thewe are here at we are here at the nasdaq on a very tough day for stocks. the traders here are getting ready to give your their best news, but first, here's what's coming up. >> this is my picture right here. >> and that's why people are flocking to vegas. but casinos have crapped out. is it time to double down? plus, how would you like to buy facebook for less than 3 bucks? >> i like it a lot. >> that should do, and we'll show you how. and talk about a bank job. >> i'll take one of those big envelopes and put as many hundreds, 50s and 20s as you can pack into it. >> after a vicious rally, financials are falling. time to get out? the action starts right now. live from the nasdaq market site, i'm melissa lee. and if you're just tuning in, it has been a rough day for stocks. the dow, russell and nasdaq all

down more than 1.5%. so, is this a healthy breather or the start of the long-awaited correction? let's get in the money and find out. dan, lay it out for us. what was behind the move, in your opinion? >> listen, i think a lot of it came from overseas. and we always knew that, really, whenever this market's going to hit a rough patch, at least in the last leg of the bull market, it's not going to come from here. think of what's gone on since the start of april, disappointing jobs data, weak retail sales data and weak manufacturing data throughout, but market has been stuck in this range. the s&p 500, really between 2000 and 2100 for months now. you think of how tight that range is, it's turning. so, i don't really think it's going to be something domestic that will send us down 5%. it could be the start of it, the volatility in china and maybe some weakness in europe, but at some point, i think investors are once again going to focus on the economic data here. >> you have two sets, basically, that are doing battle with each other here. for one thing, you have still

massive buybacks going on at a corporate level. that's a support for stocks. we still are in a low-rate environment. that supports stocks. but we have elevated valuations. that pressures them. and then essentially, what's going to happen is at some point, investors are going to get scared just enough by one of the bad bits of data that's coming out. obviously, we have some concern about what's going on in china, we have concern about what's going on in europe, but if we see bad economic data in the united states, that will be where it actually rolls over, i'm sure. >> it felt bad, carter, but technically, was it that bad? >> well, i mean, the market has a fatigue to it. i mean, we just have stalled, as dan's talking about. now it's one month, then it's a third, then a fourth. and we've had a breadth issue for the better part of a year. it remains a moment of asymmetry. can you eke out gains? sure, but you trade them off at great risk of a drawdown. we had one in september-october that was quick. we're due for that. >> so you think a 10% move is due here? >> it should be. and it's not a bad thing, it's a good thing. to keep the bull going, you've

got to reset, shake people out. it's become easy to make money in the stock market. >> one more point. before the sell-off today it was like a dash for trash this week. you saw the miners, 3d printing stock, a lot of speculative action in some stocks. shake shack went up like 20% this week or something like that. to me, i don't really love that action, especially as you say, we're losing momentum and the broad market is kind of churning and we're losing momentum in some of the stuff that got us here. we'll talk about consumer discretionary. >> consumer discretionary, really? >> it's the second best performing sector in the s&p behind health care. we know how health care's up there. it's kind of defensive, but then all of this m&a has been crazy. >> right. >> then this u.s. consumer, yeah, they've been benefiting from oil, but oil just rallied 30%. so, what does it mean if we have higher oil? i'm just going to say, a lot of consumer charge, a of the retail i'm looking at seems to be rolling over. it lost that momentum let's say months ago and has not confirmed the s&p basically is only 2% from the highs. >> right. >> so i'm a little nervous about this sector because it seems

like the u.s. consumer, which has been a stalwart, is getting a little bit strapd. >> do the charts back them up? >> the sector is steep and it is of course one of the best performing with the exception of health care. it has some marquee names that impervio impervious, disney, home depot and some others. so, it does have stalwarts that can't be just chucked out. but broadly speaking, i think the down side is there. and if one's going to play for a down side generally in the equity market, then you want to be doing it through a high beta area like this. >> i think that's a good point. consumers were benefiting from that. there are also tax refunds which a lot of consumers say they will actually spend and not pay down debt, according to the international council of shopping centers. and then, you know, the consumer has been okay so far. so, why, you know -- >> well, consumer has been okay. there might be some ticks of hope on wage growth, right, which is going to be obviously very important. and the other big factor that we've been talking about for a long time has been where oil prices are. and i don't think oil has really got a lot of legs here. i'm not expecting it to rally

