live live in the nasdaq market site i'm melissa lee. traders behind me ready to go. what we have for you tonight. >> when the money's coming your way you don't ask any questions. >> well, frank, we have one. how much does "house of cards" matter to netflix? a special report. plus, how fast of ge shares rising? >> ludicrous speed, go! >> and you won't believe how high traders see it going by next year, and something really strange could happen to microsoft. >> no, no! ah! >> not that strange, but we do have a scary chart that has traders on edge. the action starts now. want to know the key to the tech rally checkous these four stocks.

am, microsoft, google and facebook, monsters of technology and looking the nasdaq up to nearly all-time highs. dan you are starting to see cracks form. where? >> a couple things. not just apple. you had apple up, 15% of the nasdaq 500, troubling from the standpoint in my opinion, a sentiment bubble going on there. i understand a lot of catalysts coming up, people focused on valuation they think is reasonable. makes perfect sense. i don't like a narrowing of breadth of the market. the top ten stocks making up 50% of the weight. those stacks make up almost $3 trillion in market cap. way more than the rest of the 90s. a small group of stocks doing a lot of the heavy lifting. >> looks tired up here. individual stocks look tired as well. >> that's probably not that surprising. one of the things i would probably keep an eye on at this point, we're coming out of earnings season. i would probably keep an eye on

the vix, and i'm specifically looking at if i see this thing drop down around 12, we're looking a the a lot more complacency, that's probably the level i would get interested in potentially selling. look, the primary reason you would sell stocks is because the biggest driver so far, one is obviously loose -- quantitative easing, quantitative policy. we think june, maybe september. when the vix is down, complacency, your time to hit the sell button. >> brian kelley, welcome. >> tell you when you look at tech, when i look at tech, i'm looking at the fact they have exposure throughout the world, exposure to a strong dollar, negative exposure to a strong dollar. talked about techs 20shgs perce20%. tech is challenged. new highs in the market, you haven't seen names like google mentioned make new highs. that's concerning. >> a few points. get to the trade, but right now

button up the apple thing. people are excited about apple. it's raised $130 billion in market cap just this year. 30 stocks in the s&p 500 that have $130 billion market caps. astounding. a march event what they'll announce. that's not exciting. a couple other points to make. microsoft, a big one. declined 10% reported and guided in january. the stock has come back. okay? almost down 20% from november 15 highs. it's come back pap disturbing chart is, or pattern forming in microsoft the cart, the 50-day moving average cross is below the 200 day. we've seen it in a couple instances. people don't think it's important. when it happened in google in november, dropped 10%. happened in the russell 2000 in september. russell dropped 10% after that. something i'm keeping an eye on. i had a bullish trade we did on the show a couple weeks ago, took it off today. tweeted it out a couple times and will talk about it later on

the show. that's a problem. microsoft is a massive gainer in 2014. it is not participating this year and we're seeing that also in the semiconductors which were also massive gainers. one last point. the nasdaq almost at 5000. i don't believe we're in a bubble. this year the nasdaq has seen bubblish participation by stock we were participating in last year. amazon, netflix and a few others. put them together, i do not like the nasdaq 500 here. >> dan, one more? >> the trade. look out. bk made a great point. of course, okay. the thing, i want to look out to may. okay? looking at the qqq, nasdaq 100. today 109 i bought the may 108, 98 put spread. paid $2 for that. max gain, $98. make up the 8 basically four times my money. chose the strikes, the qqq broke out at 106.

a good level. over the next 2 1/2 months a good shot to be there at least and in the index that would be a nice support level. >> this is exactly the trade you want to do. first of all notice that the math works nicely. the other thing i point out it's the out of the money puts on indices that tend to be most overpriced when you look at it. that's where people often go for insurance. you actually want to buy a higher strike and sell with a lot of those other forke folks buying. i like the structure. >> when i'm trading i look at risk management. nice about options, you can define that risk very easily. right from the beginning, and you could be wrong. 40% of the time you oent have to be right and still make money on a straight like this. i like it even as a protection for a portfolio. maybe you don't agree with dan's assessment things will get weaker. it protects on a google and microsoft if you're long. back with a third season of house of cards, frank underwood.

