we're live at the nasdaq market site. carter has a rager of a weekend on top. getting ready. here's what's else is coming up. >> that the only thing we have to fear is fear itself. >> well, maybe not fdr, a collapse could be signaling trouble for stocks.

it was a quiet day for stocks, unless you're talking about apple, shares were up. it doesn't seem there's any sort of catalyst here for this move. the worldwide developing conference which we get in early june. iphone sales remain strong. this is one of the situations where we're going into a season when of all of the spaces that do well, you see technology stocks do well and this is one of the few you can look to where valuations as expensive as the stock is, if you look at how much they earned, it's not expensive on a fundamental basis. >> it is amazing how the se sentiment is getting so bullish,

saying the upgrade cycle, there's a huge base of installed users that have not upgraded to the iphone 6. >> a lot of bullish action, including in the volatility a . >> iphone 6s though, they've

talked about when that is going to be released. that is a potential catalyst. the watch, it's an interesting thing, i didn't think initially this could be that big a material mover for the stock but one of the things i do end up going to apple store -- >> it is amazing me. it's always a long line, i can tell you, i can go through the mall and before that store opens, there's a line -- to get into the store. and you see the whole staff cueing up there. i think it is amazing at this stage with a company this mature with products this saturated, that demand remain so high that people are cueing up outside the

store even now. >> there's an adage, news follows charts. we think up, so we've got a -- nice trend line, but if you want to see it, you can draw the lines, we know you've bounced off over and over and the presumption is we're about to begin again. you get nice moves and no trend, trend and presumption is up and out. i want to study this tight action. the next chart is a more short term chart. we're the same price as we were exactly three months ago. late february, late may, equilibrium, you can draw the lines like that. it gets resolved like that. here's the chart without the lines. you can draw them like that, we think it gets resolved like that. buyers here, we think up and out

and should be a good 5 or 6% move. >> brian pointed out that volatility in apple options is relatively low, one thing i would say, for the stock to move to the upside, you're talking about an increase in val u yags, i'm looking for a call spread, to the july call spread. i could buy 1.35 and sell the 1.40s and net spending 1.55. an 8% increase in valuation to get to $60 billion in the valuation for apple. i think it's okay to make a bullish bet here but you don't necessarily need to go out right and buy calls. for the stock to go up 10 to 15%, i don't think we'll see between now and july. >> when volatility has dropped like mike mentioned here, it's tough for the stock to go off and race to the upside.

it might be an upside move but i expect it to be a slow moving one. that's when you do a call spread and not an outright call. at this level, i need to be out of the stock and that's a great way to play it and cheap way if you're afraid i don't know what i'm going to do here. >> the s&p 500 or nasdaq. >> i don't think it has to mean the market is going higher in some meaningful way. i think you have a big stock cheaper than the market, delivering better results and if you do a perfect, be long apple but apple looks higher. >> given how little we're moving, should it be even lower?

what do you think? today is tricky because it's a day before a three-day weekend. you typically will see it fall but what's been happening the last couple days, a tremendous amount of upside call buying in the vix in june options expiring in three weeks here. when you look at that and june 18th and june 20 calls, anything to the upside, we saw about 170,000 calls bought to the upside. tremendous amount of open interest. traders out there are looking at the vix at 12 and finding ways to hedge a portfolio in case we have a summer doll drum and pull back in the market. >> or in case something happens at the next fed meeting. >> when you look at where the vix has been bid, everybody has dismissed the idea there would be a rake hike in june.

what's a sensible way to hedge that, you see it actually out in september and december. if you look at that part of the term structure, the same pattern is exhibited. what's going on here is that people who are long in the market are looking for hedges and pointing specifically to those catalysts you just talked about and buying themself a little hedge -- >> is the vix broken? has it happened anyone do anything except sort of dig down -- >> as you question his existence. >> no, last time we were here you had expectation biotech. >> expertise in a lot of things. >> the vix is sort of broken in the sense it is just a calculation. it doesn't consider time and decay that happens to option prices and realized movement in the market. in that sense it doesn't tell you a lot what the market is doing. it's a forward looking way to price things and way to price

