people first, then money, then things. now you stay safe. now you stay safe. bye-bye. this is "options actions." the gross out trade. we are talking about the shocking pimco departure. what it could mean for the market? >> how could this crazy stunt make you a crazy amount of money. go-proshares are on fire. wait until you hear how high some traders see it going by next week. you won't believe who is kicking amazon's nook. it is not tyson but a fearsome group of opponents and it could spell trouble for the online giant. the action begins right now.

live from the nasdaq market side. i'm melissa lee. what happened to all the nay sayers. we still have an extremely strong dollar and high yield bonds selling off. the mood on the street feels a lot calmer. let's get in the money and find out. mike, we want to start with you. what do you make of the action? >> a couple things going on. housing data earlier this week was certainly positive. the other thing is ultimately, equity markets still are going to have the support of a lot of liquidity fueled by central banks in other parts of the world. some of the stocks are looking relatively cheap, specially in other parts of the world. i think everybody yesterday got really panicked. we were off 2% from the all-time highs. it was more volatility. all things considered. dow moving by 150 points when it

is trading where it is. not as much volatility as you might think. >> it felt bad. >> it is the first time it has happened in a while, the first time it has happened in two months. one thing to keep in mind about the options. this was the place that actually happened once every month, not once every two months. part of it was we are just not used to it. not that the market didn't say it could happen. we are not used to it happening. 1.5% moved out on the s&p 500. it is expected once a month. we have only seen it once every two months. that was more of the shock value. go forward from today. yesterday, a couple of different headlines out there. russia potentially seizing assets. it made people nervous with lighter volume. >> next week, we are going to get some inflation data next week. we are going to get the jobs report. what you would love to see is immediate okur jobs report. >> i think it is important to

keep in mind that the s&p 500 is where investors want to be. the u.s. large cap is growing. the economy is getting better. earnings are growing. it does not mean we can't go down every once in a while. >> let's get to carter braxson. make sense of this for us. >> conviction is waning. it should come out in the s&p doing the same thing. the white line is the s&p. obviously, that's the market. look at some of these other things. all of europe, africa and the safaris. there are 1,000 stocks. it is now basically unchanged on the air.

this is high yield. same thing. this is all s&p 500 retail. there is about 110 stocks in this. this is the global auto index. almost everything is starting to stall except for this one instrument. that's influenced by a few big names. in many ways, this foreshadows breaks in the markets. since the bull market began, drawdowns in the hyg have occurred at the same time as the s&p have had a drawndown. what i see are two things here. you can draw your tops this sort of way. you can also call this a break in trend. the reality is that we are deteriorating and ultimately, this is what the s&p should do. now, here is the longer term. every high is met with a high. the last high was not a new high. the s&p has made the new high.

hyg is not. this comes out to lower prices for the s&p. here is the well-defined up trend. there is no way to argue against this. the presumption is that everything else is breaking. this too is going to break. the spies will succumb here with everything else. where do they go? here are the bull markets since march, '09. we think you drop to the middle of the channel, about a 10%, 11% decline to about 178 on the spy. >> you got a trade on the spy here. >> i do think again, longer term, the s&p 500 is where investors will be. to carter's point, that doesn't stop the shorter moves down. it doesn't stop the headlines that can derail the s&p 500. these options, while volatility may be on the lower side, we are not seeing the moves that volatility is pricing in. i'm a little hesitant to go out there and say, let's buy some

s&p 500 puts. you are not getting the moves you are paying for when you buy that option. i would much rather that spread. this is going to take some of the lack of the moves you are paying for out of the strategy. the strategy i was looking at today specifically at the spider trading up 198. i looked at the 193 put versus the 178 put. this was buying the november, 193 put and selling the november, 178 put. it costs you around $1.75. what happens here. what are we looking here? on any pullbacks, that 193 is roughly 2.5% out of the money. that starts to kick in as we have days like we have the other day. that is going to increase in value. just because investors are buying so many puts now. it is relatively high. >> i feel like you like the trade. >> what i am going to like is that you are spending relatively little to get a very effective amount of insurance.

going up to november, if a strong dollar is going to pressure the multi-national names. that's one of the things that people are speculating that's going to happen. i am not terribly bearish on the market in any case. a cheap way to ensure your portfolio without unwinding. >> do you actually believe the s&p. are you with carter on that 10% decline forecast? is this simply insurance? >> i would think this is simply insurance. >> to mike's point, i like it so i can sleep at night. i would be surprised at the end of december, we are down. i want to be involved in that. >> let's get to the next trade. go-pro shares rising 22%. they got into the fund. they are 80% more active than they were last week.