netflix, at just about all-time highs. what does the show mean for investor, julia boorstin? >> it's a leader in premium contents. since the show's first season premiere two years ago stock tripled nearly as it more than doubled its subscriber base showing netflix $100 million investment in the show more than paid off. now "house of cards" third season, instrumental in keeping subscribers hooked and adding new ones with a host of rivals investing heavily in original content. netflix faces more competition than ever from amazon upping its ante and hbo services is in the works and the new sling tv, plus, netflix is losing dozens of titles in its library next month. maintaining the buzz of shows like "house of cards" is why the company is ramping up the investment in originals raisin an additional $1.5 billion

earlier this month. that's half a billion dollars more than netflix had previously announced. melissa? >> julia boorstin, thanks for that. and investing more in originals, they say according to conference calls they're spending less on making their other than content versus licensing from studios. >> the big issue for them had been concerns about rising licensing costs. when first purchased content attractive deals. everybody was concerned what's going to happen when they actually start paying the kind of rates the studios will charge them? they created their other than programmi programming, "house the cards" the best example. creating successful content isn't easy. the notion every thing that comes out will be a hit like "house of cards" is too optimistic. the stock is priced like it will hit it out of the park every time. charted at 100 time what's they are expect to make, that's

aggressive and a tough stock to short on valuation in the past. we've seen even just wirth the course of the last two moss w t months what that can do. getting close, around all-time highs on the stocks. i'm probably in favor of leerning on the short side but soun short the stock. >> what do you do instead? >> look at selling upside call spreads. so names like this, down side puts are expensive. look out to april, accept the 485, 505 call spread. sell the 485s for about $19.50 and buy the 505s fors 12ds. collect about $7.50. if the stock sits here you'll collect that money if it goes down and even if it goes up, it's not going to the full value of the distance between the strikes right away. >> obviously, a high volatility. i would say for a stock that's traded between 300 and 500, like it ain't no thing the last year

and a half, if you can find inflection points, they're usually fundamental catalysts to get in there and long premium trades because the moves have been massive after earnings, that sort of thing. here's a company that mike says trading, the stock trading 100 times earnings. earnings schm earnings. a company only growing sales about 20% a year. i'm more worried about the competition from the likes of hbo. if you see a meaningful down grade in sales at some point, that's when you get in short stocks. >> hbo thing is the right point. the catalyst ta told me the story in net flik, their business model is breaking if not broken. sure, able to create content. enough money, you can pay for the content. the fact for a long time they had a monopoly on that delivery system. hbo wasn't doing it. cbs wasn't doing it, nobody was doing it. now competition. that's a problem woi for a stock 100 times earnings.

>> focus on, sell premium, up side, do it where you think it might begin to roll over. this is the upper edge of the range basically. the other thing you'll notice, april earnings come out after the expiration. looking for the catalyst, like dan said, you'll have an opportunity to look at it then. got a question send us a tweet @optionsactions. and check out we are website. someone calmed it the "catcher in the rye" of derivatives. sign up for your newsletter while there. here's what's coming up next. $7 million. that's how much one trader bet on ge today, and you won't believe how high they see it going. plus, microsoft's about to do something it hasn't done in a while. >> we're going streaking! >> well, not exactly, but the charts point to short-term pain. we'll tell you why.

