers that they were depending on a ramp although third quarter looks decent. so there are a couple things out there. >> i appreciate the man's honesty. i disagree with what i'm hearing right now. >> you want to be a holder of the stock and have him come out by the day and drop the stock 4%? >> i think it's interesting this guy is in some way trying to manage expectation in some way or another. he basically laid it out to us. he says if you're looking at long-term right now i think we're priced fine. if you're looking short-term, you know what? it's not very clear. so i think that really tells us

about what he's doing right now. >> i wish phil had asked on solar city. because why not? throw them all in there. >> maybe he did and we don't have the tape or sound of that. >> oh. do you agree with elon musk? >> i'm somewhere in between timmy and pete. i like the honesty, but i don't think ceos should be talking about it. >> is it overvalued? >> i get that. in other words i think that's positive. it resonates well. but ceos talking about your stock is not what you're supposed to be doing. >> we want to find out which stocks are also too expensive. tim? >> i think it's netflix. this is a name also like tesla, i've been larging wrong on. you're buying 145 times. here's where netflix runs into some trouble. they're a victim of their own success. their ability to generate 25 emmys for orange is the new black and house of thrones and all that. for the third quarter they don't have anything that is going to

be as good. you talk about the international competition, the costs are going higher. this is a stock where all the best is priced in. >> pete? >> i look at caesar's. if you look at the chart you think it's on the low end. it is. but when you look at the amount of depth these guys have trading in 2017, they're 80 cent ossen the dollar. this is a company that's got $24 billion right now in debt. so i really have a concern. i love the properties, i love the folks over there. i stay there all the time when i'm in vegas. when i look at them as a company, they're to the downside. >> something can be expensive or overvalued and it's not necessarily the stock price and where it is. >> exactly right. >> for me it's amazon. the reason i pick this is this points out sometimes that doesn't matter. it could be ending because perception is reality. and the market has perceived

that growth has trumped value. but the january quarter and the way the company reacted. everybody started to give up on the growth story. last earnings we had the same situation. it hasn't recovered since then. october 22nd, we have another earnings report coming up. if the market starts to lose faith, then you've got to sell amazon. >> back in may, troou car ipo, the expected range wound up pricing around 10 bucks. since then the stock has been on an absolute tear. it's gone from 10 to 24.50. it's a great platform. but not to the extent that we've seen it. we have not seen it in the name. i think this got ahead of the skis. so my choice is true. tim seymour -- >> the epic battle. tbt, this is the time to buy. rates went higher this week. stay again. >> pete? >> i like the airlines. i think most of them are great. ual in front of all of them. >> pete.

>> i like starbucks. buy that one. >> guy? >> she's a pro. total pro. jordan, jah. a graduate of pennsylvania. the ceo. >> that does it for us on "fast money." don't go anywhere. some seeing a $20 billion move for apple next week. we'll break down that trade. have a great weekend. see ya. we do? i took the trash out. i know. and thank you so much for that. i think we should get a medicare supplement insurance plan. right now? [ male announcer ] whether you're new to medicare or not,

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this is options action. tonight -- >> what's going to happen? >> something wonderful. >> that's what apple investors are hoping for next week. we'll tell you why they could be in for a big disappointment. >> i'm sorry, dave. >> plus don't dance too much because europe's a mess and that could translate into a huge problem for u.s. stocks. we'll explain why and how to protect yourself. and talk about an electric shock. elon musk says tesla shares might be over-valued. so why are so many traders

betting on more gains to come? we'll explain. the action starts now. live from the nasdaq market site, i'm melissa lee. this week another record for stocks but the big mover wasn't equiti equities. it was the euro. the euro in fact having its worst week since last november. two questions now. why don't investors here at home seem to care? and could this mean trouble for u.s. stocks? let's get in the money and find out right now. it's certainly been a depressing few months in europe for investors. should we here in the united states be worry snd. >> listen, i think there's been a lot of divergence for u.s. equities. they haven't really cared for all intents and purposes we've had this underperformance of the small caps. we had the daq sell off almost 12% over the course of the summer. now it's made back a lot of that. to me the u.s. has been a safety trade. it's kind of the safest block on

a pretty messy street right now. but to the other point, you didn't even mention all the other geopolitical stuff. we have the rate cut by the ecb. it's telling us, you know, we basically have this liquidity. every region in the world until things do get better. >> i don't know that the liquidity that's going to be provided will be enough to fix the problems they have there. so we obviously -- everyone has always said don't fight the fed. but the question is can you fight ecb where european stocks are concerned? they have bigger problems than we do. they've got negative growth. they have far higher unemployment in places like spain. and there's some question for whether ecb has as much regional essentially power as the fed does domestically. and the other thing is to really fix the problem, you have to have a lot of policy and fiscal changes. it's hard for me to see that this is going to b the fix. what's more astonishing is the fact that european markets are trading at about the same multiple as u.s. ones.

