here's what's coming up here's what's coming up on options action. >> that's what traders could soon be saying about oil, sell, because it's flashing a secret sell sign. we'll tell you what it is. plus looking to play catch-up to stocks? here's a hint how. and we'll tell you why now is a time to get in. and there's something very strange happening with disney, apple and facebook. >> i'll give awe little hint. >> no need for that, bob, one of our traders has figured it out and it could mean trouble for stocks. the action begins right now.

if you've been sitting on the sidelines, it's time to play some catch-up. what names can get you back in the game? let's get in the money. dan, taking a look at some laggards, which ones? >> google has had disappointing earnings and sales fission, missed over the last few quarters, but the stock is up 3.5% on the year, up a little less than the nasdaq, it's outperforming the s&p, it's a big component. over the last year the stock has underperformed, the s&p is up 14%. the nasdaq composite is up 24% and it's only about 5%. you say what's going on here? obviously we know facebook is eating into the once-monopoly they have in search. they have a lot of competition as far as social media. i think there's an interesting opportunity here. i think google, a couple of things to look out on the horizon here. they have a new cfo they hired, they guarantee a $70 million pay package. she comes from morgan stanley, i think the sentiment will start

to change as investors start to get focused on the potential for her to return some of the $70 billion in cash on the balance sheet to investors. it reminds me about apple, they have this huge cash pile sitting there. burning a hole here, apple before they went out on what's been an epic capital return plan. >> mike is look sog buttoned-up in miami with the tie. what do you make of the notion that the cfo will be a huge catalyst for the stock. >> the catalyst they need isn't a cfo, they need to broaden out from search, they don't have that many other lines of business. apple is more diversified than google is. the one thing i would say, dan pointed out they have a huge cash pile when you strip the cash out, the company is trading a little less than 16 times earnings, that's a big discount to the broad market so to me it seems like a safe place at least to lay low if you want to take a long position with the market right here at all-time highs. >> what do you think about

google and the notion that there's a catch-up trade you can play with stocks near all-time highs. >> i think there's a great play, google has lagged and mike mentioned about the earnings multiple. when the analysts look at it. they say maybe 10% growth this year. people are looking at it down the road, 15% earnings growth and when you have a 16 multiple after you strip the cash out if they can start to monetize that, then to me the stock looks very attractive from a valuation standpoint. you look at the technicals in the movement in the stock. it looks like it's try to move to all-time higher. i'm looking at a 555 print on google. >> what's your trade here? >> look at 580 over the last few months here, it's kind of been a level, it's hit some resistance there, i think what brian is talking about, what's the next catalyst with the cfo coming, you're going to want to look at q 2 earnings.

i think consensus will shift, they'll start to focus on the potential for cash returns. i want to set up owning calls for that july q 2 report and the way to do that is probably try to finance in the near-term that premium. because i don't want to buy out of the money call premium. the markets are not moving a lot. volatility prices of options are low, without a lot of movement, they're going to bleed in the near-term when the stock was 550 today, i sold the may 29th weekly 570 call at $2 and i used that proceeds to help pay for the july 570 call, paying $11. that call calendar cost me $9, that's my maximum risk wlaxt-day want to do on the may 29th expirati expiration? i want the stock to move up about $20, 57. i know i own the july call. i may want to reduce the cost or turn it into a vertical. why am i choosing may 29th

weekly as 0 short strike? we have a long weekend on the memorial weekend, if we have a move and things start to settle down, i think that helps finance the purchase of the longer data call on the q 2 event. >> a lot of the calendar trades that haven't been that crazy because the price of options has been low in google i think dan's trade does make a decent bit of sense. the options premiums haven't fallen as much as they have in a lot of other places, including the broad market. there's not a near-term catalyst that would propel through the strike before the first option expires, this is a good way to finance the longer data purchase. >> there's some interesting technicals to look at the stock, if the stock trades above 560, you have to get nervous about holding the short strike. you cover the strike, ride out the long, you get like i talked about, 555, takes the stock to another level. 560 is the level you want to look at to close the short strike and play continually to the upside. i like financing trades like