calls outnumbered puts by almost 2 to 1. many see big short-term gains here. >> a stock up 20%. where did we see activity. we were looking at weekly options that expire next friday. people were buying like the 90 strike calls. we were looking at people thinking we will have another 15% up move. this has been so volatile. almost anything is really possible. this is not based on any kind of historical performance. it is all speculation on what this could potentially mean in the future. ten times sales is where this thing is trading right now. a $10 million company. we are about half the value of netflix. if you take a look at the size of this company relative to what it is actually earning, it is pretty incredibly expensive. >> what's your trade, mike? >> simply go out to january and buy the 82.5 strike calls. you can spend $6.72. watch your limits.

as much as the stock moves around, the spreads are fairly wide. ask yourself this question. by next january, do you think this stock could be 20% higher or 20% lower? even if that's a coin toss. you are better off buying these calls than the stock. >> that's a really good point. >> one of my things with go pro, i would only use the options in this case. the options are pricing a much higher probability that we are lower by january. it is not a point to be up or down 20%. that being said, these upside moves can be dramatic. i want to participate. i don't like owning the stock. i think the options are suggesting it can be lower. i want that embedded protection that comes with that call. >> carter, is it difficult to do a technical analysis of a stock that has a very short trading history? >> naert. there is not a lot of day to to go on. pattern interpretations study

patterns and past behavior to suggest what might happen. here is all of the trading that's ever existed in go-pro. there are one or two things that are important to see. note the authority of the 50 level. the stock pops on its ipo. 50, 50, 50. very precise. then, of course, we have a breakout after two months of sideways, you get the initial pop, stall for two months and then heavy volume breakout which has set up this fairly orderly ascent. you say stay long, be long. there is nothing to doubt. there is no such thing as valuation when you are talking about a brand new issue. ride the momentum. >> this was one of the names that a lot of people look to and said, we don't like the valuation. we think this isn't necessarily a long-term success story. this is the situation where one of the things that's going to

benefit you to the up side is the fact that so many people are questioning its valuation. those people can get squeezed. when this he get squeezed, what happens? stocks go higher. >> there is a lot of competition in the market. they said they are going to have a waterproof, underwater camera coming up. polaroid has a cute thing for $99. >> one of have the things that concerns me with go-pro, again, this is why i would stress it. i like the options here. you cannot short this stock to mike's point, because so many people are trying to short it. that means you can have these pops, these short squeezes. i think those options, to mike's trade, you have to be dynamic with it. >> it is not an appeal, set it and regret it type of option. >> send us a tweet at options actions. for everything options actions there is only one place to go. we have the hottest options news. videos from throughout the week and exclusive trades. some have called it an out of body experience. i don't know any of those people. i guess it is true. you want to check it out. here is what's coming up next. ♪ it is war.

some retailers are making an unlikely run at amazon. we will tell you how to play the online giant now. what do derek jeter and whole foods have in common? a shocking coincidence that could mean money in your pocket and we'll sort of explain 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.

>> what happens when a high flier stops rising. amazon goes nowhere in the last three months. significantly lower for the year. traditional retailers are rallying. chart master, what is going on. >> it is not keeping up with retailers in general. there has been some big moves in sort of dead names of late. let's take a look. here you have big stuff. two months. 38%. family dollar, 28. landsend. kohl's, foot locker. huge moves. amazon not participating. down considerably. look at this long term chart. green is leading yellow is leading white. amazon is beating all retailers

which in turn are beating the s&p. year to date, exactly the reverse. white, s&p is beating all retailers and, in turn, is beating amazon. amazon is down 18% on the year. something is not right. we think it goes lower. take a look at the next two charts. there is a long-term chart. what you call this and it is all that it is, perfect equilibrium. after a great ascent, a stock starts to have a series of lower highs, higher lows and you work into this apex of a wedge, a triangle. it means you have come to a point where the debate is going to end. the bears either win or the bulls win. we are on the bear camp. we think this breaks the down side. here is why. here is our series of lows or high. a gap on heavy volume and then a gap on heavy volume. distribution, distribution, distribution. we see ultimately, it breaks