welcome back. a huge month for general electric. stock up since february and some see it going higher. today seven times the coal volume traded and one big bullish one stood out. dan what did you see? >> long dated, and one point pt a massive coal buying, not as large as today but an april expiration, april 26 calls bought those 50,000 times on

wednesday. today this is the blockbuster, the biggest trade in the options market all day long. over to the smart board here. when the stock was about $25.93 a trader bought 125,000. the january 2017, that expiration is almost two years from now. the 30, 35 call spread. paid about 50 cenfor that. $6.5 million in premium. the trade breaks even basically at 30: 50. maximum gain at 35. up 35% from the current level, but if the stock is 35 or higher in two years, that trader, ready for this, $55 million. here's the thing. over to the chart and talk about what's going on here. listen, a lot of you guys like to chase unusual activity. you don't want to buy leaps when you think a stock is going to turn. i suspect this trade was a leverage trade to a very long person who was very long in the stock and looking to get cheap

upside leverage in dollar terms looking out a couple years. look at the stock, mel said, stocks had a nice run here. not something you want to chase but when you think about it, this is $26. some of the calls bought earlier in the week, they're already in the money and doing very well. on a five-year basis, talk about laggards here, ge traded very well off the lows. outperformed the s&p from 2009. but when you look at this thing, this is a very long base. the stock's underperformed the last year and a half. think about the break evens of the trade in two years, who knows where the market's going to be in two years. stock trades 15 times expected earnings. only supposed to grow at 5%. that said, talking about dollar exposure, a heck of a lot of it, a lot of exposure in emerging markets. think about a trade like this, traders, you don't want to run out and buy 18% out of the money calls that expire in two years. look at the shorter stuff,

identify catalysts and play it that way. >> do you think this is a ge-specific story or part of a chase for the doggy sort of dow stocks at a time when we are at or close to record highs? >> this is one of the names we can look at that's actually trading at a discount to the broad market although it's managed to grow eps by 70% in five years. a quick point i make about trading that far out is that if you're only spending 50 cents, they're not going to decline by 50% tomorrow, next month or even next quarter. you actually will have a long, long look at this before they start to decay materially. one of the reasons why looking at those leaps, but bear in mind you also are not likely to get a clean double. they're far out of the money. this is a way if you think there's going to be an outsized performance to the upside in the long term to do so without spending a lot of money. >> everybody's looking at any stock that might be remotely -- ge underperformed putting it on the list.

>> you think so? enormous company. >> let me get to my point. >> sorry. >> puts it at the bottom of list because ge is a huge company. difficult for somebody to be very active in that. that said, i know this is further out. if you look at ge's underperformance versus let's say the nasdaq and the trade you guys laid out earlier it, this might not be somewhat of a bad pairs trade, if you think the nasdaq will come in and everybody's going to pile into ge, and that way you take a little market risk out of it. >> hmm. what do you think of that trade idea? >> not so much as a pairs idea. this is a cheap call on equity valuations continuing to go higher over the long term after a stellar run for equities especially with concerns that could turn the other way. i actually like the trade. >> i mention when you think about a trade like this with a potential 10-1 payout in two years it's like a lotly ticket. again, this is likely against a long stock position. someone who's already a big

holder. it they get the move over the period of time they'll be happy with it and freed up to sell stock consider it stock replacement moving towards the strike they own. coming up next, how do you make a golden call even better? find out when "options action" returns. hey mom, you want to live by the lake, right?

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you're not just looking for a house. you're looking for a place for your life to happen. zillow a> call it call it a golden trade. two weeks ache mike and carter worth got in on the gold miners. take a listen. >> ricochet and miners go the way of the biggest miner newmont. a buyer of gdx. >> looking out to june at the 21, 26 call spread trying to target that $26 price target carter identified. >> you may have noticed, carter is not here today but did drop us a note. no change to the judgment that gold bouillon and gold money stock are in the throes of going out. stay long. do you a agree? stay long i. do agree. we gave it time to play out and should allow it to exactly that. one of those situations where we

weren't necessarily going to make the play for one week. probably looking 60 to 90 days. gave ourselves that amount of time. let's see how it plays out. >> you set quite explicitly you believe the dollar will continue to be stronger. therefore is this trade not going to work out. >> oh, no. no, no. oh, contraire. there are periods of time where it correlates exactly with the dollar and we're headed into one of those periods of time. look at like a three-month correlation of gold and the u.s. dollar over the last 10, 15 years you see 60 months to a year period where these two corps late not one negatively and just starting to switch there. i think this trade works out no 3459er what the dollar does. >> wow. all right. last week dan made a bullish bet on microsoft. >> to me, what i'm thinking about the market making new highs today i'm thinking about the gaps 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.

