. . and he may have spelled doom for one well known dow stock. plus, do you like tech? you're in luck because next week it's make or break time for apple, google, microsoft and maybe even your money. and talk about change. well, not that strange.

but the vix has been doing some funky stuff. all the traders are here in time square and it is make or make time for technology. what will it mean for the rally? an what are you expecting? >> i think the first week -- -- we've rallied out of this meeting here and things feel a little bit better. it put somewhat of a dire note on earnings here. those stocks are about $2 trillion in market cap. i do believe if we can get some sort of trend out of that, that's probably going to be

reflective of the market in the next several weeks. >> especially compared to a lot of their peers were off the charts high. the downdraft we saw in the stock was kind of telling. obviously there is some denver if you are trading at the higher end of the multiple range in your space. >> in terms of nasdaq -- >> it's not so much about their percentage in the s&p, it's about what they're going to do for sentiment. >> microsoft announcing their windows 10 this week. the direction they need to go with their products they actually are going so it's going to be very stock specific. >> the top ten holdings make up

50% of the weight of the qqq. that's more than the rest of the 90 in that index. a lot of those stocks have been doing a lot of the heavy lifting. >> you've got a trade specifically on ba ba. >> here's a company that obviously is pretty new to us. it's a publicly traded entity. they did report one-quarter in early november. i think for the most part results were good. there were a couple negatives there. there was some margin pressure. i think on that singles day back in november they did $9.3 billion in gross merchandise sale here. there's very few large cap companies that don't give

guidance. goog le is one of them. one of the things that i just wanted to look at ali ba ba. this company did a 368 million share ipo on september 18th. they have an ipo lock upcoming. the trade that i was looking at ali ba ba, option prices around february extrain station that's going to catch their earnings report next week. i want to sell an option there and i want to buy a longer dated put in march. that's going to catch that lock up. it really simply was a february, march 95 put spread. i sold one of the february 95

puts at $1. then i own that march put for that lock up. that's the event i'm playing for. >> when you have a recent ipo, typically there's a lot of volatility that comes out of that stock. that's the first thing. the other thing is you wouldn't want to short this stock even though there is that huge overhang of supply which is likely going to pressure it. the stock is not immentionly expensive. for a growth stock that's not off the charts expensive. if you were going to take a look at a -- >> speaking of charts. >> there's not a lot of trading history to interpret. no one's quite sure what it's worth, where it's headed.

this doesn't lend itself to any real analysis. >> as we go into this big slate of tech earn x you are negative. >> i will tell you. there was one cap we got, intel. the stock has done nothing. there's actually been disappointments. there's been a lot of stocks that have traded very poorly in intel. this is the reason you're looking at microsoft on monday. this is not one you want to short here. whatever reason, people like that meaty dividend deal. >> let's move on here. the oil slide just won't quit. crude fell another 2% today closing at the lowest level since 2009. >> saudi prince said $100 crude is in the rear-view mirror. >> it could be a point between

supply and demand. it's inevitable that the price may go up. but as i said i think we'll never see the price of oil again at $100. >> and our chart master says that could be bad news for one dow component. >> it's not a good look here. let's go to the charts and figure out what's coming. it's not going to be good. let me show you some correlations here. this is a three-year chart of caterpillar versus crude oil. the plunge in crude -- and while caterpillar has been weak and not commen-- the commodity crud shoots on the upside. and let's say it's over shooting

on the downside. the principle here is the caterpillar cannot with stand this kind of pressure from crude. caterpill caterpillar, crude and then reverse, i have a perfect 30% advance and a 30% decline. you have something of a triple top. you have this well defined level and the bet is that caterpillar is going to break. and a bad break here implies something along the order of 2005. we're back to 2011. sell your caterpillar if you have it. >> i think a lot of people have been making the commodity's argument that they have been bearish for some time. part of what you're seeing there

is a correlation to come out of these more generally. they have a lot of exposure to materials and mining. it's hard to figure out how this one is really going to impress us when they announce earnings on the 27th. the options aren't ridiculously expensive to play that catalyst. it's actually not implaying a move quite that big. this is a situation where we can actually take a short punter by buying some short dated options. that's exactly what i was looking to do today. earlier you could buy the february 6 puts. those would be about $2.10. that's one way you can risk a relatively amount of the stock price and make a bearish bet here. >> management has had credibility issues. >> they have been buying every share that they can get a hand on. in the last year they have done