this trend right here. that's the wedge. we fall quite dramatically. we would not be long on amazon. if you are looking for a short sale, we think it is a good one. >> cartter had compared amazon is to a lot of other retailers. some made the case that they will eventually trade more like a walmart. that's the business they are in in terms of competing for commoditylike goods. >> if you go all the way back to the first tech bubble back to 2000 when walmart was trading close to 60 times earnings. it went sideways for an entire decade. it is probably not anybody who is watching this that doesn't believe that amazon is going to have much, much higher revenues ten years from now than they do today. they haven't demonstrated they can actually make any real margins. all of the investment in this stock has been a strategic bet that the play on growth was the way to go. you can't distinguish when people are starting to make

those betts until you see it break down. this was a name that i think in many cases in the past, i thought, hey, maybe this is it. maybe it is finally going to break down and people are going so see the light. now maybe we can see not only is that happening but it has been happening to are a while. >> i don't disagree. i would have thought it would have been more walmart like. to me, when i buy things, there are things i buy on amazon or walmart and i just don't have time to go to walmart. for me, very much the same type of company. comparing it to american eagle or one of those companies, it is a mall. you got up and you went out. a little difficult. i do consider it to be more of a walmart time. >> i am going to buy the january, 315 puts. you can pay about $16 for those. the reason i am doing that. i know in addition to possibly buying this put, i'm going to buy a lot of things on amazon. i am sure my driveway is going

to fill up with boxes when christmas comes around. >> carter, let's button up. how much do you think for amazon. 70%. you can make up a number. a reasonable drawdown from here after this kind of setup would be a break of this trend. this is the exact same level as that low. this is really your line. that's about 10% from where we are now. 10% lower on amazon. coming up next, what do yankees great, derek jeter and mike's whole food trade have in common. we'll explain when options action returns. [bell rings] ♪

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[ 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. cleanup in isle two. a clever strategy protected him from losses.

here is how. a put gives you the right to sell a stock. mike thought whole foods would serve up a dip. any stock can keep rising forever. it mike twos short he could be looking at losses. in order find his risk he bought the january 35 strike put for $2. if five use a right to sell a stock at the give price for a given price. he needs it to fall below $35 for more than the cost of the trade or below $35 by january expiration. spending $2 just to bet against whole foods, what, is this trade organic? the cut has cost him the august, 35 strike put for 80 cents and created his calendar put spread. he made it easier to make money and here is how. between the $2 he spent and the 80 cents he collected, mike has

cut his costs down to 120. he just needs shares to fall below $35 by more than $1.20 he is spending. it gets even better. you see since the shorter data put that mike sold will lose value faster than the longer data put he bought. mike can do something amazing, turn time into money. >> since he sold that put, he needs whole food shares to share above. mike's trade is looking all right. now, "options actions" biggest fan. >> i don't know if that makes sense. >> wants to know the same, exact thing. what will mike do now?

>> before we answered derek's burning questions, let's play options versus options and see why this strategy work. the january put has lost 40% of its value. since it was offset by the cost. mike offset his cost by selling the august put. the trade hasn't lost money even though whole food shares haven't gone the way he predicted. what do you do now? >> one of the important things is you can look to sell options again against these. you can look to sell the octobers against those januarys and keep that longer data position on. the story with whole foods very specifically, the reason people like to buy this stock, it turns out other grocers can get in, sell organic goods and the margins are getting compressed. those margins are declining. that secular story isn't a good one. >> what do the charts look like? >> fresh markets sprout the markets. no indications the selling pressure is over.

>> interesting, the space got some action when general mills bought bunnies. there was a thinking that all the organic companies would be in play and make acquisition and grow. >> i don't think whole foods would have been one of those situations. with mike's trade, he has this protection and ended up financing it as we went into earnings. we talked about this trade as it headed into earnings. he was taking advantage of the volatility was a little high. i am not expecting much with earnings. let me take that premium and allow myself to have this position longer term. time for the final call. ♪ 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. time for the final call. >> keep your eye on high-yield bonds. >> you have to trade spreads. >> i like to put spread on spy. an inexpensive way to head your

portfolio. >> i'm melissa lee. for more "options actions" check out the website. we are on ""fast money" every day. in the meantime, "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for the nutribullet brought to you by nutribullet llc. special tv offer. stay tuned to find out how you can get the nutribullet superfood nutrition extractor free! that's right. get the complete nutribullet system free! details just ahead. >> my muscle aches, my back aches really started to decrease significantly in one week. >> first night that i actually used the nutribullet, i actually slept really well. that was exciting. that was phenomenal. >> the bad cholesterol which was 290 went down to 190. >> be