this. because a lot of ways the option premiums play into your favor here. if we sit around, especially through memorial day. >> you need the market to go higher in order for this to work out. or is google such a trade it's a catch-up? >> that's a great question. generally it's not a fantastic idea to just go pick a bunch of laggards, we know it's a phenomenal company with a great balance sheet if you get a combination of investor-base looking for capital return and potential some smart m&a, you guys all know i think they should buy twitter and i think the stock would go up by 10%. if they were to do that. so the combination of capital return and some smart m&a and i think you have the stock back up at the highs at some point in 2015. >> oil rising alongside stocks. dom chu is at headquarters with this. >> crude managed to close higher today, in doing so, it helped cap off its eighth straight week of gains, something that hasn't happened since february of 2013.

when it comes to the energy stocks on the heels of that, we've seen a rally coming off the lows this year. not all energy companies have had the best of weeks just this week today. now among the top gainers, cabot oil and gas and transocean, a drilling stock, up by 2% or more week to date. early this week at the sohn conference, oil and gas fracking companies came under intense scrutiny by hedge fund manager david einhorn. and pioneer resources and eog, you want to watch the frackers, those guys had some interesting weeks. given sohn and the conference. >> you have to go to the ever-emergent brian sutland. oil volatility, what's been going on with the ovix and is there a direct correlation with the oil equities? >> when you see oil move, you'll see it reflected. the refiners have done well.

but when you talk about the ovx, the oil volatility index it has a lot of fear indication. when it broke above 28 and it spiked up into the 50s here that was extreme fear. once we broke the 28 level, that was people panicking, getting out of the oil markets, now we've seen it come off its highs here and it looks to be trending back to 28. so why is that significant? because if we get less movement every day in the price of oil, the real natural hedgers, the airlines companies, pet lum makers, plastic makers that hedge using oil. will start to get back in the market and that's going to put a little lift behind oil, a bid behind the oil market. i love seeing oil volatility come off its highs, to indicate being a buyer. we've had a huge run in oil, we'll see if it can hold. >> mike you're looking integrated for the trade this we're wooek? >> i'm not sure i feel like crude has got a whole lot more legs, i think it's going to be

above 60 the end of next year. it's had a heck of a run. we've seen eog, pioneer, a lot of names have suggested you might see production or land drilling increase. so i think we might stabilize in a lot of integrated names have not dropped as much as long dated crude has, i'm looking at exxonmobil out to the july 87 puts, you can spend $2.75. play a little reversal in crude by making a bearish bet. when everybody is getting bullish on crude, i think you should get a little nervous. and let's remember, iran, if sanctions are lifted, there's going to be more production there. more of a brent market issue. >> do you like spending 2.35, dan on this trade? >> it's kind of meaty, but crude has had a massive run like these guys have said, if it's running out of steam, the balance on exxon wasn't impressive off of recent lows. i expect if crude does go back down. equities could get panicky and

the once that didn't perform that well off the the lows make sense. volatility in exxon is pretty cheap. if you get this thing turning south and vols go up, you'll have the opportunity to spread these and reduce the premium at risk. >> spread them, right? we might get a little back-off on oil, i expect it to trade 55, 56. we talked about oil volatility start could come in, that should start to affect the individual names in the premium market and affect the options. we could see downward pressure on option prices, as soon as you get the move lower, i would jump out of the trade. it's a great way to be a trader, buy a put option, wait for the move and once it happens, take it off. >> i think exxon is, this is the best way to play it out of all of them this is actually the most expensive of the integrated stocks, i think it probably applies equally to several of the others.