back above 75 bucks or something. and that's what it would take really to start hitting customers' pockets. so, from that perspective, i can see spending on a total level actually going up. so, i don't think that's going to hurt them. what concerns me are valuations. that's what i'm worried about. >> okay. what's your trade? >> so, let's look at the xly, a consumer discretionary etf. the biggest holdings in it are disney, comcast, almost teflon names in a way. but here's the thing, we haven't seen real drawdowns in those stocks in a long time. they're a lot higher than they were in october, than the 10% drawdown you talked about. if we're going to test the down side in the s&p and see a break, this is a sector you want to go after. that chart right there will is isolating this range really between 74 and 76. these are 200-day moving average, in us a good level. i'd like to see the etf open up a little bit, but today when the etf, the xly was 75.15, you

could have bought it on the money at $1.25, breaking even. you're risking 1.5% of the underlying stock price. we're almost a month of at the money, you know, bearish sentiment here. so, to me, i like the risk-reward of this trade. i think you want to do it when it's kind of bounced a little bit. i don't like to press stocks on a day like today when it's down 1.5%. >> why consumer discretionary as opposed to retailers? >> option prices are cheap here. that's one thing i would just say, and they're going to be cheap in a sector like this with names like this in it. but to me, again, it comes down to risk-reward. i think it's 75. if the thing's going to break here, it's probably going to go to the low 70s here. you'll have at least a double, if you get that break. >> you also have what would be a fairly exceptional instance of long-term out-performance. there have only been two sectors that have out-performed the market for five consecutive years. when consumer discretion did that, stalled in '14 and now again is asserting itself. you're talking about almost a 50% increase over the markets since 1990. it's come a long way.

>> with disney as the largest component of xly and the news about "star wars" out, it's really hard to imagine how that stock is going to crack next week. >> and "avengers" on the 2nd, mike. >> i'm just telling you, this is the kind of thing that's going to encourage people to buy the stock, not sell it here. that said, the nice thing about trying to make a bearish bet right now with any kind of a proxy like this is the fact that this could be the crack. and if people think that, you could see a couple days worth of weakness, even if they do come in and buy them afterwards. moving on to facebook here. not immune from today's selling. in fact, take a look at the move here. the social media giant falling almost 2%. so, which way will it break on next week's earnings? let's ask "the chart master." carter, what's in the chart? >> let's go take a look. so it was weak with the market today, but the position it's in would suggest that the earnings can be good and that the stock can respond to the upside. here is a two-year chart. an uptrend of sorts. but if you put in some lines, take away the lines, put in the

lines. we've tracked trend pretty well. put in some more lines. we've tracked trend pretty well. and now we have what you'd call is a flat top, well defined. and we just stuck our head above it, hit $86 and we've fallen back to it. that's a pretty good setup. and more often than not, after doing that, revisiting, you'll come out again. so, the stock is peak to trough here $86 to $80. we think it bounces off the top here and actually goes on to make a new high. relative strength quite good. >> wow. mike what do you see fundamentally? >> well, fundamentally, this is an expensive stock, trading what, 80 times earnings right now and trailing basis probably about 40 times oximetried earnings. but what is interesting about the valuation here is that we haven't seen multiple expansion in facebook like we have in almost every other part of the market, including actually names that have blown the doors off, like netflix, right? so, there you do have multiple expansion. so, this is an interesting situation, because if you take a look at a chart, as he just did,

