introducing the first-ever lexus nx turbo and hybrid. once you go beyond utility, there's no going back. we are live from the nasdaq marketsite in a very hot and humid times square. but carter, he's always cool, aren't you? as a cucumber. the guys are getting ready for the big show. in the meantime, here's what's coming up. >> you can never go too far. >> unless of course your gopro supplier amberella, which may be ready to fall after a massive rally. we'll show you why with a shocking chart. plus, how would you like to make money if netflix shares go up, down, or nowhere at all? >> tell me what we're talking about. >> we're talking about a brilliant and simple options strategy. and we'll teach you how you can make money too. and forget self-driving cars and eyewear because google may be on to the next big thing and it could turbocharge its stock. we'll tell you what that is and

how you can profit. the action starts right now. >> by now we all know about the issues with twitter, which finished lower despite the ceo shake up. what we don't know is what it all means for rival facebook. so let's get in the money and find out. what's your take? >> well, listen, it's all good for facebook. nothing's been bad for facebook over the last year and a half if you really think about it. the stock's had this amazing run. and when you think about how many real true social media properties there are out there in the public domain right now. facebook is absorbing all of the investor interest. i think twitter's given investors routinely reasons to kind of, you know, just not really trust the story and not really feel like this is a stock that they can hold on to. i think facebook if you just look at it on a valuation basis this is a $230 billion market cap company that trades 13 1/2 times this year's expected sales. there's a lot, a lot of faith placed in facebook right now. to me it feels a bit crowded but you know, for good reasons right now, i guess. >> some would argue that twitter's already been losing or bleeding.

i don't know how you put it. what your view is. to facebook. what is this going to do really in the end for facebook. such a big company. >> first of all, twitter's loss isn't necessarily facebook's gain. facebook obviously has a lot more ways to int rabbit with their user base than twiser does. i personally like the twitter experience and i'm kind of hoping they figure out away to turn this around. facebook is not overwhelmingly expensive. at 36 times next 12-month earnings given their growth rate. and obviously the fact that they're the dominant player in the space it's not hugely expensive. that said, we're in a market right now that just seems like it will never quit. that's usually the time when they start to peter out. i don't know if this is where we decide to call it quits, but to me i'd probably be interested in hitting the pause button on facebook. >> carter, the one person on this desk who is not on twitter, what's your thoughts on twitter? >> no, thanks. that's a mess. twitter, there's something obviously wrong with the business. one of the things we know about price action it tells us more

about a business than anything. there's wisdom in the chart and this is terrible. but facebook on the other hand has been a market performer for the better part of a year. but day to day it acts quite well. market's been a little soft, a little dodgy and facebook's hanging in well. we like the latter -- >> is it hanging in well? this is one of the reasons why i think i really want to look at it because when you think about the stock has traded most of the year between $57 and $85, trying to break out a couple times after an earnings report, i think in q1 it was really good. it's what investors want odd to hear. and it absorbed the fact they are spending more. so their earnings growth is really, you know, at 10%, 12% expected this year, not what you'd expect in a high growth company that's growing sales at 30-plus percent but has not been able to break out. it's been in this thing. i think it's kind of a crowded trade. and that up trend that's been in place since early 2014, that's about 80 bucks. i think this you have some sort of hiccup and the company's been executing very well you have a break to 80 you're going straight to 75 and who knows from there. >> it's on a high beta moment i would say. the stock's been very dormant in

the sense it's just performed with the market. it's not showing a lot of volatility. i don't know what causes a drawdown like that, but that's what makes a market. >> let's get to your trade. >> this is one that to me i think it is a crowded trade. i think it is a very expensive stock. and i think while they've been doing a lot of things right there is a moment that could happen and this is an options show. and we are not -- we're not telling you guys always to run out and buy puts against your stocks. that's a very expensive way to own stocks. but one sfrajt that i think makes a lot of sense, especially in a stock like this in front of a potentially volatile event facebook's going to report their q2 earnings in late july i think you want to look out to august expiration. when the stock was 81.70 today you can do what's called a collar. sell an up side call and use the proceeds by a down side put. and you want to do this for as little premium as possible. here's the trade in particular i was talking about when the stock was 81.70 you could have sold the august 90 call at $1.10 and used the proceeds to help

