we are live at the nasdaq on a brutal friday for stocks. these guys are ready to give you their best news. first, here is what is coming up. investors are starting to freak out about the market. we will tell you why that could be your flashing sign to buy. plus, is green mountain about to get roasted? >> naught coffee down. >> a shocking chart spells big trouble for the coffee maker. we have a way for you to cash in. and alibaba shares got crushed this week and some traders say it will be worse for the chinese internet giant. options action.

question don't what does it mean for the market and who is next to fall. let's get in the money and find out. these are major moves. >> let's forget caterpillar. those guys nailed that one. microsoft and proctor and gamble. two stocks widely perceived to be defensive, cheap, have really good yields. when you look at that sort of decline, i think it has to raise antennas. you can come back and say apple was up. google was up. google is also down 20% over the last year. i think apple is an outliar. you want to think about the crowded trades, why you own them and the yield that you are expecting. >> certainly one of the things we have seen with these yield stocks is the fact that a lot of people thought they were a safe place to hang out. maybe not so much. but as yields continue to drop,

it is hard to figure out why the valuation of the stocks would be so unreasonable. there should be a relationship between the two. that is the only observation. bonds are way overpriced or stocks are still amazingly underpriced. >> and the classic long only move on the board, if and as there is trouble for the general market you move to health care and utilities. but it is almost a check mate. there is no way to go if you want to get out but stay in. >> what did you make of the late day sell-off today? >> the s&p has been on a perfect uptrend for two years now. we have ascended at a 45 degree anxiety and he will found seven out of eight times, we are hovering on a well defined trend line and the smoothing mechanism.

automated trend line. the presumption is that we are go to break. we can't keep this perfection up. it is too long already. >> you will look at names that had perhaps done well. >> yeah. that is generally not a great strategy. kind of pick on the stocks that outperformed for a good reason. but disney is reporting next week. the implied move is about 3%. the stock generally doesn't move a heck of a lot. but i will tell you this about disney. it is a crowded trade and much-loved name it. does haven't a tremendous yield. below 2%. it is trading at about 21 times 2015 earnings. they are only supposed to grow about 8%. that is kind of expensive. here is the thing about disney. they do not have the dollar headwinds that some of the others we listed like proctor and microsoft talked about. it is a fairly do midwest

indicated company. this super cycle they have between marvel and lucas films and pixar. this is a long-term trade. when they reported in november, there was disappointing results out of the media. that is espn and advertising. i think we see a continuation of that. i want to look at a short-term trade. if it went back to october lows, i would be in the lower or middle 80s. given the market we are in. options look cheap to me. when the stock was 92. i bought 92 half and 87 half for $1.50. that is my max risk. i sold one at the fed at 60 cents. i can make 350 between 97 .50. look at how quickly the stock dropped in the afternoon today. this is the set up they think the stocks need a reset.

disney can have it next week. >> you think it could see low 80s? >> that seems aggressive. if a stock is in a perfect uptrend, the only way a good thing can end is that it gets too hot or starts to go skplimp roll over. this has done neither it. hasn't gotten expensive or shown you that it is in trouble. the burden of proof is on the bearer. >> the other thing i would quickly point out is that the s&p is expensive to its historical multiple but disney is not. double digit eps growth going on a decade with only one down year. that was 2008. this is definitely a well managed business. they have really strong, robust underlying businesses like espn. >> you just said they had a double digit earnings growth. it is supposed to decelerate in 2015. >> as you pointed out.

i have two daughters. this was a frozen super cycle. they are going up against tough comparisons. this is the time to do it. you have the stock come in. >> the last observation i will make, options have not gone up as much as you would think going into earnings for this and other names. it is actually a reasonable bet to make in terms of price. >> talk about overcaffeinated. green mountain falling 4%. investors could see more pain when it reports next week, at least according to our chart master. carter, what did you see? >> it is not acting right. this is starting to roll and go limp. let's see if we can figure it out together. i have several charts here and i think tell make some sense. first the good before the bad. notice there is a gap here in november. december. february. 13 weeks later, again.

