tonight, a week after stocks tank, they're back to where they were before. confused, relaxed. we have a strategy to make you money whether stocks go up, down, or nowhere at all. plus, growing pains. stocks surge high, netflix and amazon have been left in a dust. are they set to rally? >> up from the 36 chambers. >> is this man keeping shares of cisco down? we tell you why a new face can revive an old tech name. the action starts right now.

melissa lee. we've got michael and dan on our theme on exploration friday. what the heck just happened? one week ago, the world was ending and now stocks are back to all-time highs. the question is who is making money in the market and what's your best strategy. let's get into money and it seems like a tough money to shore up. >> it is, but when you think about the set-up into the meeting, this was a domestic thing. everything causing the voltyty in our market was off the shore. the set-up was treacherous. in the meeting when you think about what the fed just said, they've done what they've been doing the last few years, talk risk assets higher and the exploes we saw has to do with a performance by a lot of professional money managers. they try to mark the books. there's no scheduled events. crude apparently put in a little bit of a bottom, intermediate term bottom and just rip. >> looks like we'll just drift

to the end of the year. >> that's probably the case. performance chase, a lot of people i know were not setting up to try to chase stocks into the end of the year. if you tried to talk to people in the beginning of the year, i try to give up basis points by reducing personal net longs and that was not the right move at all. you know, and the other thing i would say is the viks. let's pay attention to what the viks said last week, the world coming to an end. it's the first time to set it up and then this time, it was totally wrong basically. >> let's talk about the moves in particular. energy, for instance. it's up sharply from lows, earlier this week, 52 week lows. >> listen, they've got oversold and people have not been able to put their finger on where the commodity stocks going down. what are the value of the equities they hold relative to the commodity? that's a smart person's game. i'm not smart enough to do it. when you see the vol atilitvola even in crude, this is not great

volatility. the range after a 50% drop over five months. to me, i think you actually have been very careful with energy stocks right here. >> we saw energy moves, materials move and then also the higher areas like technology when we saw the markets rip, they ripped even more. >> i think that's probably because that was the only thing people figured if you were going to try to get high data, you could do. you basically called it wrong, want to get leverage when it swings the other way and that's the place to go. as far as energy is concerned, it's interesting because obviously, a lot of the equities have been very hard hit but some of the fixed income side may not have been hit hard enough yet. i mean, i think we've seen the rik counts drop. we see a lot of things that the energy space is starting to contract but i don't know if it's contracted enough. if crude doesn't rally enough from here, that's not a spot with any earnings at all. >> let's go to you.

technically, it seems sort of insane to think we're down so sharply and then erased all the month's losses. >> almost a perpetual motion machine. how hard it's been to outperform the market for active managers. these are the statistics that are the reasons why. here are two of the broadest in the world, nasdaq composite, the russell 3,000 and s&p. the difference is what's so telling. as that composite and the average stock in that index up 1.3. that's very hard for an active manager to keep up with the bench when the portfolio to choose from individually is not keeping up. it's a function of super names. it's really provided the backdrop for the problem of active management this year. in terms of the perpetual motion machine. it's uninterrupted and again, a dip in a day-to-day what to

expect is this, when you do dip. let's look at all the dips in the last two years. you dip from a high, when you get back, you stall a little bit. you dip from a high, you stall a little bit. you dip, you stall. you dip, you stall. we're back to a little bit of a prior high. at a minimum, you should stall and or give back more. but not truly break out in a big kind of way, at least when you first approach. >> that's different. >> keying off the nasdaq stats. that is why i want to look at the qv. it's more pronounced in the 100 group because it's much more heavily weighted to the top five names. i think top five names, apple included, make up almost 40% of the entire index. i think, to me, there's a good chance of a strong market coming back to ruse in q1 and selling a dull market, i want to sell premium on a short day-to-day

basis but by longer data premium to catch what i think is going to be a q1 meltdown. i think it's a correction at some point between now and february. today when the qqq was 104.40, i bought the december 31st quarterly. it expires on the last day of the year, february, 101 quick spread. i paid 1.40 for that. i sold for the spread and paid 170 and sold the december 31st at 25 cents. that's the max risk. what i'd like to do is if the index moved slightly lower, that's my ideal scenario. have the short put rolloff and then a lot of options. two months left almost until february expiration. i own the february 101 and then i basically have my event trade on. >> options traders are natural conce skepti skeptics. they bid up. a lot of places including on wm,

names like mcdonald's. we saw there's a curve for prices near dated options, more expensive. that's unusual in any circumstance, but particular unusual when you're going into a holiday period, stocks usually trade up into the end of the year. you have a lot of days off and then there's not much activity. so these type of trades can make particularly good sense this year because actually with the vix at 6.5, it could be lower with the market right here and this wild week kept prices barely elevated. i think these type of trades make sense. >> one more point, i do this on a directional basis. if you own a lot of these stocks, it's a way to finance the purchase 1% of the underlying stocks. a huge week for stocks, names like gopro and amazon fell. shunning growth in what names look particularly vulnerable at this point. let's get back to carter. what do you think? >> some of these high flying

