a cold breeze blowing through wall street with some traders calling for a correction. our guys here suiting up behind me with their best trades. but first here's what's coming up. >> we're not going to make it. >> that's how traders felt today, and it could get worse when the fed meets next week. we'll tell you why and how to protect yourself. plus -- >> to infinity. and beyond! >> and the dollar's about to go even higher. we'll tell you which sector in particular to avoid. and why are traders suddenly betting on herbalife again? >> we're not going to say anything publicly. >> but we will, bill, because the "action" starts now. ♪ kiss me baby let the fire get higher ♪ >> one big question tonight for investors is big oil going to cut their big dividends? let's get in the money and find out. go to mike here. what's the likelihood in your view of this? >> well, it's interesting because if you look at what the options markets are implying

right now they are absolutely not forecasting sort of the steady dividend growth that the oil companies typically are well known for. as you look out to next year, some of the big names are definitely looking like the options market saying there could be a cut. and that actually makes some sense. let's take a look at exxon at an example. here's a company that was doing over $24 billion worth of free cash flow about five years ago and they're probably going to do about 2 billion this year. you see similar declines in names like bp. chevron, which is a name that did almost other $15 billion in free cash flow five years ago, this year we're going to look at probably 9 billion in negative free cash flow. it's pretty hard to continue to support dividends when you have cash flow that was once extremely positive suddenly turning negative. if you look very specifically let's take a look at bp. we're looking at a 38% year on-year implied cut in the dividend. chevron 25% and exxon 25%. >> they haven't suspended or cut their dividends yet, they've

suspended their buybacks. so you have that floor underneath their stock gone. so the dividends could actually go higher on a yield basis which puts more pressure on them. >> at some point the game's over. massive asset sales have to start to cope with it or you have to cut. and then that becomes really bad. not good. >> dan. >> i think it's the speed this is all happening. we know exxon just had a meeting a couple weeks ago, they cut their capex, chevron did, and they've been talking about the buybacks. all this is happening very quickly and i think that's the sort of thing that has the potential to catch investors offsides a little bit because people are still seeing those yields and they're saying there is an underlying business here. so the dividend yield looks great. when they start buying back stocks and oil kind of stabilizes here, this should be the place to go. >> if it does stabilize. and that's really the issue. >> if you see crude stabilize 60, 70 bucks, there'sn't necessarily some reason for them to cut but if it continues to be weak and gets even weaker, these are not businesses that are kicking off significant amounts of free cash flow at 40 bucks a

barrel. that's something people need to be aware of. you can't sustain it indefinitely. >> carter, over to you. you see some troubling charts. >> the price action's terrible. we're going to look at bp specifically. but the issue of course here with all these big energy names is there looks to be quite a bit more down side. of course it has a lot to do with the current setup in terms of the dividend. i've got you three columns and three or four big stocks. earnings, factual. 2014. take bp. they earn 4.05. this is the consensus for many, many sell side firms, they'll have $2 earnings. look at what the dividend is. that dividend is not going to be covered. same thing con o'co. they're only going to make 84 cents if wall street is right. and the dividend, not covered. same thing with chevron. 3.83 and they're going to pay out 4.28. not covered. and hess, they're actually going to lose money, and yet the dividend is a dollar. so not a good construct either

way. the price action we know has been poor. here's crude oil versus bp. the little bit of a bump-up in crude, you get a little bit of a bump-up in bp. zmou of course crude is back down, and crude almost touched the low today, and the bet is that bp is going to take out its prior low. here's a chart and then i'll show you one more and i'll tell you where i think we're headed. if this high was about 53 and this low was 35, you have a 35% decline from peak to trough. and then we rallied almost 20%. and now again we're revisiting this low. this is not a good setup when you do that and this. the presumption is we're going to take out that low. take out the long-term pattern. you can name patterns anything you want. people like things like head and shoulders because it looks like a body or cup and handle. looks like it's out of the kitchen cabinet. if you want to call this head and shoulders, call it whatever you want. it's a major reversal formation.

