your money and it's this. people first, then money, then things. now you stay safe. bye-bye. ♪ freak out this is "options action." tonight, ifrenzy. consumers and investors are freaking out over the new iphone. could long lines translate into long-term potential for the stock? plus, where are alibaba shares headed? we go back in time to find out. >> hot tub time machine. >> we don't have one of those, but we have a special report. tesla shares are breaking too. ♪ not quite like that, but they are selling off and we'll tell you whether it's a buying opportunity. the "action" starts right now.

live from the nasdaq markets, i'm sarah eisen in for melissa lee. these are a traders on times square. a historic day for markets. alibaba the biggest ipo of all time. and the two most active stocks today? alibaba and shareholder yahoo!. while alibaba had a huge day, yahoo! dropped 3%. record volumes in the options. what is going on here? let's get in the money. dan nathan, why the pressure on yahoo!? a little bit counter intuitive here. >> if you were in yahoo! you're late to the game. the stock's been up over 100% since 2013. it's well-known it's a way to play expanding value of alibaba over the last few years. just also mention, the stock was up 15% in the last month. heading into this event. you know, we hear talk all the time on the street, you know, traders say, buy the rumor, sell the news. that's what you got today. >> if you look at the options

action going into today, yesterday for instance, very high volumes. mostly buying calls. >> that does not surprise me very much. what we can see, also, as yahoo! rose, every bit of that increase in price that we've seen recently was attributed to the rumors where the price for alibaba would be, and as that rose, so, too, did yahoo!. i also see this as an indictment of yahoo!'s strategy in general. clearly they're not placing any kind of value on the business other than the pieces of alibaba that it owns. what's interesting is net of all of this, options in yahoo! haven't gotten more expensive. they're less expensive now than the beginning of the year which sets up for opportunities if you're inclined to make directional plays because they still own a stick in it. >> no doubt. here's the thing with yahoo!. and why it's the core business in and of itself, trading for nothing basically is that revenues declined 20% since 2008. they did $5.5 billion in sales,

then expected to do 4.4. they don't know how to grow sales. all of a sudden now they have a quarter market cap in cash, own 400 million shares. of alibaba. >> so what? throw a blackberry valuation on the residual piece of this thing. even if they have declining revenues and earnings on their own, that does not make it a zero. relative to alibaba, it looks -- >> mike, the street is voting that she's a value destroyer not creator. they'll have more and more cash over the course of this thing, they're going to keep buying back their stock. that's how they manage earnings. earnings grow at best for 2% forever here. then declining. >> some of the voting, though, is stakeholders and alibaba taking money off the table. you have holders of yahoo! selling. holders selling the stock. >> what's the upshot? what's the trade? >> i got asked this question ten times today, brian kelly said it. they want to be long, yahoo!, this is a alou baby ba in the

short-term -- >> just buy alibaba. >> you could do, but it's going to be volatile. be honest, this has a $225 billion market cap. not a lot of room for error. yahoo! is trading below core value. so what i would do is i would look out to november. i would buy a call butterfly. when the stock was 40/60 today, priced up november, 45/50, cost a dollar, buy a november 40 call for $3.22, buying at $1.45, that's $2.70 total. and buy the far wing for 50 cents. cost a dollar. that's maximum risk. what i'm trying to do here is if this stock is between 41 and 49 on november expiration, two months from now, i can make up to $4. at 45, i make 4. that's 10%. risking one to make four if i get back to the prior highs. >> the four to one pay out is interesting. pay attention to these strikes. you'll notice it's slightly in the money right now. this actually does -- you don't have to have a stock move a lot for this to pay off. but the thing i was saying

earlier is that actually in yahoo!'s case, options are not that expensive. i don't mind using single leg trades to make directional stock >> 45, why center the fly there? that was, like, the high from back in the days when maybe microsoft buys them. that looked like a great level, a lot of technical resistance. >> the other big story, apple. after months of speculation, iphone6 released to customers today. josh lipton at the apple store all day in palo alto. josh, how long were the waits and what does that say about the sales? >> well, you know, sarah, remember, tim cook called this the biggest advancement in the history of iphone. looks like a lot of consumers agree with him. today, the lines we saw at apple stores were bigger than any previous iphone launch. they were incredible from coast to coast. in new york city, thousands showed up at apple's location on fifth avenue. the line stretched at one point ten blocks. here where i am in palo alto, at

