we are live at the nasdaq on a record-setting session for u.s. stocks. the guys are getting ready behind me. first, here's what's coming up. ♪ >> and could a bubble a lot higher? we'll tell you why and how you can profit. >> plus, cybersecurity stocks have been on fire this year. how do you cash in now? we have got the play. and talk about accelerating. shares of ford are up 10% this month and one of our traders says it could go even higher. the action starts now.

we want to start the show with breaking news on zillow. >> how about a nice little after hours friday afternoon earnings report before a three-day weekend. they report earnings per share of 24 cents. that misses analyst estimates. revenues come in at $92 million. the shares are up about 2 1/3% in the after hours trade. in this light friday afternoon session. zillow also said it expects to close the acquisition as early as next tuesday, the 17th, following notification from the ftc that it's closed its investigation. so a earnings miss, a slight revenue beat. they may close their transaction by early next week. zillow is up about 2% right now. >> thank you.

keeping you busy on this friday afternoon. dan, was this a mistake. >> no, it wasn't by any means. a lot of traders were looking for this. it was one of the last of the internet services to report. the biggest is this trulia news. they've seen short interest go up dramatically because of the arms spread that was going on. they really need to kind of articulate what the sort of cost savings are going to be. it's down 35% from the all-time highs last year. investors have kind of lost their interest in some of these models very related to advertising. >> we have a bullish story to tell. are you a trader? >> taking a look at it, it's not that surprising to me that the stock is holding up despite the earnings miss. as long as they have a slight beat on the revenue line, people are going to wait for it. really need to wait and see, this is what i'm going to wait

and see, wait for the first quarterly earnings announcement after they've actually done the buyout and you can see whether they're realizing some of those synergies. you probably will have the opportunity to trade this with a little more transparency. >> almost 3% move here in the after hours. >> yeah, i mean, i think it's an interesting story. zillow is in the infancy and the real estate translation into the technology area. making everything electronic from the time you buy the house to the time you sell it and how you sell it. get rid of the guy that's the real estate agent. >> the question is valuing it, i guess. dan, is this a tech stock or real estate stock? >> i actually don't think it's a real estate stock. you think about linkedin in a way. what have we seen just in the last week from pandora and heavily supported ad services,

they're not really working right now. if they can capture some of these synergies and combine entity, they continue to have agents paying them and also getting search revenues, that's the holy grail. >> it is still a show me story. it is trading at 15 times revenue. >> let's leave it there. and let's move on on this valentine's day eve. we'll start with the walk of shame. we're talking about stocks of course which have all bounced back powerfulfully after plunings. let's get in the money and find out. what do you make of this. >> so this was something we kind of looked at. there was a whole host of other names that saw some disappointmen disappointments. they talked about the head winds from strong dollar, over seas sales. they filled in a lot of that earnings gap.

the market has change add whole heck of a lot. some of the names that have gotten punished have now started to come back a little bit. which got me thinking about micro soft. they had a combination of a new ceo. that really nice dividend yield. we know they buy back a ton of shares. it was that one report set it down 9% in one day a couple weeks ago. that was $40 billion in market cap in one fail swoop. i'm thinking about some of these gaps being filled from some other large cap names. it got me thinking about microsoft that this could be the next one to fill in the gap. >> and that was a rough quarter. >> what i'm thinking of in the near term, we know we have this march fed meeting coming up. if the fed does not signal to rate increases in june, i think stocks party here. i think microsoft will fill in

that gap. to me, it was a really simple play. microsoft, it was trading about 43.65 today. your break even is as 44.62. the price of options is really cheap. you're risking 1.5% to make a play for that gap fill. >> options premiums have dropped significantly. one important thing, with central banks pumping in so much liquidity, can there be anymore multiple expansion. if yields everywhere else continue to drop, yes. a place like microsoft is actually a reasonable place to make a bullish bet. >> i like that. microsoft on qe. that's sort of a new one. >> that's how you justify equity valuations. they're all related. >> everybody else is ramping back up, i guess. >> just a touch back on that gap.