but now if you take a look at equities they're trading at about the same price as the s&p. >> we're tied basically. but at this point with the currency moves, would that be a head wind for u.s. stocks and tail wind for european stocks? and tipping the favor to europe? >> no doubt about it. but the dollar, the move it's had makes exports tough here. you know what i mean? that's the flip side of this argument. you have to think about u.s. multinationals again. we've been talking about it again. they keep making new highs. but there are these underperformers like the mcdonald's that can't get out of their own way for these rneason. i'm going to take issue with what you said. i don't think you fight the fed or the ecb either. the fed got european equities where for and now picking up the baton. i don't think you have to pick a top here. >> let's go the chart master and see what he thinks. carter braxton worth.

>> the banking system is much more proento trouble there than here. and of course their basic contracts while we are not. let's see if we can put it all in perspective. long-term chart of the s&p. what i wanted to point out here is of course we know the high in 2000, the high in 2007. juxtapose that against europe. index picks up france and germany and italy and spain. it's the same proposition but not as good long-term. meaning it has a high in 2000. in 2007 it's a lower high and it hasn't gotten back. whereas you've got this circumstance, europe is not en close. and now not only is the long-term not even close, the here and now is starting to diverge. look at these charts. the europe versus the s&p on a near term base. and all of a sudden we're starting to get real divergence

now. so the long-term is underperforming. now the day-to-day is coming apart. let's drill down into the big player in europe, germany. this is an etf, the ewg which tracks the daq. so i think there's some warning and here's how we would trade this. it's broken trend for the first time in about a year. that's important. when we throw back a bit here, we would fade this throwback and i think what you're going to get -- here's our line. here's the break in trend. i think what you're going to get is about a 10% decline back into this support. so i would say be careful and consider this a place to take profits if you were long. >> that's considerable, 10% decline. >> yeah. like we were just talking about, you can't get short something like this into central bank action like what we're seeing. when you look at the german equity indices and names there.

they're international companies. and still they have tremendous exposure over there. vo i'm inclined to take advantage of the fact that generally speaking when you look at an index like this, options prices tend to be less. and we're looking to january to give us a little bit of time. i'm looking specifically at the january 29 puts. you can pay about $1.10 for those. this is one of those trades where you get a pullback you can look to take profits or look to roll a trade like this only if the market continues upwards unabated only sort of bullish move that we've seen since this was announced. >> would you spend a buck ten on this trade? >> probably not. i've done this in a name like this. even with volatility low for an index or etf on an index like ewg, you might want to look at it as a calendar.

you're not going to have this 5% down move. if you do the calendar, it helps offset some decay and the time. so to me i think you've got to be very careful with something like an ewg. because it doesn't move a whole heck of a lo t. >> that's a fair point. one thing we're not doing is buying one that expires next month or two months from now. these longer options and maybe january isn't the longest caption to find. but they won't decay on a percentage basis. >> but you could also pick up some preemup. >> one could. thread the needling. >> let's turn now to tesla. the stock slid hard today after the stock price is kind of high right now, elon musk said. they were active today with twice the average daily volume trading. what's interesting is the calls are far more active than the puts. now of course maybe the bulls have a reason to keep buying. about a year ago musk made similar comments saying the market is being generous in

valuing his stock. since then of course shares have nearly doubled. so what do you expect this time? a repeat? >> here's the thing. he's made funny comments over the last year or so and the stock is up 85% since he made that comment. i think phil lebeau last summer. and the stock is in mania. it's an amazing story. if elon musk has half what steve jobs had, he would be an amazing person in tech for years to come. it's not something that i think you have to go out and just buy every time you hear a good headline. i would make one other point. the company has been very smart. they've raised a lot of cash along the way. since their june 2010 ipo, they've done three secondaries each year. one in 2011, a secondary share offering raising cash. and then earlier this year they raised $2 billion. they know that this giga factor will chart a different course

for this company. when you hear a guy like musk make a comment like this, maybe you do take some pause. >> i would say he's being rather, you know, understated when he says the valuation is kind of high. this thing is valued at approximately a million dollars per car sold if you figure what they're going to do. versus $7500 valuation per car sold for a company like ford nap is pretty extraordinary. there's a lot of good news priced into this thing. there's a lot of future prospects and probably outside even the car industry itself that people are looking to when they take a look at this thing. >> you would have said that $50 ago. exactly. so -- and the chart has proven you wrong. i mean, chart master, carter worth. what do you see? >> i think valuation can't even be discussed here. this is in the future. let's look at the chart and see if we can figure this out. i think the most important thing is despite all the percentage gains that we might refer to one year, two years, it's made no