of the stock price since the ipo and then you map the revenues over it, revenues have actually out-paced the stock price growth over the course of the last couple months. so, i'm not going to call the stock cheap, but after i saw the reaction to netflix this week and i can actually say it hasn't seen multiple expansion, which is my primary concern with the easy of the marketplace, i could actually see some upside here. >> what's your trade? >> simply looking out to the may 82.50 calls. i can spend about $2.85 for those. and one quick point. so, you can use weeklies to try to play a catalyst or go further out in time. it's interesting because this stock has historically moved a little less than 9% the day after, about 10% the week after, but over the course of the month after earnings, this usually moves 15% one direction or the other. so, you can spend more, buy that month-long call option and basically be able to play this a little longer. >> seems kind of expensive, $2.85. >> the problem that i have -- oh, on a premium basis, yeah. you're going to need that outsized move to make it happen. i'm in the camp that if you're long the stock, i think you want to sell calls against it,

because i think this stock is range-bound between $75 and $85. i'm not certain there's anything in the report next week that will make this stock break out of a seven-month trading range that it's been in here. and to me, at $225 billion market cap, it's trading at 13 times sales. that is ridiculous. i mean, it just is. everyone thinks it's the safest stock in the world . at some point in the next couple years, this stock's going to get cut in half. it has to happen here. it may be from $120, but i just don't know. it's ridiculous. >> it was range-bound, but it broke out of that range -- >> it fell. it fell. >> but it did break out of that range about five weeks ago. so, it does have some room to the upside and actually, i'm stepping on his toes here. but here's one question i want to ask every person on this desk. in 30 days, do you think there's a chance that this stock could be up more than $3 or down more than $3 from where it is right now, in 30 days? what do you think the chances of that are? i think it's very, very good. and if that's the case -- >> you just answered your own question. >> in that case, you would rather trade options than purchase this stock. and i don't think $2.85 is

expensive, if you think about it in that way. >> quickly on the charts. >> still, it's a marquee name. it did make an all-time high recently. it's pulled back to support. you give support the benefit of the doubt. >> okay. got a question out there? send a tweet to @optionsactions and check out optionsaction.cnbc.com for the hottest news, videos throughout the week and exclusive trades. so, check it out. here's what's coming up next. why is steve wynn so mad? >> if i don't see that sentence in this edited version of this tape, i will choke both of you after this question. >> maybe because his stock has been falling, and we'll explain how you can profit. plus, cowen carter cashed in big on goldman sachs. now they have a way to make even more money. we'll tell you how. when the world moves,

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it's so close to the options floor. you'll bust your brain-box. all on thinkorswim. from td ameritrade welcome back to welcome back to "options action." let's get out to jane wells in las vegas. i had a what some will say will be the fight of the century. jane? >> reporter: i'm at the wild card boxing club in hollywood, where manny pacquiao trains. the fight coming up may 2nd is financially going to break all the records in terms of ticket prices, the number of pay-per-views. there's talk that total revenues could be as much as $500,000. for floyd mayweather, who is the favorite in a single day, he will earn more than any other athlete has ever earned in an entire year, since he's getting 60% of the pot, a guaranteed $120 million that could go higher. is the only reason this fight happened was because you were

willing to take less than half? >> yes. 60/40. and agreeing what he wants. >> i never waited so long to do any fight. everything is about timing. >> reporter: finally, look at this. mayweather putting his money where his mouth is. he's paid $25,000 for specially made mouth guards, one with a $100 bill inside. so custom-made, mayweather breathes better with them in than out. we'll have to see if he keeps them in his mouth in the corner in between rounds come may 2nd. back to you. >> jane wells. thank you. well, that big vegas event comes as gaming revenue on the strip has actually been falling, but the real problem for casino stocks is in macau, where a crackdown on corruption has decimated the gaming business. take a look at shares of wynn, down 15% this year. so, is there any reason to get into the casino trade now, or are these stocks going to be left for dead? what was interesting is that even today, credit suisse came out with a note saying that the worse is not over for wynn,