growth names stalled down on the year and it portends worse to come. priceline, big uptrend, break in trend. tesla, big uptrend, break in trend. let's talk about netflix. here's the trend. just like the others, clear break in trend. thst how it starts. you can draw the lines this way, a head and shoulders top. a bit of a neckline. put it all together, yuf got a break in trend, head and shoulders top. the neckline. here's the important thing. these gaps, that's a quarterly beep, that's a quarterly beep, that's a quarterly beat. your first quarter mess-up. subscriber growth, unacceptable. kills the stock. the presumption is to break these lows and break these lows hard. short 340 last and think it goes to 290, 15% lower. >> cop vinsing charts, mike.

how do you break lower in netflix? >> we were just talking about the fact in some of the things breaking down and also the market getting a little bit more volatile options, prices ticked up, i don't think the way to play this, don't short the stock and don't just simply go outright buy options because there's more expensive. to keep it simple, going to march and buy the 3275, and about $7.50 for the 275 and the distance between the strikes. that's the kind of risk reward relationship we like and it's not going to decay that. gives a little time to play out. trading 57 times earnings. content costs are high. marco polo, not the efforts their block busters have been. >> marco polo. not happening. >> i'm not. but others are. >> the charts are what they are. the thing looks horrible but in

this market, it's been a travesty to press stocks with high short interest, beta names where there's tape bombs left and right. you remember when the stock was down on the gap and mark cuban thinks it's that and ten 10%. i don't think you want to press a stock like this down so much in a short period of time. i will tell you this though, if you get a move back up to the down trend, that's where you lay into it and you may want to do it closer to the q4 earnings. i don't know if you have to rush out and do it now. >> here's one of the things. at six bucks, that's what you pay, risking less than 2% to make a bet out for a quarter. i don't think that's a bad risk reward relationship, and this would be the way to do it. people who decide to get short. >> get ripped off. got a question, send a tweet. tweet @optionsactions and optionsactions.cnbc.com and exclusive trade and now ground

breaking tutorials starring mikeko. check it out. >> there in the dow, dmx why this classic theory could make you money in 2015. plus. >> something john chaim bers has been no friend of the stock. we explain what the company needs to do when options actions returns.

is there a problem at cisco? the networking company had a nice year but it's still underperforming similar old tech names like hp and microsoft.

dan nathan there and breaking it down. >> it was oracle's results that got me thinking. up 10% after the better than expected results and if you look over here at the chart, i mean, the stock basically, this is a 15 year chart, a few percent away now from the all-time highs made in the internet bubble in 2000. it got me thinking about the other times at the guy, the horse men, microsoft and cisco, the largest market cap company in the world in 1999 or 2000. so cisco, to me, it's been a big lagger. and now up a lot, 23% this year. and that sounds great but 100% off the 2009 lows. the s&p 500, 200%. when you think about it, some of it is peers. it's a monster year but getting back up and then the other is intel. up 40% this year. one of the things that's interesting is well off the 2000

highs but all three companies i just mentioned, oracle the ceo, larry elson just replaced himself with two other people. just there as the chairman and then had intel, had a new ceo a year ago and then obviously, microsoft stepped down and dell has taken over. new blood telling new stories and the stocks have been working. that brings me to cisco, okay? here, this thing is really a disaster for all intents and purposes if you look back over the past ten years in a tight range. i want to say this. the three prior names i talked about, they all traded about a market multiple about 15 or 16 times next year's earnings. cisco, 13 times. why is that? the story is not told correctly. when you think about that, this looks like a coiled spring to me. if there was ever a reason for investors to get back in here and buy this stock, i think you could have this thing up at 40 in a heartbeat. so here's the thing. i don't know what john chambers is doing or not doing. the quarter they reported was

better than expected but seems like somebody else needs to tell the story. somebody else needs to do a new restructuring and get this going. if that happens, this could be a moon shot. >> there's two things here. i want to handle the technicals because he was pointing, do you see in the same charts? >> there's a lot of tension with a great run-up, a great collapse, the bull bear and then the same set-up. the presumption is that these value stocks, that's what they are, the gross stocks we just saw all rolling over. a better bet here than the high flyers rolling. >> we've seen a long period of underperformance for cisco. this year hasn't been that bad. does that alleviate the pressure to make it less likely to move forward if they didn't do that? >> you're highlighting one of the things of the stocks into the end of the year. big growth stories. this has not been a top line

