e. test. a cold breeze blowing through wall street. our guys here suiting up behind me with their best trade. 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 is about to go even higher. we'll tell you which sector in particular to avoid. and why are traders suddenly betting on herbalife again? >> one big question tonight for investors. is big oil going to cut their big dividends?

let's go to mike keir? >> well, it's interesting. if you look at what the options markets are implying right now, they are absolutely not forecasting the steady dividend growth that the oil companies are well known for. as you look out to next year, some of the big names are definitely looking like the options market think there could be a cut. that makes sense. let's look at exxon as an example. here's a company doing over $24 billion of free cash flow last year. probably about $2 billion this year. you see similar declines in bp. chevron this year, we're going to look at probably 9 billion in negative free cash flow. it's pretty hard to continue to the support dividends when you have cash flow that was once extremely positive turning very negative. specifically, let's look at bp. think i we're looking at 38% year on year implied cut in the dividend. chevron 25%.

exxon about 30%. >> the troubling thing is, a lot of companies that have not cut the dividends yet, they've suspended the buybacks. the dividends could go higher on a yield basis, which puts more pressure from them. >> translator: at some point the game is over. asset sales have to start to cope with it, or you have to cut. and then that becomes really bad. yeah, not good. >> dan. >> and i think it's the speed this is all happening. we know exxon had a meeting a couple of weeks ago. chevron did. they're talking about the buyback. all of this is happening very quickly. that's the thing that has the potential to catch investors offside. people are seeing the yield and 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. that's really the issue. if you see crude stabilize 60, 70 bucks, there isn't necessarily some reason for them to cut. if it continues to be weak and

gets even weaker, these are not businesses kicking off significant amounts of free cash flow at 40 bucks a barrel. so i think that's something people need to be aware of. you simply can't sustain it indefinitelily. >> we're going to you. you see troubling charts here. >> the price action is terrible. we're going to look at bp specifically. the issue with all of the big energy gains is there looks to be quite a bit more downside. and of course, it has a lot to do with the current setup in terms of dividends. i have three columns and three or four big stocks. earnings, factual. 2014. take bp. they earned $4.05. they're going to have basically $2 earnings. look at the dividend. now that dividend is not going to be covered. same thing with conoco. they're going to 40 cents if wall street is right. and the did i have dend is not

covered. and hess, actually going to lose money, and the dividend is $1. and the price action, as we know, has been poor here's crude oil versus bp. there was a bump up in crude. you get a little bit of a bump up in bp. crude is back down. crude almost touched the low today. the bet is bp will take out its prior low. so here's a chart, and then i'll show you one more and tell you where i think we're headed. you have a 35% decline from peak to trough. and then we rallied almost 20%. and then 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 a look at the long-term pattern. you can name patterns anything you like. it looks like a body. or a cup and handle. it looks like it's out of the kitchen cabinet. thest a major reversal

formation. neckline. and then a massive break. that's the potential here. we would do something, get out. >> so the charts look terrible. mike, on a fundamental basis, would you also pick on bp? >> i think there's plenty of reasons to pick on bp. i don't like anything in the space. bp is the one that has all kinds of other potential headwinds on top of just the weakness in the oil business. one interesting they think is the oil sector in general, the integrated oils were not premium stocks. and right now they're higher. normally when you see them higher, we're going to tole you to trade spreads. in this case, i'm not going to do that.

i think they are justified here. all i'm looking at doing is going out to july. that costs about $1.80. which is 5% of the current stock price. if the stock does go lower, two things will happen. options premiums will rise. that's a good opportunity for you to spread or roll. >> you're going to get a crescendo action here. this is coming to a theater to you. well, this looks like when they break the lows, things could two haywire here. you may have a down 10% day. that's what mike is really talking about, is using this, 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 happens, rather than possibly spreading, you may want to take the profit there. you could see some sort of reversal. this could be the thing people are waiting for. so the timing may be difficult from the standpoint, it may feel like a press right now. if you get that move and it

happens, you may want to bring the tradeoff. >> bp taking out the low that exxon already has. the most important one is already making lows. the world waits on one woman. we're talking about janet yellen and the fed that kicks off a two-day meeting on tuesday. so we thought we could give up on the banks because the results are out. >> it was interesting. yesterday's price action, including bank of america was fantastic. you had jp morgan getting close after being down 15% at one point on the early, in early february. he be able to buy $6.5 billion worth of stock. everything sounds fantastic, right? don't forget these guys had poor results. they gave murky guidance. it's a company not growing sales or earnings in 2015. evaluation is cheap. here's the thing, okay.