i think a little bit above $45 a share, that's the gap that dan's really talking about that could get back in and fill. that's why that call play makes sense. you can get a quick pop, that stock moves to $45, boom, you're in the money. having said that, i don't typically love microsoft all that much. i actually play the semi-conductors. they're trading right there. i like names like taiwan semi-conductor. >> final word. >> just add one point, if this stock does approach that gap fill, that's where it fell off from after earnings, first thing's first, they said they were going to axccelerate the $2 billion in buybacks they have left. they're probably in the market buying. they're going to host analyst day. if something hasn't really improved on the earnings report, i'll bet you a lot of calls for

these guys to possibly do a special dividend. >> it's all about putting the cash to work. here's something you do know. oil prices are rising off their lows. here's something you might not know. energy stocks just turned positive on the year and are crushing the s&p 500. so can the bounce continue. we're talking about the big etf. what do you think? it is sort of surprising so see it rebound like this. >> it is a little bit. i'm going to do my best carter impression and take a walk over to the smart woord. we have seen quite a significance bounce in crude oil. it's bounced easily 30% off of its dead low. if we take a look at the longer term picture, it's still down about 47% on the spot price. since crude fell, you'll notice that the xle is down approximately 20% in that time

frame. crude prices, in fact, long dated crude was about $88 a barrel before all this started to happen and it's now about 72. the next question is, are we starting to see a breakout, is this going to bounce back? we crossed the hundred day moving average today. i think one of the most interesting things is the fact that the rig counts dropped so quickly. it shows that the producing community is actually very responsive. take a look at the short interest in the energy stocks going back to 2008. if you think about what's a good time to buy securities, it's when everybody's basically throwing everything out, you can see that that would have been a great time to get long energy back in 2,0008. this is also another way we can think about how concerned investors are. it's obviously fallen somewhat

as energy stocks have rebounded. there's still some concern. that gaves up a little bit of a potential boost to the upside. we're not sure whether it's completely over, we can take advantage of options to see whether this rally might continue. buy the june 82 calls. spend about 4 bucks on those. it's a little less than 5% of the underlying. if we do get a bounce, remember where this came from, that's a win. if it goes down, i'm only risking 5%. >> all right. do you like the trade, dan? >> he talks about only risking 5%. listen, implied volatility, the price of options is still very high in the stakes. about 30% of this etf is chevron and exxon. so you're really making a bet on those two names. i don't really love the risk here.

his break even is at the break down level from december. to me, i feel like it's risking one to make one in a lot of ways. i don't have the conviction on oil right here. >> brian, do you see the options market telling you that we have seen a floor for crude? >> i think it's interesting what's going on in crude oil itself. it's trading almost four times that of the s&p 500. so tremendous amount of volatility in oil. to me, that's not sustainable. yes, you see that commodity or asset class decline in such a situation. we saw oil decline and oil volatility explode. i don't believe that's susta sustainab sustainable. if i believe it's going to come off those highs, if i believe in what mike showed on the chart, i love seeing that chart where you actually saw volatility make a lower high as xla made a lower low. that's a sign people went in, took a chance, put their money to work, took some risk.

to me, i think i'd start to become a buyer from oil. any sort of pullback below $50 a barrel. >> if this is a dead cat bounce, then that is the reason that you want to use options to make your bullish bet here. i don't mind being long equities in the rate environment, but i certainly wouldn't go out and start buying energy stocks with both hands. >> and to your point about baker hughes, that index has become so closely watched. are falling rig counts a bullish enough reason? >> that depends on which rigs. we're looking at marginal rigs and marginal wells. they may not have as much of an impact. globally, demand for oil continues to increase. all of that marginal production has come over the last five years from the united states. so this can't go away entirely.

and our marginal production cost is going to be where -- >> that supply and demand balance. >> i've been in the business now 17, 18 years. the fever pitch when oil overshot on the downside, i've never seen so many pundits call the low and reach the low. >> all right. putting it out there. got a question, send us a tweet @optionsaction. check out our website. while you're there. be sure to sign up for our news letter. here's what's coming up next. do your own thing. >> not before you hear what our trader has to say about the stock because he doubled his money in a week and has a way to make even more. and bust out your smartphones because we're taking your tweet, but only if you're nice. the action returns after this.

it has it has been a great week for chip stocks. the semi-conductor atf up almost 5% this week. one big options trader appears to be skeptical. thanks to a massive trade, we saw seven times the average daily put volume trade in the action today. >> it wasn't just today. it was also yesterday. yesterday, there was a buyer of 45,000 of the march puts.