growth story. that said, this is a stock that has real potential because they're carrying more than $30 billion in net cash and not only is it cheap but they have ammunition if they decide to get really aggressive and try to get the money back to shareholders. that's promising. the other thing is that we are actually looking now at a potential year on year revenue increase. when i look at this thing, i'm with dan on this. it's hard to figure out why it would trade much lower but a lot of potential to go higher. this is trading right now less than a quarter of its peak value in the tech bubble and 2.5 times the revenue they did then. this is a situation where a company that once was ludicrously expensive is actually right now looking ludicrously cheap. >> let's just say mike highlighted a bunch of improving fundamentals for the company. no ceo change, would you say it's higher based on the business? >> it could work. really, analysts right now are expecting 3% earnings and sales growth next year. if you saw a material bump to that, you could get a rerating

of the stock. we saw in oracle that's gone from 13 times to 15 times. here's the one thing i'll say. the action here. if you don't want a buy a stock with the highs, this is the options market. i was looking in cisco at the july 30 calls. there's about 70 cents. the jan '16, 30 calls. about $1.20. on the percentage of the underline, that's a good place. when you think about it, the green line all the way back to basically 2000, that's $30. to me, if you wanted to find your risk and basically make a con trarn longer term bet, this is one way to do it. >> coming up next, are dow underperformers like g.e. and boeing your best bet for next year a classic wall street to make you money in 2015. we'll explain why when we come back.

boeing. let's take a listen. >> we think again we'll make a run for the january high up 10%. we think it's a real good bet relative to the s&p and think it's a real good bet absolute. >> what i'm looking at are the may 35 calls and you can buy that for a quarter. >> carter, do you like it? >> there's three ways. a price stock, gets you too much. a time stock, it's too much. and then harvest it for gains. this is just a few weeks old, not much happened. like it still, stay. >> this is a situation to take the next trending day at 545 and traded up to $7 in two days.

i thought it was interesting to get down to the 120 level which i'll defer to the chart on whether there's support there but actually some things you could do in this. when they rally, sell some calls and keep your bullish bet on. if you come back down to the 120 level and get the ball pop like we did, trade it close to five bucks and now you're in the trade premiumwise at least and buy the stock at a discount. that's a way to play it on the long side. >> a couple of weeks ago, dan bet on a different dow component, general electric. >> g.e., simply, i think you look out to the new year changing, look out to the first quarter, their q4 earnings report which is on january 23rd. you could buy the february 26 calls for 65 cents. >> g.e. shares have fallen a bit since, dan, do you hang on to this? >> i closed them yesterday, actually. the stock went from 26 straight

to 24. one of the catalysts, the stock did not react well to the guidance. to me, i got half the premium i paid. that's like a stop limit. i cut it right now with the stock closed at $25.62. worth for a 10 cents loss but i don't think this has it. i took a trade and i was wrong, i'm out. i don't have the same conviction i did two weeks ago. >> let's talk about the theory. the dogs of the dow theory. going into 2015. carter, does it have a technical basis? >> it's not so much. it's a sentiment basis, people said these are so bummed out. let's take the road less traveled. it's a spotty record. there's periods where the dow has more consistently several years a row and then flat for several years in a row. so you take a chance with this kind of thing. buying in principal is wrong, you get what you pay for in life. >> are there any dogs in the dow that you would take a look at at this point?

>> one of the reasons that someone who looks at things from a fundamental standpoint would like the dogs and the dows because you get to buy some value, right? >> sure. >> some of the values we talk about look like reasonable value. i think boeing is a reasonable value. that's not a dogs at the dow but not one of the stocks. g.e. is one of the situations that demonstrates if it's a stock picker's market, it's hard to pick the right ones but value bets, probably a good trade. >> the dow acted poorly with bad headlines like mcdonald's but we've seen call activity, like fast and options action segment and rumors like bill acman will get in. it acted poorly, good yield and brand. >> the dog you would like. >> maybe the potential catalyst. we don't trade off rumors. >> somebody big is getting in there. >> coming up, kramer dies

amid the sony shock wave. and plus, could eharmony fall in love with wall street and the people behind your paychecks? coming up, final call from the action.

good time for a treat. sean asks spots about doing a vertical on gld as the gold volatility has come in. >>| i think that's the way to do it. i think gold next year, gld add 115. probably trades 100 before 130. with options define your risk. after march if you're listening, the 115, at the money 125 call spread cost you about three bucks, a third with this spread. >> final call, last options with carter. >> province and netflix, good the last four or five years. >> danny? >> a lot of stocks, look to leg into some protection, february

qqq. >> mike? >> in your stocking. >> i'm melissa lee, for more option action, check out the web site. in the meantime, don't go i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. >> hey, i'm cramer! welcome to mad money. welcome to cramerica. may job is to educate and teach you so call me or tweet me. this market has some engine to it, doesn't it? think about it. after running off about 4% in a straight line, you'd think we'd have some profit takes r takers

co