everyone is focused on higher rates here. we don't know what is going to happen. is the fed going to remove them or not? i think that's already in the markets. the rates have moved up here. i think it's in the market. so you have this enthusiasm. i know it's considered the one you have to go after. and that is what some tech anythings, not what carter called the death cross here. two weeks ago on the program, remember we highlighted microsoft doing the same thing. it went from 44 to 41 in a strait line. we have a meeting well telegraphed. april expectations going to catch their earnings report on april 14th. i have two events between now and mid-april.

and the stock was 60.55. i bought the april spread. i paid $1.20 for that. that is the max risk. it breaks even on the downside. i have the potential to make $3.80 if the stock is between $58.80 and 80.85. i think the stock is extended here. >> i go to carter. do we agree with this analysis. what is this? >> my body of work. my sense. and hearst whoo i mean by that. we know the demise of the banks wz called for energy. and the big banks, these are near and the kre. at or near a high. we think they act well in the

face of what should be a pressure. take the other side. >> i'm going with dan here. here's the reason. when people talk about financials, one thing they frequently talk about are things like net interest margins and the idea rising rates are ultimately beneficial for the the banks. part of that is a little bit short sided is in the short term you have to expect origination to drop. you know, the whole reason that we have these low rates helped basically refuel the housing boom. you're not going to see rates go up 150 basis points. i think basically any of the good news is probably baked in. and then you get the wait and see. a lot of loan origination you're going to know mid next week. that's actually really bad for the banks because it means the fed is too worried about rates going higher.

if your oil call is correct, okay, and the fed remains worried about the recovery here and they're not ready to raise rates, the whole economy could be in for a double dip. and the banks will be right there. >> got a question out there. send us a tweet. we may read it later in the show. check out wour website. it will change our world. >> currency a problem. frankly the best companies will figure out a way to manage it. >> maybe not for apple. but this tech guru says it could be problem for another large tech stock.

heroes charge! ♪ (explosion) ♪ (explosion) ♪ (explosion) ♪ lead your heroes in the hit mobile game!

your currency is clearly a problem. the best companies will figure out how to manage it. >> not sounding too worried about the big dollar rally.

should you be? dan nooiiles is senior portfoli manage. good to have you with us. certainly we've had a drum beat of analysis with the negative currency impact. tech data as well as xerox yesterday. we had another on tesla today. is this a concern of yours? >> yeah, it should be a big concern for everybody. for the most part, the way they should. everybody is 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 13% or so year to date. about 25% year over year. and that's simple math. the bigger problem, which people haven't really dealt with. so you're right now dealing with a currency translation effect.

anything you're bringing over from asia or europe you have to translate back to 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 or 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 problem i see that people aren't focused on. only a few companies have pricing power like apple to get through that. >> would you agree with tim cook in that the best companies firing on all cylinders, that currency is not a big issue. if the companies like a hewlett h or ibm have to be careful. >> one is you have a unique product that people desperately wasn't.

to some extent apple is benefitting from the fact that they haven't had great products. that's why their revenue growth slowed so dramatically. so they can get away with it. the second piece is if you're a consumer facing company, they have more money in the wallet because of the same factors that oil has been crashing that you were talking about earlier. now the if you're not in the boat and selling more to corporations or government et cetera, like you mentioned hewlett-packard which has a big business like that. short ibm again, more corporate facing, or ge, which are also short, you've got those issues that affect those companies. it's a lot harder for them to get out of it. they're competing internationally. you have the japanese competitors now able to take advantage of pricing. they had to reprice the printers. they talked about that. and on the press release, they

mentioned currency. not sure what they'll end up saying. i will tell you, micro processor prices may need to be cut in the future to keep demand up. >> we were talking about apple here. when we get to a point in the next couple of months and the demand in north america and europe wanes a little bit, much of apple's growth is going to come from overseas, china, and so to me i have a hard times squaring the circle here, that if much of the growth will come in the back half of the year like emerging markets with china, how do they withstand the price increases? who knows where china's currency is going to grow? if the peg is broken again. so i'm hard pressed. tim cook's answer was very nonchalant in my opinion. i know they have sophisticated henling programs. let's remember, this is a luxury product that we're dealing with in the iphone.