today, another buyer of 50,000 marks 55. so here's the thing. we quote it all the time. you never know really what is it. this person may own so many semi-conductor stocks that this looks like the cheapest sort of protection to them in a lot of ways. we don't make decisions just on unusual activity. it got me thinking about some of the performance of some of the names in this etf. one of them was matt grime. this year it's down. it's really lagged. the chart, i think we have it. momentum is really waning here. they had cut that stake as of the end of september. they owned 40 million shares at one point. this is a stock i think you can take a shot at on the downside. if you're not of brian's belief -- he's going to get a

word in here. this stock is acting very poorly. so to me, i looked at it when it was 31.75 and you can buy the april 31.26 put spread for $1.30. i chose 26 on the downside. that was support from a couple months ago here. i think this is a really good risk set up for stock. >> i like the trade and i also like the play on the sentiment. one of the reasons the stock has been so weak is because these big holders are offloading shares. if you think he's trying to moderately soften exposure, i think this is the beginning of a larger unwind. to me, that makes a lot of sense. >> this market's had such a huge runup. i like the assembsemis. i don't like micron that touch

as i do as taiwan semi-conductor. the market, yes, it's had a big runup. i think guys are out there adding protection. i think you look for areas to put on hedges in your portfolio. i think we're due for a pullback. ultimately 30, 60 days from now, i think the market reaches all-time highs. in the next week or two, i could see a selloff coming on some of these names that maybe have lagged versus the rest of the names in the sector. >> the time thing i would also say, some of this put buying could be a hedge. this is a good way to sort of get ahead of it in case you can't offload your positions quickly enough. that's about comparable to these types of positions. it wouldn't surprise me if that's what it was. >> i'm going to make a final point. >> final word. >> intel is also 18% of the smf.

it's down 5.5%. i would almost put intel into that camp. it's obviously a cheap stock. they buy back a lot of shares. you never know. maybe this person is loading up on intel shares and they see this as cheap protection. i like focusing on the weak ones. >> cyprus semi-conductors, that's his favorite for the year. up next, coke beat on earnings. now the stock is fizzling. we'll tell you how to profit now when option actions returns.

it is time for the upside call where the guys tell us how to make the good trades even better. last week dan kicked the tires on ford. have a listen. >> to me if you want to buy ford, if you think it's going to participate with increasing wage inflation over the next few months and increasing sentiment towards some of these sorts of plays, then i think you look at the may 16 calls. they were basically 70 cents. >> well, the stock is up pretty nicely this week, dan. what do you do now? >> stock rallied 2.5%. i think the stock was 15.90.

it's 16.30 today. i'm really playing for a move back to the prior highs which is 18. if the stock gets to 17, i think what you do is look to sell some 18 calls against the 16 you own. and you have the 16-18 call spread. you offload the premium you have on this trade. and you have this nice few month trade for playing for the previous highs. >> mike, what do you think of it? >> i think a roll would be one way to play it as well as potentially spreading out the way he did which is probably the way i would go. i don't like to carry my options too far into the money. i'm still bullish on ford here. i think this is the right way to play it. >> interesting. giving everything that's going on with general motors as well this week. also last week mike and carter worth bet against coca-cola. here's what they said. >> to me this looks like a fairly major topping out formation. i think we break this trend. i'm a seller of coke. >> as people move away from the core products. i think what we're seeing technically is an indication that people think that the fundamentals are likely to follow suit as a result of those

head winds. my trade there simply is to look to april, by the put spread. >> carter's in london this week, but he did send us a postcard by sticking by his call. and it says, the stock hasn't changed and as such our thesis hasn't changed. a bearish chart pattern, plain and simple. and speaking of bearishness, it is telling in a strong week for the s&p 500 coke is virtually unchanged. not good. mike, you agree with your friend carter? >> absolutely. i was surprised by the positive result to the earnings which i thought were tepid at best. a turnaround against coke. we didn't see that. >> we did see them beat expectations. >> lower expectations. what we continue to see, though, is low, no, or even negative top line growth. selling products to people no longer wanted to buy. i compared them before to the same problem mcdonald's finds themselves in. this is not a cheap stock.

why would you pay 24 times earnings for a company seeing negative growth. >> some people like the monster bets and green mountain. analysts for the most part are bullish on that. i think we've got to leave it there. anyway, they're not. the options traders are not. up next, the final call from the options pits when we come back.

time now for the final call. time now for the final call. the last word from the options pits. >> if there's a weak link in the market, coke is it. i'd stick with that spread. >> absolutely. buy the s&p at many times discount to coke right here. >> i would say if you think the market is going to broaden out here, we have new highs. i would expect microsoft to participate. i think they're buying back a lot of shares. >> all right. thanks, guys. looks like our time has expired. i'm sara eisen. for more "options action" go to optionsaction.cnbc.com.

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