3:00 a.m. local, the fans were already here in tents, in sleeping bags. they were joined by a special guest, of course, tim cook was here shaking hands, taking selfies, and even welcoming customers into the store when it opened at 8:00 a.m. local. who were the customers in the lines? take a listen. >> i've actually been driving here every night, like, a week before launch date before these guys were here in line to see the situation. i've been going to san francisco stanford shopping center and here. >> the bigger screen surface, you know. the landscape mode. the -- just the overall, the whole product of iphone 6-plus looks amazing. >> now, of course, the next big data point for apple investors is iphone sales this weekend. some think apple could sell 10 million phones. that would be a new record. sarah, back to you. >> all right, thanks very much, josh. especially for those estimates. we'll watch for the news. so is it too late to buy big tech? let's go to our chart master,

what do the charts tell you carter worth? >> all tech, all the time, all the news of late, and it's carried the nasdaq and qqq a long way. it's time to take profits to fade it, but let's figure it out together. the first thing that's important here, the breadth in the market is poor. take a look at these statistics. there's no way around this. this is the nasdaq 100 itself year to date. look at the actual performance of the average stock, underperforming by 200 basis points. look at the median stock. this is the story of the market. it's being skewed by a few big name, apple, of course, one of them, but many others. you can do this visually another way. a classic charting technique is breath, looking at the advanced decline line. since we peaked here, the markets continued higher, and yet the breadth has not been confirming. it hasn't made a new high since

march. apple's influencing and others the nasdaq but the average stock is not participating. another way to look at breadth. not the advance decline line but the percentage of stocks above their own moving average. the nasdaq continues higher. this, too, peaked and is trailing off. less than half of all stocks are above trend as measured by the moving average. take a look at this. this is new highs, new highs in the nasdaq right now, and yet the new high list is contracting. a divergence, a problem. take a look at the new low list. this should be not up here. new lows in the nasdaq should be down here. another problem. well, let's look at the qqq itself. nice trend. nice bounce off trend. nice bounce off trend, now too far above trend. play for a sell off, play for a perspective selloff. close at 100 today, we think it will print 90, 10% decline. here's another way to look at

it. you're above trend, we think you fall back to the middle, that's about 90 on the qqq. finally, the long term chart. we are literally up against the prior peak. not quite there, but the principle is a big move to a difficult level, too far above trend, play for a correction in the qqq. >> yeah, maybe it is too late to buy tech. mike, what's your tech on the qs? >> it's interesting when you see from a fundamental standpoint the news that apple could hardly be better than it is, and yet these are the names that help the qs rise the whole nasdaq index. if these things are starting to have a hard time hitting new highs now, then what exactly is going to propel the qs higher? i think that's one of the challenges i see. i will make one quick point, though. he was just comparing it to the tech bubble top back in 2000. options markets are not suggesting we're at that stage. while i could see a pull back here, what we saw then was there was a general sense in the

marketplace we were getting to a really speculative level. alibaba, as wild an ipo as it was, the valuation isn't as high as facebook right now. i think a lot of investors are looking at this saying, we're a little concerned but not panicked. i think we can take advantage of the fact that options in the qs are relatively inexpensive, go out to january, buy -- these were close to at the money when i looked a the the january 1999, about $3, when the qs were trading 99.5, obviously closed a bit higher than that. >> alibaba is not eligible for nasdaq 100. right? because it listed on the new york stock exchange. a big part of this is that trade. are you outright? is this an outright call or are you hedging? >> well, this is one of the things, first of all, almost everybody viewing this is hedging if they put a bet like this on. i, like most people, are actually long stocks on balance. unless you're jim, chances are that you're net long stocks. this is going to be a hedge if you put this bet on -- >> think about it this way.