microsoft, was trading about $43.65 today. the march 44 calls, buy them for 62 cents. break even at $44.62, up 2 1/2%. options cheap. risking the underlying stock price to make gap for that play. >> clearly, you do not still stick by this? >> i didn't. today i sold it. here's the thing. okay, the stock has actually appreciated a little but not able to get anything going here. it's below that 200 day moving average. i mentioned that death cross that isn't pending. that's going to happen here. wasn't able to establish a new range above 44. i'm out. taking a small loss on this. short dated options, these are march. sit around, try to be patients, could be worthless or near worthless soon. when trading option trades avoid as much as possible. take a small loss. don't like the technical setup, momentum poor, with hewlett down the way it was this week i don't

like large cap tech obviously through my qqq trade. >> seeming there's a looming debt would you put on the negative trade on hughes or microsoft? >> going on both. >> doubling down? >> see how it trades next week. >> in the crm conference point they talked about sales force and talked about how good sales are with microsoft products and the synergies seeing there. i put it to the test. does that mean i sell short crm? a better trade than microsoft? >> not at all. that breakout was epic this week and doing everything they need to be doing, where people want to be. they want to see the licensing growth. better for salesforce than microsoft. >> running into resistant, rolling over, definitely one thing to look for. the other thing, dan made a great point there. you don't need to hold options until they expire. when thinking how much risk you're taking it's not the amount of premprem it's how much you spent for as long as you hold it. if you change your thesis change your position. >> are you negative microsoft?

>> i would call myself neutral on microsoft. it needs another catalyst. a big run because of the pc refresh cycle, xp expiring. now what do you do? a show-me story. you don't get hurt in it. wouldn't say negative, but hold on to it and pick up the dividend. >> dividend's great but you may see increased capital return. meet in april, shareholders meeting. if investors are unhappy with the price action they say with need more cash back. coming up on "mad money" kramer's gcrep cramer's got you covered. take on the rallies and monster beverage, all that and much more top of the hour on "mad money." cup eoming up, taking your tweets. send them in to "options action," but be nice.

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one from mateo. asks quite a long time ago dan and mike did a put up or shut up on herbal life. where do they stand out in? >> no good news for this company and no incremental buyer. that's problem when someone's dug in on the short side. i'm not sure how mr. icon gets out of this. to me this is a no, no touch. i don't know if it's a zero like ackman thinks but certainly not an $80 stock anytime soon. >> never trusted their business model. i think many people, i'm one of them, suggested ackman would be right in the long run. the way carl gets out is hits the bid. >> perhaps he does that. i think herbal life is a tough name to trade, because you have two very strong personality there's. you don't know what either are going to do. i would stay away from it completely. >> one thing to point out options premiums are off the charts expensive. sell verticals.

acknowledge the death of a tv movie legend. leonard nimoy beth known for playing spock died at the age of 83 from "star trek." all strive to live long and prosper. see you back here next on friday and on monday on "fast." "mad money's" up now. nd applause ] >> announcer: the following is a paid advertisement for the revolutionary 21 day fix, brought to you by beachbody. >> thank you! [ laughs ] hello there. i'm tom bergeron, and this show is about transforming how you look and feel, starting right now. >> announcer: are you struggling right now to lose weight? >> i've struggled with my weight my entire life. >> i really want to... lose this. >> i didn't want to walk down the aisle weighing 220 pounds. i need to do something, and it needs to happen right now. >> announcer: now there's a breakthrough new way to lose those pounds and inches, and it happens in just 21 days.