progress in six months. virtually unchanged since february. and so in that sense, it's not extended at all. and in principle this is a well-formed process. a nice response. backed off today from the high. and the principal i would say is filling. and then after responding to the prior top, exceeding the prior top. we like this long. >> i'm going to take the other side. the nice line from the february highs there, you know it had a failed breakout. the stock did break out and the comments caused it to fail. when you look at that chart, this is not something you want to press on a down day. i want to give this until next week. if this stock has weakness in it, it would consolidate towards that 2.65 level. i want to make another point. in the last year the stock has had two 30% selloffs from highs here. so to me if you have this sentiment shift and that's what could be happening and could be

out of the words of their ce o rks, this is probably a good shot if you get an opportunity next week to put a trade on to kind of isolate a consolidation. the trade i looked at today, down 3%. i don't like to press stocks down 3%. but i do like every once in awhile to try to use options to put a trade in my favor when the stock was 276 i looked at the december, october put calendar. that would be selling one of the september puts at $3. and buying one of the october 265 puts for $5. $5 is my max risk here. what i'm doing is use the next two weeks to get it to inch lower, consolidate -- >> there's no event here in the next month. >> one of the things, you're trying to find a way to get through. you can't get short the stock itself. it is a company that i could see doing $20 billion in revenues which is near tenfold where it is right now. that's where it's going. and that would be $4 billion.

i don't know. but i think -- i do think dan's got the right track here. >> you keep saying momentum break. these are the words of the ceo. prior to that tesla's doing just fine. >> they've done these capital raises for the last three years every year. they have to raise more for this. if they bring a deal soon, why wouldn't you bring a deal when the stock is at the all-time high. they sold it at 92 in may of 2013. why wouldn't you sell stock at 276? >> we'll see how the stock reacts. >> i suspect that last time -- >> when they sold stock in may, elon musk bought a hundred million dollars. i don't think he's going to be a buyer here. >> i don't think i would be either. >> got a questions out there, send us a tweet @optionsaction. for everything options action, check out our website. in addition to top videos and

trades, also the secrets to living a long and happy life. so lose the shrink and check out the website. it's free. here's what's coming up next. >> that's huge. >> you have no idea, paris. that's because options traders are expecting a $26 billion move for apple shares next week. and we'll give you the best play. plus talk about a bank job. >> this is too much. >> mike doubled his money in less than two weeks in bank of america. and now he's got a way to make even more. we'll explain how when options action returns. [bell rings] ♪ time and sales data. split-second stats. ♪ its so close to the options floor, you'll bust your brain-box.

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$27 billion. that's how much options traders think apple will move next week as it's expected to release its new iphone 6. a lot of traders think the stock is cheap except the one to my left and that would be mr. dan nathan. why not? >> listen, you know, let's walk through some charts here. we'll get to the most important thing at the end. as we head into this event, it's important to remember this right here, that was the much-anticipated iphone 5 launch back in 2012 when the stock was at the prior highs. what did the stock do? it ran. it had this massive run right into it. there's a huge rotation into the stock this year because of the product launches that are upon us. when you look at this, carter like you just laid out on the tesla, i'm not sure for the largest market cap in the world where you've had this into the event. okay. that being said, let's look at what's going on. you mentioned a $26 billion move priced in for next week alone. okay? look at this. this is the price of options

implied volatility. it is higher when the company reported their earnings back in july. it's treating this like a massive, massive event for the stock. okay. and here's one last thing. so we want to talk about valuation. all right? well, listen. this was that september 2012. the stock's trading at about 16 times trailing earnings on a p.e. basis. here's the thing. we know that they have a ton of cash. all right? so "x" cash, it's pretty cheap. that's a multiple right there. this is when the company wasn't buying back stock. they're buying it back now. everyone wants to quote p.e., that's fine. that's traditional. to me i want you to look at a couple different things. fiscal 2012, that's when the iphone 5 was released. this year they're expected to have $6.34 earnings. fine. sales is up 50%. gross margins, they're down five percentage points. there is pricing pressure from competitors. we get that. here's the kicker right here. net income.