out fear, it's a temperature gauge and that's all you can take it. there are various other instruments but various ways to do that. >> for protection, what's the trade? >> i've been looking at you look at the spy options and the cheapest way to find that protection. when you look at the june 30 date and options in the spy, this is expiring at the end of june, going out about a month. i would be looking to buy the june 2.07 put and selling -- only 20 cents. this is a simple trade. it's a bet. i'm betting 20 cents, risking that to pay out a dollar. it's a four to one payout. cheap inexpensive way, if the market drops 3%, i trade in a $20 bill and get back $100. it's a cheap way to hedge your portfolio and get a nice payout on the hedge. >> that's a pretty good risk

reward. those are the type of things we like to look for in put spreads, versus what it can be worth. why only a dollar? the reason is if you can get that four to one payoff, you buy as many of these as you need to hedge for the most you're going to get. this makes a lot of sense. when volatility is low, spreads could still make sense even in that environment. >> carter, you asked that question a pointed way, does vix help us at all. do you look at it at all? >> never, it's derived from price, isn't it? it's like in foot notes, secondary and -- stick with the price itself. >> if you look at the s&p in a way you're looking at the vix. the s&p is extremely range bound and likely to remain later and expect volatility to go higher, q3, q4. >> send us a tweet.

if it's mean we'll ignore it but if it's sweet we'll read it out loud. there's news and video and trade. it's the perfect compliment to the memorial day weekend. here's what's else is coming up. >> talk about a bank job. >> put as many 100s and 50s as you can put into it. >> they double their money in less than two months and they have a way to make even more. they'll show you how. plus, oil is surging and that could be good news for one large retailer. we'll tell you which one and how to profit when "options action" returns. 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.

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of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this. welcome back, put it in the record books, oil closed lower on the day but not enough to kill that weekly winning street. this marks the tenth straight week that crude oil has posted a gain. it's a longest streak of weekly gains on record going back 32 years. that's how long these performance numbers have been tracked. the wti to $59.72. some traders pointed to the strength of the u.s. dollar as well as profit taking ahead of the long memorial day weekend. crude oil often times moves in the opposite direction of dollar value because commodities are priced in dollars.

it becomes more expensive to convert money to buy oil. we did also get news on the oil front on the rig side today in the latest data from oil services baker hughes, the number of operating u.s. oil rigs fell by only 1 to 659. the rig count did fall, it may indicate that industry activity may be stabilizing for now. back over to you, melissa. >> thank you, carter is looking at a retailer that sells a lot of gas and reports earns next week. what is it? >> costco, big name obviously, and what i have here to start is a chart since the bull market began. it's up four fold. and obviously, it is in a well defined ascending channel. i want to study this recent dip and tell you what i think is coming. here is the past year or two. what we now is we have a powerful advance up about 45 to 50% and pullback of 10%.

these little lines i've drawn here, this is what's important, we're up $45 from this period over about 11 months and pulled back 15. there's a ratio here, which is to say we've retraced 33% of the proceeding advance. there's nothing random about that. where we started to stop is exactly on the average. the presumption is that this decline leaves us at a level of support where rebound potential is high. we like costco for a bounce off its trend line going into earnings. >> and mike, this lines up with what you're seeing with your little known stock indicator known as your credit card bill. >> if i looked and saw what the household -- where it spends its money, i would have ended up in apple and lululemon and costco. this is an interesting case, there's not a lot of places where you can get good solid single digit top line growth and

bottom digit growth. they are more immune to gasoline volatility than a lot of other retailers because they are a gasoline retailer themselves. what ends up happening is you get consumers going to costco when prices get high. that's a primary motivation for being a gasoline retailer. with earnings you get a bump in volatility, i'll look to a call spread, i'm looking at the june 1.45, 1.50 call spread, you can spend $1.60 on that spread. and i will say, surprisingly enough, you would think that retailers would be a strong place to be during the summer month. that isn't the case. technology and health care tend to outperform. we can make a hedged bet to the upside. >> do you like costco or the trade? >> i don't love costco. the charts shape up to move up, but i don't love it from a fundamental standpoint when you look at growth being 10% over the next five years, 8% growth in the coming quarters and a

stock sitting at 27, i would be leery how high can costco continue to go. i would look for other names in the consumer discretionary to play to the upside, priceline that i like playing as long as prices stay cheap. there's other ways to play consumer discretionary but this is a trade here call spread for a slight play to the upside and maybe get bling off the chart and bang for your buck. >> charting ability? >> it's only fair if i don't use the vix -- >> payback. >> right. >> you know, so there's a discretionary element. it's a lot of groceries and gas and that type of thing. it's not as sort of cycle cal -- >> compare it to walmart or target. it's the one that is growing for better than the other two. you're better off in this one.