things will get worse before they get better. and the dividend that is high on wynn may be in jeopardy at this point. >> it's really interesting, because when the casino stocks start going the wrong way, they can really going the wrong way hard. and i think people -- you know, we say it many times, but the scale of macau is hard to appreciate. we're talking about something that is multiples larger than las vegas. and where those revenues were coming from, we now recognize that it's pretty sketchy, right? so, if they're going to crack down on this, how far and how fast that could go, and who's going to get hit hardest in that cutback? it's going to be the high rollers, and that's where money make all their money. >> looks like the high rollers are investing in the hang seng and the shanghai composite. when you look at, just if you overlay the shanghai is up, what, 60%, 70% in like the last five months alone, and you look at wynn. they get 70% of their sales from macau. you know, they're gone. they left. they're not there anymore, okay. the stock's been cut in half in the last year and you've seen new account openings in the stock market ramp. they've gone parabolic.

>> so, you think billionaires are investing rather than gambling, that's your thesis? >> they're not gambling in las vegas, either. maybe they've stopped gambling altogether and know the stock market's a beautiful gamble. >> and the final fact of course is price. i was a summer intern as a kid in a brokerage firm and an old man said to me once, i've never bought a stock in a down trend in my life and that's one of the best pieces of advice you could take. if a stock is going down, there's something wrong with it. there's no reason to buy wynn or mgm or lvs. just stay away. >> the other thing that's coming out, there's this anticorruption crackdown, but there's also a smoking ban that's going to go into effect at the end of the year. and interesting -- i'm serious! analysts are factoring that in as a pressure because a lot of these vip people, they're in these rooms and if there's no smoking allowed, it is going to be the casinos that are built with verandas and terraces where you can go out and smoke where those people will stay. otherwise, they're out of there. if they can't smoke, forget it. >> got to get the games outside. >> i mean, sounds bizarre, but -- >> and just to kind of button it up. when you look at this thing, at

250 a year ago, now at 125. when you look at the five-year chart, $100. if you're going to round-trip this move, it was a bubble and it burst. this is what it look like when it bursts and they keep making lower lows. countertrend rallies on the way up are getting smaller and smaller. it leads me to believe you'll have a flush lower because the sent manet has not bottomed. >> so, bottom line is don't touch casino stocks. coming up next, is there more money to be made in the banks? our guys correctly called goldman sachs. now there's a way to make even more. when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. all on thinkorswim.

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tsplit second stats. it's so close to the options floor. you'll bust your brain-box. all on thinkorswim. from td ameritrade

goldman goldman shares rose this week on the banks' impressive earnings report and that was good news for mike and carter, and here's why. on "options action," it's how we trade like wall street legends, risk less so we can make more and that's exactly what koe and carter did with their bullish bet on goldman sachs. carter thought it was going to break out, but just buying the stock -- >> something big it going down. >> that may be the case, but buying 100 shares would still put you back nearly $20,000, so instead, mike bought the july $195 strike call for $7. now he needs shares to rise

above the call by more than the cost of the trade or in this case above $202 by july xrision. >> i can't tell you how excited i am. >> well, it gets even better, leo, because if goldman shares go up, those calls will increase in value faster than the stock will, meaning more money in mike's pocket. >> greed, for lack of a better word, is good. >> you bet it is, and since the time of the trade, goldman shares have rallied 4%, making this trade a quick winner. now "options action" fans all over the world are asking just one question -- >> can you say that again? >> no. what they really want to know is, how can they make more cash? ♪ so, carter, do you still like goldman? >> seems okay. the break has come and gone, the market has fallen back, but you're back where it started. the presumption is that this stock is out-performing financials and the market, good place to be. >> mike?