all right? look at this. so the earnings look flat, the stock is back up here. the company has brought back $55 billion in the last two years. that makes this number much higher. but look what's happened here. with the gross margin decline and the net income going down. that's what you people should be looking for. if this product cycle comes and goes and all the people who bought it for, to me i think you have to keep a track on sentiment and that net income number. if all those people who bought this stock for the cycle and it's just so-so and it continues to decline, the company has to use that $165 billion to buy. they have to stick with carl icahn's plan. >> you're skeptical overall. how critical is the over-valued piece of the equation here? i think some people really take that to task. >> that 106 -- and i'm sure mike has an opinion. that $165 billion on their balance sheet should not trade at a market multiple. if you think about it. it's just cash. they may need to cash to

continue to manage earnings. if they flop on the iwatch and these service things and the iphone 6 is just an okay release, you know what? they're going to have to really invest. that cash is going to be important. 2/3 of that cash is offshore. they raise $30 billion in debt to continue to buy dividends. >> one of the biggest justifications for buying apple here and we've heard it from a lot of quarters, is we're going to see a multiple expansion. what justifies that? one is revenue growth. and the other is the key thing that dan's pointing out which is income growth. we're talking about income growth at a gross level. you can pull a creed of tricks by doing things like share repurchases. we do not expect that this year we're going to see quarter on quarter versus 2012 higher net income than we did then. although we will see marginally higher revenues. if the revenue number starts to drift off, i don't know see why the multiple would expand at all. >> how do the charts look? >> the principle is the same

here. you respond at the top. apple is responding. we think it's responding well. >> coming up next, what does a famous delicatessen and one of the world's largest banks have in common? the answer will make mike a lot of money and we'll reveal when we come back. ♪ 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.

[b♪ll rings] 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. inspiration comes in many forms. something that mike khouw learned on his winning trade on bank of america. take a look. on "options action," sometimes risking less to make more just isn't enough. sometimes we want more cash. and that's exactly the case with mike's winning trade on bank of america. mike was stumped for an idea, so he went to his favorite delicatessen for inspiration. >> yes! yes! yes! >> no, not that kind of inspiration. something more like this. >> at $18.45, do you have any

options that are cheaper? >> an option cheaper than 18 bucks and perhaps more delicious than a pastrami sandwich. then it hit him. >> those cost only about 15 cents. >> so mike bought the b of a call for 15 cents. now, at the deli, the sandwich goes for just over 18 bucks. but in the world of options, each contract controls 100 shares of stock. meaning mike's bank of america call for 15 cents actually cost $15. making it cheaper than the famous sandwich. >> i'll have what's she's having. >> before you do, keep in mind that in order for mike to make money, he needs bank of america shares to rise above $16 by more than the cost of the trade. or above $16.15 by september expiration. but it gets even better. that's because if b of a shares

rise, that call will gain value faster than the shares will. meaning more money in mike's stomach. i mean pocket. and since the time of the trade, shares for bank of america have risen about 7% making this trade a quick double. and now "options action" fans have one question. >> a wha are you saying, that they fake -- >> get your head out of the gutter, billy. all they really want to know is how mike can make more cash. before we answer that, we've got a little surprise for mike. today is mike's birthday. so we got him his pastrami sandwich. and mike you don't look a day over 80. happy birthday. >> i don't feel a day over 90. >> now what? >> we're about at the money. this is atypical because normally we would have probably gone for a longer dated option, given this more time to play out. but we're right here. my inclination is we stick with it. we didn't do this just for a sandwich. and now i've got my sandwich. so i'm pretty content.

>> how excited are you about this? >> for the pastrami i'm very excited. the stock can't really get out of its own way. had that move after the last settlement, but it's settled back in here. i'm not a huge fan. >> i don't know. i mean, it's come to life. some of the big banks, it's regional banks that have been struggling. you've got a good trade here. >> are you going to eat that? blow the candle out. happy birthday to mike khouw. coming up next, the final call from the options pits. [bell rings] ♪ time and sal split-second stats. ♪ its so close to the options floor, you'll bust your brain-box.

all on thinkorswim, from td ameritrade.

[ 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. time for the final call. carter? >> if you have any exposure to germany, reduce it. >> dan? >> tesla. love the story. love the stock. i actually want to play for consolidation in the near term. >> mike? >> i like ewg. and for the calls you still own, stay with them for the u.s. equity market.

>> our time has expired. check out the website options action.cnbc.com. we'll see you back here next friday. 5:30 p.m. eastern time. mike khouw, happy birthday. have a great weekend. >> phenomenal. my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bug market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. other people want to make friends. i'm just trying to make you money. my job is not just to entertain you, but coach you and teach you, so call me. or tweet me @jimcramer. huh? that's what i said