royal dutch shell would be first on my list, if i wasn't looking at exxon to make the same play. >> got a question, send a tweet to options action. for all the options action, there's only one way to go, while you're there make to sign up for our newsletter. here's what's coming up. what do disney, apple and facebook all have in common? >> those people have never been in my kitchen. >> no, cliff, they're all down since earnings, what that could mean for the market. plus calling all options fans, live long and prosper, and send as you tweet. if it's nice, we'll read it later on in the show. "options action" is back an this. here at td ameritrade, they work hard.

wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart,

plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this. dan is noticing a troubling dan is noticing a troubling trend in disney, and apple. >> potentially trouble. when you listed those names. they have been fabulous performers in the latest leg of the bull rally. i want to look at the charter and the s&p. the s&p, this is the one-year chart, he the s&p 500, it's come up to this 2100 level. you have a massive day today. a little knee-jerk, a little give-back from what we had, the selling earlier in the week. what's going to help us break out? where's the leadership going to come from. names you listed before, they have been leaders throughout this whole bull market.

and in some ways they are like a teflon portfolio of some of the stocks and i want to look at some of them since they reported. here's apple here, it's up in the mid to high teens. it was up that way at a new all-time high heading into the earnings. this was earnings, the stock has sold off, down about 5% since they reported earnings. and we'll notice a trend here. here is disney, the same thing. an all-time high. they sold off about 4.5%, 5% after the earnings. here is nike. same sort of thing. this is reported back here. it spent the last couple of weeks going down and then comes back. and then starbucks, the same thing. what all of these stocks have in common is there is is a massive premium on them other than apple, as far as consumers think about their products, obviously apple fits that category. but the multiples the stocks trade at. one thing i would say about the 5% average selloff about those four stocks on earnings, people are full-up on those things,

they're crowded trades. there was no incremental buyer and you had some selling. and i want to juxtapose this against facebook. this was a huge gainer leading up to last year. look at the massive range this has been in for ten months now. this stock also made a new high and was trading that way into the earnings report a couple of weeks ago and it sold off and now back into the big range. when we figure out what will cause the s&p to break out we want to see apple and disney and nike and starbucks get us there. but if they can't and showing waning momentum, i would be skeptical of a breakout in the s&p and that is my point because if they fall back in the trend like facebook we could lose the horsemen of the bull market. >> so you are using the charts to make a decision about the s&p which is it is in trouble. >> you have to tell me where the leadership is going to come from. >> and i would push back, these

ran into the earnings but the s&p is still close to the record highs and it doesn't look like it rolled over along with these stocks. >> that is true. there is one thing that the s&p has in common with the stocks that he hasn't mentioned, and he's talking talked about and he's talking about multiples but if you go back to 1950 and if you look at how the s&p performed over a 90-day window it is up, believe it or not, because the market trends up, almost over 3% but when multiples get into the range where we are, 17.5 to 19.5 times earnings, the s&p's growth during a 90-day window drops by 33%. and that is exactly when you will start seeing it, when the leaders in the market trading at the high multiples, people are trying to figure out, what is the next great thing that will come out of them and it is hard to figure out what that is. i don't think the market will roll over but the chance for sharp upward moves in the next

90 days are significantly limited now. >> so dan and mark are siding with janet yellen. could we see new leadership rolling in. >> i believe so. and i'm in your camp than they are. >> i'm not in any camp. >> you sounded a little biased. i think you could look at financials and some of the higher beta names, growth names and small caps that have lagged and maybe it's time for them to take the next roll, take us to the next level here. and i do want to touch on dan making some great points on the charts. the roll ore in the -- the roll over in the big names, post earnings, i look looking at the volatility and what is that telling us. options market. i take a look at what's called an apple vix. and typically after earnings the last couple of years, apple vix plummets, volatility plummets, options get crushed and it trades below 25, down to the 20

level. but the last earnings it hasn't broken 25 and it tells me that people are out there bidding up options and maybe putting on some hedges thinking that hey, we'll get another rollover in the big names that have done so well for so far and now it is time to buy a hedge and look for the down side for apple. >> they say diamonds are a girl's best friend but they are trouble for one of our traders and find out why when we come back. i'm here at the td ameritrade trader offices. ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade.