4 billion dollar in accelerated buy-backs. that was the company aggressive buying their own stock. to me i think it's a tough press as we get closer to 80. what carter shows on that charge is massive support at 0. i'd rather take a look at deer and that's where i'd want to make the bet. >> this is like copper. copper is not doing anybody any favors either. it's just getting weaker. >> the thing i like about the deer trades also, you're contending with -- these are multinationals. caterpillar has more multinational expose year than deer does which i think favors making the bearish bet on deer rather than cap. >> one word, hot. so you want to check it out. here's what's coming up next.

>> riddle me this, riddle me that. >> why is the vix tumbling? plus, actually it's just the dollar. and you won't believe just how high some traders see it going.

have no fear, the vix and have no fear, the vix and stocks are down for the year. what does this mean? >> let's bring in brian stutland. what happened today in the vix? what could it mean for stocks? >> a lot of interesting action today. we saw puts trade three times that of the calls. february 14 put, over 230,000 contracts were purchased. certainly, vix traders betting that the stimulus will drive the vix lower. that's why we have seen the vix drop. it starts to get really interesting here. i think when the vix starts to trade below 16 in this year of 2015, i think that's an indication that the market is reaching a top. it is time to look for hedges and buy puts on your portfolio. the low range likely is 13 or

14, given all the volatility here and the oil markets and the high valuations in the stock market. i would be looking to hedge when the vix gets below 16. when you see it pop above 16, up to that 22 level, that's a time when you put cash to work and get into the stock market. this range, 13-22, is how i would be playing the vix even though you have seen this huge put buying volume. >> a lot of folks at home don't deal with volatility or want to trade the vicks. in terms of implementing the strategy, what would you choose to buy on, s&p 500 or nasdaq? >> the simplest way would be to buy. i would issue one bit of caution. it was a huge mistake to try to hedge too much when the fed was a busy buyer here in the u.s. if the ecb is going to be buying. let's remember that central banks create a put in the market all by themselves. when they are buying, you have

to be careful. i would wait for it to go well below 16 before i become an aggressive buyer. >> the multiples are going to expand. rates are going to go lower. what drives it from here z here is what happens next month. so it is going to be $60 billion this month and next month. >> it has done so. it has done so over the last five years. let's just remember. they can always ratchet it up. they have given us a backstop of how much they are going to buy. >> let's pretend i'm an investor in european stocks and i am thinking they are going to inflate stocks, assets, prices general. would you hold on to that and buy protection against those positions. >> with the vix at 17, it is a little different. last year, it would be at 12. we have a much-higher level.

today, 200,000 of the february 14 puts that were bought for 15 cents. big institution, big money. they were selling down side puts to buy upside calls. now, it is kind of interesting. >> we saw one other big trade this week. we saw big call buying in ewg. a weakening euro could be good for german multinationals. it might mean buying calls in something like ewg to make a bet without exposing yourself. >> you are still taking the tailwind of the currency. so while the tax is up 600% in ivax, it is not the games it would appear on the surface. >> in terms of positioning, ahead of a very big week of earnings, what is are you seeing out there? >> with the greek elections, we saw them reverse themselves. there is still a little bit of fear out there. earnings have to hit on all cylinders.

basically, valuations are above historical numbers. it may bleed into the stock market here. that's why i think the vix getting about he low 16 tells me, hey, let's look for some hedges. stimulus packages can suppress that. put the put in the market like mike mentioned. we need some solid earnings in the next couple of weeks. we'll see how that goes. brian, thank you so much. last word, dan? >> i would say this, really importantly. when you think about what's going on here in the u.s., at least its earnings and we had it with ups. we just talked about. i think investors are shooting first and asking questions later. the one name that was up massively is an outlier. we have seen very strong bounces after earnings. it may make sense not to buy protection. you think about stock replacement strategies to give you that long economic exposure. you are not wasting money on the down side.

