now you stay safe. bye-bye. now you stay safe. . welcome to the nasdaq market site. we are continuing the kompl of this week's sell-off. the dow having the worst week since 2011. the culculprit, oil. what parts of the market are most vulnerables. so what did you make of the action here? >> one of the things i think is most interesting is what you just highlights, which is the move and the vix. at that time the s&p was off

7.5%. here we're off 3.5%. what often happens is it's a knee jerk reaction. the market falls, then people start buying insurance. not this time. they're trying to get ahead of this because i think it feels a little bit different than people. >> finally we're seeing the volu volu volatility volatility. the s&p 500 is also a safe haven asset. we've seen this move into bonds. it's almost back at two percent. obviously people looking for security but all these other asset classes has to come home

to roost. when i think about the vix rallying 70% in one week, i think it tells you people aren't ready to set their stocks, but they are ready to sell their protection. after that, we could get some calm into the holiday season. >> so there could be an oasis in terms of -- >> i think people are feeling pretty edgy. i think one thing that will happen is this is an interesting situation because when you start seeing energy stocks getting old off this much, this is the benefit to the consumer of lower gas prices. the byproduct of that for people who are trading stocks, it could become more of a stock-pickers market. in general, the market is going to have to trade lower.

>> the materials sector is down more than two percent. and then within energy i'm just wondering because i'm sure people at home are thinking could this be a buying opportunity. we've heard time and time again that the equities move faster than the commodities. >> maybe what we're seeing in commodities and the particular in oil, we're seeing the unwinding of a fed bubble here. we know they're considering language that would move toward rate hikes sooner than expected. what i'm really focuses on right now is where does this go from here. we know we've seen this in a high yield narcotic. where does it go next? are we going to see some defaults, some sovereign defaults, these countries that are very leveraged to credit prices. it leads to me to financials in a way. because really if you think

about every mess that the world has been in from an economic standpoint, banks have been right at the center of it. >> what's your trade. >> obviously a lot of our banks are not that leveraged adds some in emerging markets, brazil for instance. it's going to be very bad for them. ed the in the xlf i looked out to february when the etf was 2040. i paid 55 cent frs that. that is my max risks. i sold one for ten sents. i can make up to 2.45. that's a pretty wide range to the downside. i'm really trying to target that october le that ow that we justn the xlf. i don't think con ttagion.

>> like xlf, there probably is a little bit of a floor in there and that actually makes selling the downside to help finance it a little bit more sensible. i don't think there's any reason for people to try to reach out and think that energy price versus somehow bottomed hout here. i absolutely don't think so. hedging still makes a lot of sense. >> in the your stocks bank index got clobbered this week and it's down on the year. when you look at it it's approaching the 52 week lows. i think there's a lot of people hiding in there. these options have actually increased in price pretty dramatically. this is one reason you want to do a spread and you want to do it appropriately.

>> let's turn to the charts now and check in with carter braxton worth. carter, you think it's about to get worse. what are you looking at. >> the big subject is what is going on globally. you're starting to get energy dependant areaareas. when emerging markets were still going high ner 2007-2008 and -- don't were ri about the u.s. things will be pull bid the growth ne merging markets. now it's the reverse. we never decouple. let's look at these facts. three things. u.s. equities quite clearly -- equities as an asset glass globally. this is 9 800 companies -- it's basically a dud.

here's all equities in the u.s. this is the real story meaning this middle line here is only unchangd because the u.s. is influencing it. you take the u.s. out and that's the real fact. global equities are not performing. here's the visual. s&p, all world equities and the only reason this line is here and not here is because the u.s. is influencing and bringing this up. basically no progress. now, take a look since the last bull market in october 2007. u.s. equities are up 33% from their prior peak. equities as an asset class and exwe canities without the country u.s. are down 30%. this is a disaster, yeah? nothing short of it. there's the visual and let's go to the trade.

the presumption is the u.s. is on borrowed time and it will go the way of the rest of the wonderful. i do not draw the lines. i didn't make this fit. the lines draw themselves. it balances perfectly. guess where we're fade right now right off the top . that em plies about % here short the spy. >> the s&p is trading about 17% earnings that's about a turn and a half richer. the only reason you assign higher multiples to stocks is you think there's going to be growth. you don't think that. at the very least you would expect that the multiple would at least revert back to the main. that's about an eight and half percent decline from where the s&p traded today. it's not a big stretch to think that we could see it fall another 8 and a half percent here. >> what's your trade.

>> i'm looking to the march quarterly. 2185 put spread. sell the 185 against it for 3.40. that's about one-quarter of the distance between the strikes. that also happens to be the long-term mean in terms of multiples. >> you had said before that after the fed meeting you think that we could rally to your end. how does that thesis fit within mike's? >> as a strategy pressing a down four or five percent move in the s&p over the last few years has not been a good trade. pressing the lows on the short side. so you really want to try to catch it on a bounce. i'm going to tell you when you think about where yields are right now, something's brewing people. 200-185 in the spy, that may be conservative. you may want to look out longer

and you may want to wind it out a bit. in the last two years we've had two peak to trough declines in equities. >> if you own stocks and you're averaging a dividend yield in your portfolio that's approximately the same as the s&p from now you're going to collect about two bucks. you're not really making a big risk here to give yourself some insurance. >> carter, back to you in terms of the bottom of the channel. does that look like a pretty decent support. >> that's just it. that's the best case scenario, right, that you vacillate within an ascending or descending channel. if you were to look at the channel for europe, we long ago are breaking below. there's every chance that we go well below the bottom of the channel. >> check out the website

optionaction.cnbc.com. what's more painful than this? possibly owning apple shares into christmas. look at the vix because you won't believe how high traders see it going by next month. we'll tell you how to protect yourself.