the probability of having a down 3% move between now and january expiration is very high. there's a good shot they are in the money at one point. i'd make one other point about carter's charge with the breadth here. listen, when you have microsoft up 25% of the year and intel up 35% of the year, companies grow sales at best at medicine angle digits. how do they get double digits, buying stocks hand over fist. if rates are going to start to go up, which they did tick up the last week or so, you may find these sorts of stocks not nearly as attractive as they were before -- >> this is going to capture the next thing out of the fed -- >> i think there's a storm brewing here. i'll tell you this. looking at cheap options in stuff like this so levered to a small group of socks performing well, that's it. >> bear in mind as dan pointed out, this is a trade you have to keep your eye on. it's probably going to end up in the money. that's the opportunity to spread, roll, take profits. >> all right. from apple options to mainstream media, it really was all over this week and today. if you got a question, tweet us

to @optionsaction. for everything options, check out the website, optionsaction.cnbc.com. here's what's next. >> we're sending you back to the future! >> because that's the best way to see where alibaba shares are going next. plus -- car trouble? >> we're out of gas. >> tesla shares have stalled out but we'll tell you why they can soon get back into gear 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.

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. we hope the next 50 years the world changed because of us. we want to be bigger than walmart, we want to be bigger -- we want to learn from walmart, they changed business the last century. and we hope 15 years later they say, this is the company like microsoft, like ibm, they changed, shaped the world. >> that was alibaba founder and chairman spelling out bold ambitions ahead of the ipo this morning on "squawk on the street." how does awe bebaba's performance stack up to previous ip os and what does that say about where the stock will go next? carter, break it down for us. >> good day, obviously up 38%. look at stats and maybe try to

put it in perspective. this is a table back ten years showing first day of trading performance so keeping in mind what you get, we got a 38% move in alibaba. what's important over time -- >> it's not even on your chart. >> right. off the charts so to speak. what's important is where you come out. notice how feeble, not a lot of ipos, but also in a bad period they don't do well. that's a very obvious thing. then in a very good year, very well. okay. keeping that in mind, let's look at something that's important also, not only one particular year, but the type of period you're in. in fact, here's 1980, 1989. take a look at the average first-day performance. that's not a very dynamic period for the economy and for the market, if you will. and now compared to the big bull phase, '98 to '98. double the number, and, of course, much better performance, and then i isolated one year, and look at the bubble year, just on its own, you have to combine the two to get the

actual figure for the decade. and, of course, that's the stellar standout, and as of late, when we had the troubles of the past decade, the number diminishes, and, again, we get back. over time, this has been the average for history. now, big names put in perspective, and what the outlier here, of course, this is first-day performance, then one year for microsoft, of course amazon. look at this. this is a test. we all know they mispriced that ipo. they kept moving up the price before the day. it would be a good number, but they blew it, and there you have the results. put baba in here and we've got plus 38%. and it makes it a real -- in line, in line, well, not as good as twitter, but the principle is fairly normal. >> it's interesting to see what happens over a year, despite the ipo pop, whether that has anything to do with it. >> that's right. actually, these are particularly good results. on a three year basis, ipos underperform the market on a

relative basis. i've picked out big, prominent names. but in aggregate, because of the first-day move, going forward stocks underperform. >> interesting, carter. dan, what are your thoughts? on buying ipos in general? >> talk about baba here, that's all anyone cares about here. to me, listen. there's a scarcity value to the name, no doubt about it, just as henry blodgett famously said before the facebook ipo, calling it muppet bait. i think buying this near $100 is muppet bait. i think it's a very, very risk asset to get involved with right now at this stage of the game. i wouldn't be doing it. so i know there's a lot of really smart hedge funds and mutual funds that bought on the deal at 68 and they keep buying, they have to, they have a longer time history line zon. horiz horizon. i think the margin for error with a $225 billion market cap is dangerous. >> i'm a skeptic, but i think in fairness to baba here, it's interesting what jack was talking about, 15-year horizon. the guy's on third base already, 75% of the size of the market