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here at td ameritrade, they work wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.

a positive jobs number sent a positive jobs number sent stocks soaring but that was bad news for dan. >> on options it is how we trade like superstars. risk less so we can make more, and that's just what dan tried to do with his debt on the dow diamonds. the diamonds were coming under pressure, just shorting the index could lead to big options and so dan bought for $2.65, to make money he needs dimes to fall below 180 or below the cost of the put, $177.35 and paying $2.65 to pay

just a bebt against the market? >> i declare bankruptcy! >> so to cut cost he sold the strike put for 65 cents and created the put spread. here is how it works between the $2.65 he spent on buying the higher strike put and the 65 cents he collected selling the lower strike put, he cut the cost of his trade down to $2 and now he can see the profit of the diamonds fall by the reduced cost of the trade or in this case below $1.78 by the expiration. ♪ ♪ that may be true but keep in mind there is a tradeoff. and by selling that put dan's capped his profits to $170. and since the time of the trade, diamonds are up slightly, meaning this trade isn't looking so hot. and now "options action" fans have one question -- what will dan do now? >> and so let's answer that? what will you do now? >> we put this trade on a few

days before q1 earnings and this premise was, this was cheap, near-the-money protection in large cap stocks in u.s. multinationals, and i thought that if there was going to be a downdraft, it would be focused in these stocks. as of wednesday this was a winner here. and this is again, what do you do a trade like this before, if it is protection against a large cap portfolio. you still have another week. i think the 180 puts is the only thing you have to worry about over the next week. they were offered 60 cents here, they're going to quickly go to zero, you have to make a decision early monday or tuesday, how much premium you want to recoup. >> mike given the charts that dan had, showing the rollover, could now be the time to put the trade like that? >> this isn't saying the stock will go lower but a quick point about put spreads, these are trades you want to adjust

because what will happen is the two options, the decay rate at the money will accelerate to the relative to the other, so you want to adjust the trades to take advantage of the benefits that a put spread offers. >> brian? >> i'm out there looking for hygiene strategies myself and with volatility and fear this low it seems to make sense to roll this over and look a few more weeks out and put on another put spread. it makes sense. the down side put when you go even further out in terms of expiration is relatively high so you can sell a down side put and capture premium there and that why the put spreads are so cheap to buy. that's makes some sense. buying a put spread makes sense on a good hedge. >> coming up next, reach into your pocket and send us nice thoughts. and we'll answer a tweet after the break. i'm here at the td ameritrade trader offices.

ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

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here at td ameritrade, they work wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade.

you got this. let's take a tweet. md asks what do you think about getting long on amazon now. let's take a tweet. md asks what do you think about getting long on amazon now. >> dan, you take it. >> this stock has had a massive run-up off the lows in the 52-week lows, and went up to 450 and it looks like it was back to 400. they will continue to get the lenk leverage out of the investment and i think you have to wait for a pull back to 400. it is not my bag here but i think you may want to look to define your risk, call spreads. >> and matteo has a question. stones or beatles. mike? >> rolling stones all of the way. >> i would go with stones too on that one. can rocks out a little bit harder. >> dan nathan. >> stones all of the way. >> stones all of the way. clean sweep, matteo. >> and mike carp from miami.

>> i would say sell some covered calls. >> good to have you. >> google call spread, the leader for the next few weeks. >> i'm with ryan, google. >> our time has expired. see you back here next friday. mad money starts right now. >> announcer: the following is a paid presentation for p90x3 brought to you by beachbody. [ bell tolls ] [ clock ticking ] [ dramatic music plays ] >> announcer: do you wonder what it would be like to be in amazing shape? [ pulsing ] do you look in the mirror and wish you had a six-pack? don't you want a body that can perform like this and look like this at least once in your life? [ air rushing ] well, now, you can get that body... faster than ever before. you don't need a gym membership or fancy equipment, and you don't need a lot of time. you start by doing what these