>> we have small profits in the option. actually, at one point when it smi spiked, you could have sold the 200s for almost 8 bucks. you could have locked in profits at that point and still had some upside. i think that's how you want to play it. if we get any rally in the shares, look to the rally and try to take money off the table and still preserve -- >> i found it troubling. it was an amazing report and it out-performed -- >> but you hate financials. >> no, i don't like them, i just think goldman is always going to be as good as it gets and you got that here. i think a territory is $190. i think that report supports buying on a pullback, but the failed breakout was not really impressive. >> you can always look to sell puts if it gets down to those levels to help finance the purchase. dan also had the hot hand on exxon. >> when you think about exxon, it's down 7.5% on the year, down 18% from the 52-week and all-time highs made last summer, and it's really trying to kind of make a bottom here. for those who are looking to make the fine risk directional plays, the options market is one way to do it. so, today i looked at it when

the stock was about $85.50. you could look out two months to june expiration. the june 85 calls were offered at about $2.50. >> dan, what did you do with the trade? >> here's the thing, you had a quick move and it doesn't always work that way, kbrout sometimes have to consider what's going on. the trade cost $2.50, was probably worth $4.25, not a bad short-term gain, but looking out to june, june expirations. so, what i'm trying to do is when the stock is at $90 again, it should be about a double here and that's when i will consider either rolling it up and out, if i still have a bullish view, or like mike said, possibly selling a higher strike call in june expiration to lower my break-even and lower my risk on the trade. >> obviously, a big week for oil, for energy stocks. exxon got the lift with that. risk-reward's sort of neutral, i would say. >> neutral. how about you, what do you think, neutral? >> it's not surprising to see some of the oil stocks rally with support and strength in oil. that said, they have not fallen enough, given where oil currently is trading. this is just basically you're

buying oil reserves. oil has fallen much more since its highs than these stocks have. and i think that's just an observation i would make. valuationwise, doesn't look that cheap to me. coming up next, the final call from the options pits and the one activity that brings out the best in all of us. tweeting. back after this. when the world moves, futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. all on thinkorswim. from td ameritrade. dovisit tripadvisor new york.

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tsplit second stats. it's so close to the options floor. you'll bust your brain-box. all on thinkorswim. from td ameritrade let's take a let's take a tweet. andrew asks us, will amazon climb again this quarter after earnings? mike khouw, what do you say? >> you know, my observation i would make, take a look at what happened to netflix this week. this is a very high valuation name. investors have not always required them to make money to see the stock go higher, and kind of like netflix, the options markets are not expecting it to move as much as it normally does. and to me, that actually sets up an opportunity. if you're inclined to make a bullish bet here, and the stock was down 10 1/2 bucks today, you might look at buying some calls probably out 30 days or so to make your bullish bets. >> big gap last quarter, gaps

come in pairs typically or more. this likely played for a gap-up. >> gaps come in pairs, words to live by. the next asks i bought baba at $98. should i hold it? >> it's a hard one. everyone was focused on the lock-up that came and went in march and the stock pounced afterwards. we've seen this before in other big lock-ups, but now the stock is once again threatening the $80 level. they haven't set a reporting date yet. they gapped down 8% after the last report was disappointing. if they miss, and i don't think they give guidance, this stock will get creamed because a lot of the people waiting to sell who are maybe in lower than $68, the ipo price, will probably sell on poor results. and i've got to tell you, i think at some point, this stock is going to trade back at its ipo price this year. >> stay away. >> yeah, i'm not a fan. >> time for the "final call." >> facebook, own it. looks like a good quarter coming. >> mike khouw? >> calls are the cheap and safe way to play a bullish bet on facebook.

>> dan ethan? >> xly, i do not want to short disney or comcast, but i will take a shot on money at the xly on the money puts. >> our time has expired. i'm melissa lee. thanks for watching. check out optionsaction.cnbc.com. we'll see you next friday. "mad money" starts right now. >> announcer: the following program is a paid advertisement for the worx aerocart. introducing the worx aerocart, the 8 in 1 tool that makes every load as light as air. >> you can carry anything in it, and you can use it for a multitude of things. >> announcer: like moving heavy water jugs with ease... and not straining your back moving potted plants. >> this actually has lightened the load a lot. i can move it around and not have to worry about that. >> it can tackle any job that i need it to in my yard or an