. stocks are dropping. fear is surging. what did you see this week? . it's really interesting. we saw about three times the average daily call volume in the vix. we ought to take a look at the last year in the s&p for a bit of historical perspective. around april we saw about a 4% dechain. then this july another 4% decline. great time to buy it. we saw a spike on that first big decline that we had, about 5.5%. the last time we saw the vix getting above 20 was right here,

7.5% decline. we're getting pretty close to that right now. what we see is the vix spikes when the market goes down. the vix is actually leading the way that time. and this time what we actually saw was a purchase of about 100,000 january 20, 30 call spreads. that's suggesting that the vix could get as high as 30. and what the does that suggest about the s&p? bam could be down 30 or more by january expirations. this time they're not waiting around to see the nec thing happen. >> the volatility can go higher. that means on a daily basis the markets -- >> we just talked about a put spread and we're talking about vix call spreads here. i think about the vix more as a tail hedge than anything else. you could use a tail hedge as

portfolio hedge. this is really under the worst case scenarios. in the spy heads you're doing it under a portfolio that is correlated and you're getting some protection on the stock. they're really difficult because of the asymmetric nature of them. to the upside it's really hard to choose your strikes in that regard. >> in client meetings the complacency is very high. i think this can get out of control. >> let's take a look at some of the asymmetry that dan was talking about. they paid $1.60 for the spread. you're getting a lot more leverage even than the put spread. they're expecting something to happen a lot harder and faster than we're suggesting even you put on your own portfolio. >> i'm wonding whether there are

certain sectors where we're not seeing as much complacency. >> when you look out six to ten months, it's still only about 20. here we are in the spt above that. it speaks to a level of x-ray sev -- complacency. i i think staples would become very expensive too. i think the whole market is laden with complacency. >> my own piece this week made the case for overweight financials. we like financials on the long side. the place that's most x-ray sent is the traditional safety trade. staples are very steep. we kind of like utilities to some extent, financials. >> here's two utilities for you. at&t and verizon.

>> their businesses are under extreme pressure. >> if you don't want the dollar exposures the a utility for all intents and purposes. >> coming up next l it be a blue christmas for apple shareholders. we needed 30 new hires for our call center.

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have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2. . this tough week for the market apple was down almost 5%. take a look. >> on options action it's how we trade like computer geniuses, riskless less so we could make. >> i think it makes sense when you think about it to add a little protection. >> selling the stock and giving up on all the potential upside. >> get out. >> $2.20. now dan is protected if apple shares fall below that $110

strike price by more than the amount he's spending or 107.80. below that level it doesn't matter how much apple falls because that value will rise in value as the stock falls offsetting potential losses on the stock. >> everybody getting this so far? >> keep in mind there is a trade-off and by buying that put dan is giving up on $2 a share if apple rises further. he needs it to rise above 116.20 to see a profit. with the holidays just around the corner apple fanatics all the have the same question. what will dan do with his trade now? well, now this put is worth nearly double what it cost last month? dan, do you keep holding onto it. >> i think you do, to help you

hold onto something you're very convicted in. at the time implied volatility was -- that's giving you an opportunity to spread these puts. i'd be surprised to see this thing below 100 just on its fundamental news between now and january. their q 1 earnings are going to be probably on january 23rd. i think you sell the january 100 put for a dollar. now you have a $10 wide put spread. >> how does apple look on the charts? >> there's an unfilled gap and that would be a natural target on the way down. a well-defined level of support. >> one quick point for anybody who did put some insurance on it, it's really easy to try to take prompts on your hedges when

they teurn green. i think you give yourself a little bit of time for your hedges to play out here. let your winners run a little bit and this time hedges are winning. >> it doesn't capture earnings. so at that point do you change the trade? >> i'm actually a little bit worried about the first half of the year for apple. >> theoretically it should be an air pocket in which apple stocks should l-- >> i think you're going to see a huge uptake in this past quarter and the quart their they guide to. i don't think on average the stock has gained 30% a year. i don't think you're going to get that -- >> get a better understanding of

where the market is heading. plus, jim is talking to the man who people are calling uber for handy men.

. we've got time for a tweet. thomas rice asks airlines were down before anything else. every time oil went lower, airlines went higher. and the correlation seems to be breaking down. >> at least one airline, that's southwest hedges. they're going to have to take off the fact that they locked in crude prices right before they plum meted. i don't know why you would reach out and grab these things when they're basically trading at all time highs. >> everyone is in graemt that

airlines are good and getting better, that nothing can stop this fuel and it's all about half their costs declining rapidly. sell. >> some people are concerned if they're saving too much, then they'll start spending too much. >> this is an industry that's figured out how to screw up every good thing that's happened over the last years. >> fair trade, short the spy, long the xlc. >> that's what markets a market. i actually think just the fear of contagion. >> one of the things about the financials is they're actually not the expensive here. but the s&p is expensive at 17.5 times. i actually think you want to play with put spread on the spc.

>> we're on every day during fast money. see you back here next friday. mad money with jim kramer starts right now. paid advertisement for dr-ho's physio belt, brought to you by dr-ho's. >> hi. i'm john cremeans. welcome to our show, "living without back pain." do you suffer with back pain, hip pain, or shooting pain that runs down your legs? well, stay tuned and discover how others just like you have found the new way to relieve their back pain. >> it's really funny. i just put the belt on. i've had it on for about a minute, and already, there is a reduction in pain that i have in a particular spot on my back. it's weird. i didn't think it would work so fast. >> the belt allowed me to walk for the first time in a year without a cane.