13 weeks later, again. in june. again. and the last gap was also a quarterly beep but the stock did not go up, it went down. that is ominous. the share price did not react. keep the same chart and draw the trend line. we have bounced off trend and now by all accounts we have broken trend. that is an issue. it has a little bit of this rolling over look. here is the long-term uptrend. when the talk was at an epic low, we have gone up tenfold from $17 to $160 and have broken this trend. the long-term chart since the ipo. came to life in 1993. we get overdone. this trend, overdone. and you get a little overdone. risk-reward is not favorable. >> all right.

bearish. >> this stock is pretty expensive. trading about 28 times its 12-month earnings making it 30% more expensive than disney who is expected to have higher year on year eps growth than green mountain. this is not a very diversified business. we need to have that proof for their new technology. they lost the patents. now we have to worry about this. i think it is interesting. investors really chased this every time. this thing really moves on earnings. over the last three years of data, after three weeks the stock moved 25% on average. and 10 of the last 12 times, that was higher. the interesting thing, options markets are only implying a move of about 8%. that will set us up to make this bearish bet without spending too much. i am looking at the april 115. and in this case you can spend

$5.70 for the 115s and sell the 100s. you will spend about $3.85 and given the kinds of moves this thing has had, if it moves up, you haven't risked that much. if it moves down there is a highly likely that tell move through. >> would you spend 385 on this trade? >> probably not. this is a company i really don't understand. i thought the product was really crappy. that being said coke is now a large shareholder in this thing. the lower they go, the more they end up buying. from a trade set up it looks oversold. i am not one to press oversold situations in a gappy market. if you think the stock is go to 100 on a disappointing report. this is how to do it.

>> i think the involvement is the reason the prices set up for how it does. it really does move sharply. trading at a high multiple. if there are any signs or cracks in their story i think they might take a breather and let for it to come to them. >> got a question? extend in a tweet. there is only one place to go, silly rabbit. how is that for a tease? here is what is coming up next. >> does a high vix mean it is time to buy stocks? strange but true and we have the incredible stats to prove it. and baba shares got slammed this week. we will explain when "options action" returns.

just like that the fear is back. the vix closing above its long-term average of 20. in the past this represented a good buy. what do you see? what has the pattern been? >> it is really neat, melissa. i know dan and carter have been a little bearish in the price action. the vix, the first time it ticks above 20 over the last two years this happened 20 times. what happens to the market? look at the s&p. investors have been hugely

rewarded if you went in to buy stocks that the moment. the s&p returned 13.2% from the time it up ticked above 20. i am almost near my vix target of 22. maybe now is the time for a risk-reward basis to step in and price average and buy into this market. i think there are interesting technical levels that say we break 1985 on the s&p maybe we go a lot lower. i think you have a tight stop and can dip your toe in the water. >> it is the chart we were looking at together. perfect uptrend. 20 out of 20. it has been right to go the opposite direction after weakness. perfection does not last. it exists but does not last. this is probably the time where it won't work. >> there was an instance it went over 20 in late 2007. i think the only reason it looks

that way is because what often happens is they buy them on the dips and that caused a mean reversion in vix. but sometimes it is the sign of something a lot worse. do you think that might be happening now? >> you know mike, yeah. you have to be worried about that. treasuries are trading like internet growth stocks. oil is flying around. extreme volatility. is 20 still 20? i don't know. i would back off a bit. my target set about 22. that is when i step in. if you snep now you have to keep a tight stop. the market could easily reverse and collapse. keep a tight stop. i am willing to dip my toe in right here. i have to take a shot. >> i want to make a point to the viewer at home. brian is a vix trader. you at home shouldn't be charting the vix. it is pretty useless.

carter charts individual assets. the vix is not an asset. focus on bonds, on the ral negold and on some of these other things that will affect the stocks that you own. that is the message that i would have. when you put it together, it does not make for a pretty picture. >> brian, in terms of spikes in volatility, are there certain sectors that look more attractive than the overall markets? >> i think there is. when you look at the dividend yield being paid by the s&p 500, that is trading tax adjusted at the 30-year treasury right now. if you think there will be growth over the next 30 years, do you want to own a treasury or something that pays yield, gross dividends and potentially the stop price is appreciated over that time. i think i use this opportunity pull back and dip in a little and wait to see what happens. >> brian, good to see you.

thank you. coming up next, is the worst behind or ahead for caterpillar and alibaba? we will discuss it next when "options action" returns.