neck line and then a massive break. that's the potential here. if you're long you would do something about it. we'd get out. if you're a short seller pretty good bet. >> the charts look terrible. on a fundamental basis would you also pick on bp? >> i think there's plenty of reasons to pick on bp. i actually don't like anything in the space to be honest with you but bp is the one that has all kinds of other potential headwinds on top of just the weakness in the oil business. one of the things that's interesting is the oil sector in general, the integrated oils were not very high volatility for a long time and the options premiums were relatively low as a result and right now they're significantly higher because of the pressure on oil, because the stocks have been under constant decline. and normally when you see options premiums higher you're going to hear us on this desk sit there and tell you you should be trading spreads but in this case i'm not going to do that because sometimes higher options prices are justified and i think they are justified here. so all i'm looking at doing is going out to july, buying the after money 36 straight put

which cost about 1 $1.80 which about 5% of the stock price. if the stock goes lower options premiums are going to rise, that's going to be a good opportunity for you to spread or roll. >> i would just say from a trading perspective i actually believe carter as the charts are showing him you're going to get a crescendo action. this is coming to a theater near you. a lot of people have been talking for the last few weeks the stabilization in oil prices. it looks like when they break the lows things could go highware here and you may have a down 10% day and that's what mike's really talking about, is using this implied volatility, the price of options that feels very high right now. it's going to go much higher. i'll tell you, though, at that point if that does happen rather than possibly spreading you may want to take the profit there because you could see some sort of v reversal. this could be the thing that people are waiting for. so the timing may be difficult really from the standpoint it may feel like a pressure but if you get that move and it happens you may want to take the trade off. >> quick and brief but violent. the key is bp take out that low

which exxon already has. the most important one of all is already making 52-week lows p not good. the world waits on one woman. we're not talking about j-law. we're talking about janette yellen. the fed kicks off a two-day meeting on tuesday. >> it was interesting. yesterday's price action in most of the banks excluding bank of america was fantastic. you had jpmorgan getting back close to the unchanged on the year after being down 15% at one point on the year in early february. and you know, the results were pretty decent. jpmorgan's going to be able to buy $6.50 billion worth of stock and they have a 2 1/2% dividend yield and everything sounds fantastic. right? but don't forget about the fact that these guys actually had very poor results in q4. they gave murky guidance. not growing sales or earnings expected in 2015 to be flat. valuation is cheap, it's a little over book or whatever. here's the thing. everyone's focused on higher rates here. we don't know what's going to happen. is the fed going to remove the patient word or not?

i think that's already in the markets. okay? the rates have already moved up here. i think it's in the market. you have this enthusiasm. and when i look at jpmorgan i know it's considered that one you want to go after but there's a formation. look at that right there. on cue. the 50-day moving average is crossing below the 200-day moving average. that is what some technicians, maybe not carter, call the death cross here. and maybe it's a little confirmation bias, whatever, saying this thing works. two weeks ago on the program remember we highlighted microsoft doing the same thing, 44 to 41 in a straight line. to me there's a lost enthusiasm built up in the space. we have this meeting that's well telegraphed, and i think it's time to short the banks. >> what do you do? >> jpmorgan today i looks out to april and april expiration's going to catch their q1 earningsar report on april 14th. two events between now and mid april, and i literally just bought a pretty near the money put spread. the stock was 60.55. i bought the april 60-55 put

spread. it breaks even on the down side at 58.80, i have potential to make $3.80 if the stock is between 58.80 and 55. and obviously i'm risking that 120 if the stock as boff 60. the stock's a bit extended here. the technical formation i don't love. and if you do get to the earnings and the earnings are weak i think you're going to see it in the mid 50s. >> when you say technical formation i go to quarter. do you agree with his analysis? >> we actually like the banks. our firm from my seat. and here's what i mean by that. we know the demise in the banks was called for in terms of energy. that was a big theme. and energy has collapsed and the banks have not collapsed. they've been relative outperformers. a bit like home builders being stocks you'd suspect to get in trouble are not. and the big banks if you look at the bkx it's actually at or near 52-week high. i think they act well in the face of what should be a lot of pressure. take the other side. >> so you break the tie. >> i'm actually going to go a

little bit with dan here, and here's the reason. when people talk -- big surprise. when people talk about financials, one of the things they frequently talk about are things like net interest margins and the idea that net rising rates are going to be ultimately beneficial for banks. part of that i think is a little bit short-sighted is that in the short term you have to expect origination to drop. the whole reason we have these low rates help basically refuel the housing boom. you're not going to see a lot of mortgage origination if you see rates go up 150 basis points. this is not going to happen. and the market's anticipating an increase. i think basically any of the good news is probably baked in and then you get the wait and see, what actually happens when rates rise. you're going to see a lot of loan origination. i think it's probably going to decline in the short term. >> final word here, you're going to know mid next week how the banks are going to react to whatever the fed comes out with. i think if they remain really zoffish that's bad for the banks because it means the fed is too worried about rates going higher and that's when you could have this confluence of events. if your oil car is correct and