>> good debate. >> talk about money in the banks, they made a killing on the bullish bet on financials and have a way to make even more cash right after 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. dovisit tripadvisor new york. tripadvisor not only has millions of real traveler's reviews and opinions, but checks hundreds of websites,

so people can get the best hotel prices. to plan, compare & book the perfect trip, visit tripadvisor.com today. ahh... steve, other than making me move stuff, ces. 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.

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.

it's how we make bank. that's just what we did with the bullish bet on financials. just buying the etf -- >> i'm in. >> after all, 100 shares could set you back more than two grand. >> they bought the july strike call for 25 cents. to make money mike needs to rise above the strike of the call he bought by more than the cost of the trade. or in this case, above 2525 by july expectation. >> praise the lord, praise the lord. >> it gets even better. that's because if the xlf does rise, the calls will increase faster than the etf will, meaning more money in mike's pocket. since the trade financials have rallied 3%, meaning this trade is a solid winner. now bankers all over the world

are tuned into "options action" and just have one question. what will they do now? >> so let's start off with carter, do you still like the banks? >> in principle this is a big part of the market and done precious little over a year now and certain leaders are starting to catch a bid. we like this on long side, we would stay. >> i want more cash, what do you do? >> if you want more cash, you'll stay in the trade and we'll look for an opportunity to spread it and upside calls. we're not there yet. one of the big reasons for a rally in financials is basically the expectation of rising rates, improving interest margins among other things, that's the standard line on this. we're looking for that at the end of year. we should sit tight on this trade -- >> you're on the same page here? >> we can agree about something,

jp morgan, that one is a winner winner chicken dinner. i laid out a hedge trade earlier in the show. a bearish bet. but when correlations are as low as they are, you try to find the winners because those outperform and rest of the market will lag or stay stagnant and trade back and forth. when you look at the banks and look at apple, we talked about earlier, those are the names you want to own. >> a quick important point, when you're buying calls or call spreads you are making an implicitly hedged bet to the upside. you're risking little and that's what we're doing here. only risking 1%. no harm in staying with it. >> when you look at the s&p financials, where do you see the most strength? regional banks? >> it's starting to where there was original leadership things,

it's spilling over into not necessarily bank of america which has been lagging or not acting that well. you have online brokers and traditional brokers and money center banks and other certain insurance stocks are coming to life collectively. >> a lot of financials wsh among the cheapest stocks you can buy. blackstone was a good example and they have a lot of potential deals going on in the energy patch. they are poised to do well. they are cheap, that's a good combination. >> reach into the pocket and take out the phone and send us a tweet and we'll read it. 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. my daughter.door there's a scientific genius at work... it all started when she got a dell 2-in-1. it's a tablet when you want it and a laptop when you need it. dell 2-in-1s with intel inside have everything you need to learn and do just about anything. whoah! genius. like father, like daughter. dell inspiron 2-in-1s. starting at $379.99. buy select pcs for $699.99 or more and get a free 32" tv. ♪

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 look at tweets. i have june 1 home depot calls, should i hold or pull the plug?

>> the time to monday ties those with when the stock ripped to 1.16. i would make my bets longer and push out maybe for the call spread. >> if you can push the time out the pattern is intact and we think it goes higher. >> if you're going to play to the upside, wuch the 10-year note, if they tick up, that should have a negative impact on home depot. i expect rates to move higher. you have to watch the trades that can trade up to $2.60 on the interest rate. >> time for the final call. >> apple long, costco long, choose one, choose both. >> use call spreads for both of those. >> good to see you once again. have a great memorial weekend.

i would call with call spread toos, i think that's a good call. >> thanks so much for watching. check out the website optionsaction.cnbc.com. have a safe fun memorial day weekend. >> announcer: the following is a paid presentation for derm exclusive instant anti-aging, brought to you by beachbody. >> hi, everybody. i'm deborah norville. and i've got breaking news from the world of skincare. this time, there's a celebrity twist. keep watching. you are not gonna want to miss this. [ cheers and applause ] >> announcer: if you don't like the face staring back at you in the mirror... >> my skin was sagging. really heavy bags under my eyes. >> announcer: ...if age, sun, stress, and life have robbed you of smooth, young-looking skin... >> i don't want to go and get injections, but i thought that was the only choice i had. >> announcer: ...now there's a doctor-approved way to look up to 10 years younger in just