♪ looks like our guys made it through the tough week. mainly because they were bearish. >> caterpillar cannot withstand this type of pressure from crude. the bet is that caterpillar is going to break. a bad break implies something along the order of 75 or back to the lows of 2011. >> you can buy the february 86 and that would be about $2.80.

it will capture those earnings. >> carter, 75. still in the cards? >> we are not quite there. there is massive run over 20 or 30 years, lower implications. >> mike, what are you doing? >> i am going to sell and roll down and out. we are not going to have that much gearing in the options we have. take the profits and apply them to something else. >> i was skeptical of pressing it. it was a great call. the stock found a home at 80. even today it did not budge much from 82. the company bought $4.2 in accelerated buy backs last year. i think maybe that give its support between 75 to 80. >> it wasn't just caterpillar. a few weeks before that carter bet against qualcomm.

are you staying in this trade? >> this was so aggressive. the gap is so big. we would say move along and declare victory and walk away. >> the biggest disappointment is that we did not buy it out right. this came as a surprise to me. if you are surprised, that is a time to take profits. >> would you press this? >> no. i wouldn't press it here. i think 60 is an interesting level. it is a fantastic call. they have so much cash. they do buyback a lot of stock. they are trying to get into the spaces intel is with server space. i think it is a very cheap stock. they misexecuted on a lot of levels. but activists will get in and push it around and i think intel should buy them. >> interesting. last week dan made a bet against alibaba. >> the trade i was looking at,

alibaba, looking to take advantage of option prices around february expirations that will catch their earnings report next week. i want to sell an option there and buy in march that will capture that lockup and hope to basically get in for cheaper. >> all right. dan got the direction right but maybe a different structure would have worked out better. >> this is a disappointing trade. i have been fairly bearish on alibaba. i tried to thread the needle a little bit. sometimes it makes sense to go in there and make a move and just threat ride. >> yeah. what do you think of baba? >> we did highlight on the options actions segment on "fast money," the yahoo and baba. for those following the twitter feed that , is some of the action we highlighted. options were cheap.

they really paid off. i think we will see more of that. earnings season is not over. >> it is fortunate manage the trade. the worst case scenario is that the stock continues to go lower and you lose the dollar premium you risked on the trade. i closed it here for a small gain. if the stock goes back to 95, brilliant. that is exactly what we wanted to happen. i am going look for another trade into march. >> not much of a trading history for baba. >> you are supposed to look at a one-year chart or longer. the drop in gap, it is billion whether it goes lower. it is really trapped and can't go higher. up above are millions of angry people. you have the prospects of going higher are low. >> coming up on "mad money," big brother is watching you. are you on top of your game?

arrowsight knows. you don't want to miss this. pick up your phone and tweet us. after the break we take your tweets. be nice out there.

♪ andrew asks, what is your take on cmg. there is quite a bit of bullish talk. >> we know restaurant stocks have done well and a lot have broken out. the last to go was starbucks. we think this has been held back. hasn't moved like dennys and wendys. unchanged in the last two week when the market has been pounded. go with the long side. >> bull ish, are you? no you are not. he never is. >> a burrito company trading at

40 times expected earnings. it can't last forever. the chart is fantastic. if you own it, don't sell it. but i don't think you have to chase it. you need to see if there are signs of meaningful deceleration. you have to get out quickly. >> here is another one. john says why always buying premium when it is so high? just sell a spread. >> it can seem expensive at times and cheap at other times. we are right in the middle of earnings seasons. a lot of the trades we are recommending, we are expecting the stocks to move. however, selling vertical spreads, as you suggest, in a high implied volatility department is usually a good call. >> time for the final call. >> you have green mountain coffee? i would recommend selling.

>> collaborative final call. dan. >> i am favorable on the company. i would look to buy it down 5% or 10%. but that is a nasty set up. i like shorting at expired. i'm melissa lee. thank you so much. meantime, "mad money" starts right now. my mission is simple. to make you money. 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. other people want to make friends, i'm just trying to save you some money. my job is not just to entertain you, but to educate and teach you, so call me at 1-800-743-cnbc. or tweet me @jimcramer. we can't save the world. we can't turn it around. we can't make the chinese spend more money. we can't force the europeans to