>> well, i mean it is. 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 key. that's a very, very small number. so i completely agree with this you that international growth you have to be worried about. they talked about on the call how they repriced products in russia. but they still put up good numbers. the good news is there's so many more people left in the u.s. to upgrade. and obviously not dealing with currency issues here, that helps you get through the problems, and also you get a little bit of extra revenue kicker in here with things like the watch, that i'm not necessarily a big fan of. but all those things will help them get through better than others. but clearly through the back portion of the year as more of the u.s. is upgraded, as you get towards the fourth quarter, that may be a bigger problem. i see the dollar going higher from here. this is becoming a bigger issue as you get further out from the

year, especially as the feds raise rates, which puts more awkward pressure on the dollar. >> dan, thanks for phoning in. we appreciate it. >> thank you, melissa. >> dan niles. ibm is down $40. >> about to take out the lows again. >> 20% revenue decline. the streets have been looking for increases, which is totally fiction. this is terrible. it's terrible. >> all right. coming up next, bill ackman is back on the attack. hey mom, you want to live by the lake, right?

yeah. there's here. ♪ did you just share a listing with me? look at this one. it's got a great view of the lake. it's really nice mom. ♪ your dad would've loved this place. you're not just looking for a house. you're looking for a place for your life to happen. zillow

welcome back to "options welcome back to "options actions." we have breaking news. first of all, henry shine, currently the s&p 400 will go into the s&p 500. will replace care corporation. that will happen after the close of business on tuesday. the 17th of march. three other changes will happen on friday. the 20th, and that is equinex.

and hanesbrands will replace avon products. four changes happening. melissa. back on over to you guys. bill ackman was on cnbc on reports that they are being investigated by the fbi. those reports sent shares highly sharper and sent off a flurry of options buying. what did you see, mike? >> yeah, we saw well above average options ak at this time today. seven times the average daily can call volume. a lot of it was the ones that expired today. we saw people going out and purchasing the 37 and a half calls that expire next friday. in a situation like this, it's important to note they're hoping for a sharp market reaction. this is not a bet, folks, that

herbalife's problems are over. u it was an initial flurry. a burst higher. and it faed all day long. just a few people trying to speculate and catch a pop. >> does this tempt you at all in the trade sf. >> you know, ackman was as cool as a cucumber. he started at cnbc, he made the rounds. doesn't appear to be worried here. he's saying manipulation is on the other side. to their lobbyists are working other time. and then it closes the way you guys just mentioned and the conviction in the the options market, it was a lot of short data stuff. so to me it seems like a nonevent. i think we'll see this lower in the next couple of months. #

now with the you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more.

time for a time for a tweet. if you are short ibm, would you buy puts on orcl going into earnings? and they had a nice day today? >> it did. they report next week. the options implying 5% move. that's how much it moves on average. last quarter they reported cloud revenues up 45% year over year. that was can kicker here. the euro is down 15%. it's in the market. has it down be in sympathy with hewlett and intel? that sort of thing. >> time for the final call. last word from the options pit. >> when a dividend is too good to believe, it usually is. bp. 6.8% yield, i would not trust that. >> when the options premium are higher. sometimes there's a good reason for that. bp is that situation. just buy the july 36th.

it looks like our time has expired. i'm melissa lee. for more, check out the website optionsactio optionsactions.com. >> male announcer: the following program is a commercial presentation of total gym fitness. >> my arms are a disaster. >> i'm hoping to gain a bunch of muscles. >> haven't been able to lose that quitting-smoking weight. >> i definitely want to see weight loss. >> i want to feel better, have more energy. >> love to have a little bit more defined stomach. >> i'm really concerned about my midsection here. >> trouble area is right here -- right in my middle. >> what happens when people want to get results? well, we're putting total gym to the test. >> 14 people, all with different goals. what can total gym do to your body in only 14 workouts? >> cardio, strength, stretching.