capitalization of walmart where he stands now and he's got a company trading at a multiple that's significantly cheaper than facebook. do i think you're going to get a chance to buy the stock at a better price? i do. interestingly, compared to the other names you talked about, twitter, for example, facebook, for example, i think this is a better value. >> yeah, and a lot of the guys on the floor talked about how it looked like the '90s down there. interesting discussion. up next, tough week for tesla, is it time for investors to get behind the wheel? breaking it down when "options action" returns. ♪ 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.

we're back, and a tough day for tesla, the stock down 2% after goldman sachs says the carmaker may need $6 billion to build a gigafactory. what does that mean for dan's bearish trade on the stock? have a look. on "options action," it's how we trade like true innovators. risk less so we can make more.

that's what dan tried to do with tesla, thinking shares were about to stall out. >> maybe you do just take supplies. >> just going short? >> we know better. >> we certainly do. after all, what if tesla shares double again? so to define his risk dan, instead, bought the october 265 strike put for $8. to make money, he needs tesla shares to fall below the cost of that put, below $257 by october expiration. spending $8 just to bet against tesla? >> why don't we do better? >> dan, listen to the man. to spend less, dan sold the september 265 put for $3 and created his put calendar. he did something even better. he made making money easier. >> dreamer he is, then, with the courage to elaborate and improve on the past. ♪ dream weaver >> between the $8 spent on the longer dated put and $3 he collected by selling that shorter dated put, dan cut the

cost of his trade to just $5. and now to see profits, dan just needs the stock to drop more than $5 below that strike price, or below $260 by october expiration. but it gets even better. >> that's the ding dong truth, folks. because the put that dan sold will decrease in value faster than the put that he bought that means he can do something traders of the past could only dream of. turn time into money. >> we are about to take off on the highway of tomorrow. >> but there is a tradeoff. because he sold that nearer date put, dan needs tesla shares to stay above $265 through the september expiration but below that level by the second expiration. since the time of the trade tesla has dropped too quickly, putting the trade in jeopardy of losing money. now every future thinker wants to know the same thing. what will dan do with his tesla trade now? >> so, dan, enlighten us.

>> to be frank. this was a great directional call, it was a horrible trade. to be very honest. in hindsight, i sold a call that september 265 call that expired today. you know, i sold that at 90 cents. that was a bad idea, threaded the needle too much here. sometimes it makes sense to think about what the thesis is. my thesis was almost exactly what goldman laid out today. but i really wanted to kind of just finance the trade a little bit. >> to raise capital? >> for the gigafactory. to me you've got to take this -- well, i already did take it off for a small profit. >> directionally you had this right. the problem was concern in the stock started tobrother and that affected the price of the underlying options. actually sometimes you can use that as your cue when you're trying to make a directional bet and making a bet on the short side stood up in this case. >> how does it look to you? >> technically it's intact. despite the slipping this week, it's a healthy chart by my work. >> is it healthy when you have a ceo of a company saying the shares look a little overvalued? >> well, look what happened the

last time he did this? the stock has gone up since. maybe that's the best they can do, sitting there to defend it, they protest too much. >> all right. keep an eye on tesla. up next, the "final call" from the options pits. [bell 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.

[ 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. ♪ happy birthday to you well, it was not just the iphone drawing crowds today. "options action" fans are gathering around the nasdaq to wish dan a happy birthday. >> wow. >> happy birthday, dan, tomorrow, right? >> 30 years old. >> only look 20. >> you look amazing. >> yeah, sure. >> time for the "final call." last word from the options pits, carter, you first. >> if you have qqq, reduce exposure. >> dan? >> yahoo!, i'm not a buyer of stock but look at defined risk calls. >> mike? >> puts are cheap in the qs. that's what you want to buy. >> time has expird.

i'm sarah eisen, more options action friday at 5:30 p.m. eastern time. have 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-free life, inversion is an important