the fed remains worried about the recovery here and they're not ready to raise rates, i think our whole economy could be in for maybe a double dip. and i'm not saying this is all going to happen at one second but the stock market should start to anticipate it at some point and the banks will be right there. >> got a question out there, send us a tweet @optionsaction. if it's nice we might read it in the show later on. check out our website. it will change your world. here's what's coming up. >> currency's clearly a problem, but frankly the best companies will figure out a way to manage it. >> well, maybe not for apple but tech guru dan niles says it could be a problem for another large tech stock. he'll reveal which one. plus traders are betting on a big herbalife bounce, but it could be bittersweet. we'll explain when "options action" returns.

people are worried about the world. people are worried about europe. people are worried about currency. are we being -- are those just the kinds of things that wall street worries about and if you're at home and you're watching, you own 100 shares of apple you should just be thinking that tim cook and the team are ready for pretty much anything that the world might throw at us? >> currency's clearly a problem. but frankly the best companies will figure out a way to manage it. >> that was apple ceo tim cook on last night's special tenth anniversary "mad money." not sounding too worried about the big dollar rally. but should you be? dan niles is a senior portfolio manager at alpha one. we simply call him mr. technology. i call him dan. dan, good to have you with us. >> thanks, melissa. >> certainly we've hay drumbeat of analysts recently come out and highlight the currency, the negative currency impact. we've had barclays on hewlett-packard, lexmark, tech data as well as xerox yesterday. we had deutsche bank on tesla

today. is this a concern of yours? >> yeah, it should be a big concern for everybody. i think the one thing that the analysts for the most part aren't focused on the way they should is everybody's of course dealing with the fact that if you're selling something in europe and you have to translate it back to the u.s. you're losing i think around 13% or so year to date, about 25%, you know, year over year. and that's simple math. the bigger problem which people haven't really dealt with is if the dollar stays up here a lot of these companies are going to have to reprice their products. so you're right now dealing with a currency translation effect, and that anything you're bringing over from asia or europe you're going to have to translate that back into fewer u.s. dollars. the bigger issue is when you have to go through and reprice your products because customers overseas can't afford or don't want to afford it because it becomes less competitive because effectively with the dollar up 26% year over year as of today

you've given all your products a 26% price increase. and that's a big issue if you're an international competitor. so that's the big problem i see that people aren't really to thaexed on. and only a few companies have pricing power like apple to get through that. >> would you agree with tim cook in that the best companies that are firing on all cylinders, that currency is not really a big issue but it's the companies like maybe a hewlett-packard or an ibm that might really see the impact? >> yeah. i mean, i think we have to be careful with that because i think there's a couple of pieces to it. one is do you have a unique product that people really desperately want? and to some extent apple's benefiting from the fact that for the past three years they haven't had great products. that's why their revenue growth has slowed dramatically. and the new phones that they introduced are great because everything's been waiting for a 6-inch, 6 1/2-inch phone. they can get away with it. the second piece is if you're a consumer-facing company, the

consumer's got a lot more money in his wallet because of the same factors, that oil has been crashing that you were talking about earlier. now, if you're not in that boat and you're selling more to corporations or governments, et cetera, like you mentioned hewlett-packard, which has a big business like that. we're short ibm, again, more corporate facing, or ge which we're also short, you've got those issues that affect those companies. it's a lot harder for them to get out of it because they're sort of competing internationally. hewlett-packard brought it up on their call, how they had their japanese competitors not able to take advantage of pricing. they had to reprice their printers. they talked about that. and intel on their press release even mentioned currency. not sure what they'll end up saying. but i will tell you, microprocessor prices may need to get cut in the future. just to keep demand up. >> hey, dan. it's dan. we were just talking about apple here. you talk about this upgrade cycle and obviously there's demand throughout the world for it. when we get to a point in the

next couple months and the demand for the upgrade here in north america and possibly in europe kind of wanes a little bit, much of apple's growth is really going to come from overseas, china. so to me i have a hard time kind of squaring this circle here. that if much of this growth is going to come in the back half of the year right from emerging markets like china, that sort of thing, how do they withstand this price increase? who knows where china's currency's going to go, if that peg gets broken again over the next six months given what's going on there. i'm just hard pressed. tim cook's answer was very nonchalant in my opinion, and i know they have some very sophisticated hedging programs. but let's remember, this is kind of a luxury product here that we're dealing with in the iphone. >> well, it is. but here's the way you need to think about it, i think, is the amount of people that upgraded last quarter, i believe they said in the u.s. in terms of the installed base was low teens. that's a very, very small number. so i completely agree with you that the international growth you have to be worried about. but don't forget they talked