>> treasure yields continue to plunge. we will give you one way when options actions returns.

you only know in a fire to get out, to escape and now ok you are outside and you are safe but what do you do now and that's where the red cross came in... . we ran out of the house just wearing our pajamas. at that point just to even have a toothbrush that i could call my own was so important... . ...you know it just makes you feel like a person again. every 8 minutes the american red cross responds to a home fire or other emergency.

you can help. please donate now. time for total recall. time for total recall. we take a look back. >> the markets are going to price lower than people think. i bought the march put spread, $2. if we get better wage inflation and ecb qe, i think bonds go lower. >> we did get ecb qe. rates continue to fall. what is the move now? >> we were talking about volatility. the morning that that was introduced, the tld was trading at 131 and today 135. that's a massive move for a bond etf. this trade is down 50 cents. i specifically look to march,

because i want some other things to play out here, jobs data and a fed meeting next week. i think you stay put here. i think the strikes are the right strikes here. i like owning this march 130 put. >> we made record lows this week in the 30 year treasury. ten years bouncing around at 1. i think it is a money flow issue, spread, blends. it is tough for u.s. rates to move higher when the rest of the world is so much below. >> we assume they can only go higher from here. don't forget, the ten year was lower than it is right now. there is room for those yields to drop further. when you keep pushing money in, that will yield the suppression. >> it just today put its head up above the top of the line and closed at 83. the implications are here to catch up.

a 10%-15%. it is a big name, a liquid name and would be aggressively long. i am looking at the 85, 90 call spread. you can spend about $1.5 for that. >> if the objective is to play for the breakout and you have gotten the breakout, the question is, do you exit or let it run? >> in principle, i would let it run. >> that's my inclination too. i don't see that this is the reason to try to go short the thing right here. the thing about our call spread is that it is now well in the money. originally, with he were risking $1.50 to make $2. take your profits, use some proceeds and buy some upside calls. >> beautiful breakout. the input was the technical setup. when you thought about this, this is a stock that underperformed the market for most of last year. >> and most restaurant stocks. >> the call was a work of art. it sounds like things are hitting on all cylinders. don't chase things on runaway

brokeout. it's just not my deal. coming up on "mad money" jim has a triple threat of exclusives. all that and much more ahead on "mad money," top of the hour. coming up next, your tweets and the final call from the options pits.

time for a tweet. time for a tweet. nathan asks us, what do you you think about a straddle for google's earnings this upcoming week? >> dan, all right, my brother, let's talk about this. they have the money straddle for next week is about $24. that's a really tough way to make a living, buying that and hoping for a 4.5% move. that's not how i want to play it. if you have a drexel bias, you look to it. if you see this back in the 200,

take profits. >> it has not been a performing stock for the past year. can you get a netflix type pop on its earnings. >> recently, it has been pretty good. >> we would stay away. >> frank asks, what makes options cheap or expensive? that's perfect for mike. >> the simple way to think about this is take a look at how far out the options are and how much that straddle and option costs you and compare it to how much that stock has moved over a comparable period of time. stocks like johnson&johnson don't move around, 7% in three months. other stocks are more volatile. that's how you figure it out. does it seem like it makes sense. other more complicated ways to think about t we are not going to bother with that. >> final call. >> if you have some caterpillar, one has reason to be cautious and careful. do something. get out. >> mike? >> you take advantage of cheap options prices and maybe buy calls on ewg on the easy bi.

the ali baba put calendar could be cheap protection against long stock. >> our time has expired. i'm melissa lee. we'll see you back here next friday. for more options action. in the meantime, "mad money" starts now. >> announcer: think you don't have time to work out? >> my commute is almost two hours a day. >> well, i have two kids, husband, dog. >> i'm working 12 to 14 hours a day. >> 45 minutes is what you need to successfully burn fat and lose weight. >> announcer: now all you need is 25 minutes. >> 25 minutes? it's like before i blink, it's over. 2 1/2 minutes left. >> you're dripping in sweat. >> five minutes into it, i'm already sweating. >> it's brilliant. it's only 25 minutes a day. >> stay in there! you got it! >> i lost 38 pounds and 33 1/2 inches.