about on the call how they repriced products i believe in russia. but they still put up big numbers. the good news is there are so many more people left in the u.s. to upgrade and obviously we're not dealing with currency issues here, that that helps you get through some of these problems. and also you get a little bit of extra revenue kicker at some point in here with things like the watch, which i'm not necessarily a big fan of. but all those things on the margin will help them get through better than others. but clearly as you get to the back portion of the year as more of the u.s. is upgraded, as you get toward the fourth quarter, that may become a bigger problem because i see the dollar going higher from here. so this is probably becoming a bigger issue as you get further out in the year, especially as the fed starts to raise rates, which puts even more upward pressure on the dollar. >> thanks for calling. we appreciate it. >> thank you, melissa. >> dan niles of alphaone. he is short ibm. ibm is down what? $40 since the -- >> 30% since its peak in 2012. about to take out the lows just like bp and exxon.

>> 20% revenue decline. the street's been looking for some increases, which is totally fiction. >> is it still a short, though? >> oh, sure. it's terrible. >> coming up next, bill ackman is back on the attack. but why were options traders betting so big today on herbalife? we'll tell you when "options action" returns. in our house, we do just about everything online.

and our old internet just wasn't cutting it. so i switched us from u-verse to xfinity. they have the fastest, most reliable internet. which is perfect for me, because i think everything should just work. works? works. works! works? works. works.

welcome back to "options action." we've got some breaking news here with regard to changes to the s&p 500 that are scheduled to take place next week, guys. first of all, henry schein, currently in the s & p 400, will go into the s&p 500. will replace care fusion corporation. that's going to happen after the close of business tuesday on the 17th of march. three other changes will happen on friday the 20th. and that is equinix will replace

denbury resources in the s&p 500. sl green realty will replace neighbors industry. so two oriole place there. and haynes brands. four changes happening. >> hedge fundn bill ackman was on cnbc earlier commenting on reports that people hired by his firm pershing square are being investigated by the fbi. now, those reports sent shares of herbalife sharply higher. set off a flurry of options buying. what did you see, mike? >> we saw well above average options activity today. seven times the average daily call volume. a lot of it actually was just the ones that expired today. we also people going out and purchasing the calls thaex pyre next friday. when you see people reaching out and grabbing the really short dated options they're hoping for a little bit of a sharp market reaction. this is not a bet, folks, that herbalife's problems are over.

>> and the market looking at the shares is not convinced there's anything new here. the initial flurry, the spurt, the burst higher, and it faded all day long. basically closed -- the volume was not heavy. it doesn't smell of volume. just people catching a pop. >> does this tempt you as a trade? >> this thing. cool as a cucumber. started at cnbc, made the rounds. he's saying there's manipulation on the other side. you know what i mean? their lobbyists are working overtime. his people are working overtime. the thing stinks to me. and the fact this stock barely has an uptick ever with 50% short interest and then closes the way you guys just mentioned and the conviction in the options market, it was a lot of short dated stuff. so to me it seems like a non-event. i think we're going to see this thing lower at some point in the next couple months. >> coming up next, the final call from the options pits.

and your tweets.

♪ all right. time for your tweets. "if you are short ibm would you buy puts on oracle going into earnings?" and oracle had a very nice day today. >> yeah, it did. they report next week. the options market is implying about a 5% move. that's that's how much it's moved on average. the euro as we were just talking about, is down 15%. expect worse guidance. here's the thing. it's kind of in the market. has it been down in sympathy with hewlett, with intel? i think you have to be careful. i wouldn't isolate the event. i would look out to may if you're looking at puts, maybe the may 41s for a buck 15. >> carter. >> when a dividend is too good to believe. it usually is. bp 6.8% yield. i would not trust that. >> mike kuo. >> when the options extremes are higher sometimes there's a really good reason for that. bp is that situation. you don't need to bother with

the spread just buy those july 36 puss puts. >> dan math jathn. >> yeah, jpmorgan, april 60-55 put spread. >> looks like our time has 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 a little money. my job is not just to educate you but to teach and to entertain. so call me at 1-800-743-cnbc, or of course, tweet me @jimcramer. first, before we get started, i want to thank everyone for the tremendous outpouring this week about the shows we've done,