purchase the august 75 put for $1.40. that costs you 30 cents. here's the deal about a collar. you own the stock and if the stock was 891.70 it costs you 30 cents in premium you can make up the $8 between $82 and $90. your stock would be called away at $90. that's about 10% from here. that would be a pretty good breakout level. but remembering the fact the stock has not been able to break out on two occasions above 85.75. but let's talk about the down side. the stock's at 81.70 you paid 30 krebts for is that structure, 892 is your break. between 82 and 75 you have losses to the stock but you're protected below it. you're setting up a trade structure where you have participation to the up side and disaster protection to the down side and you're not paying a lot to do it and i think this makes sense in front of potentially volatile events. >> you're paying essentially nothing to put this collar on. as you point out, seven bucks to the down side. those levels, by the way, are levels that the stock actually has seen. above 90, it's never even been to 90. we're talking about an increase in market capitalization of 10%.

$12 billion net cash on this company's balance sheet. that would be a substantial increase in the value of this business. and it's not one it's likely to see before august. to me this is one of those situations where a lot of times collars are tough to put them on because it puts you so far out of the money. here it makes a lost sense. >> shares of gopro supplier amberella surging to a new high. the stock is up 133% this year alone and that might be a little bit too much for our chartmaster. so carter, what does it look like? >> it's to the moon. but let's go look at the chart and see how to the moon it is. several things that are worth noting here obviously, this is tremendous but sometimes there's such a thing as too much of a good thing. well, we know the angle's changed here. this is what my eye sees. well-defined trend line. and we have -- we've come off the trend line quite considerably. again, something of a parabolic

move. a well-defined trend line. but then take a look at the way it's gotten here. again, this is the same chart, but i've simply annotated the performance of these powerful moves. so we have had six consistent moves each of which have given way to correction. if you take the average of these, this most recent unone being 70%. it's about 62%. this current move of six, seven weeks is a little bigger than average. and what has happened after this? well, we've gotten correction. there have been five of them. 19, 28, and 10 forth. you can see the numbers quite clearly. the average correction is 21%. so you have six powerful advances, each lasting several weeks to two months. average is 60-plus percent. and we have one now. and then each one has given way to a correction. this is a very steep situation. at a minimum if you're long take some profits. and if you have the fortitude and courage to do it go short. >> mike, what would you do? >> i certainly wouldn't go short the stock here and it would be

hard to do that because right now the short interest is about 26% of the float. and the other thing that makes that challenging is when you see that happen the price of puts tends to go up a whole lot. valuation on this company is similarly off the charts. we're talking about a company that's trading about 14 times less 12-month revenues right now. i look at something like that, that hockey stick and the valuation, and i think this is probably a time you want to starts thinking about making a short bet. but there really is only one way i think to do it here and that is by selling an up side call spread. we're trying to take advantage of the fact that options pleemz have been elevated. we need to cap any potential loss because of the potential for a short squeeze. very specifically i'm looking at the july 125-130 call spread. you could sell the 125s for about $5 buy the 130 for 3.30. you collect 1.70. 3.30 is your maximumlist. you would not start to lose money until the stock was above the 125 call you sold by at least the premium you're collecting in this case that $1.70.

if your stock sits right here you're going to make money, even if it goes up a little and it comes back you're going to win and you're only risking $3.30. >> forced to choose what would you choose in terms of the direction of the stock from here? >> it's a crap shoot. this is a stock that's doubled since the beginning of march. think about what's happened in the semiconductor space since the beginning of march. there's been $50 billion of acquisitions. this market cap has gone from 1.6 billion to 3.7 in that time period with all these deals. there's a lot of people looking at the addressable market for the vertical that they sell into and one of their biggest customers is gopro. we now xiao mi's going to goint low end. i think there's a lot of industrial uses for the chips they make and where they go. to me i think if you do have an acquisition of this company it's probably not going to be at too much of more of a premium. it's getting a little rich here. i like mike's strayed. if you want to make a short brett this is the way to do it, define your risk. options premiums are high and

this is a smart trade. >> let's say someone said i think it doubles from here. it's not so much about br it's going long-term. the path higher probably passes through a lower price. intermediate advances and then you have reactions. a new high and then a reaction. we're due for some sort of reaction at this point. you're trying to time the next correction and we think that time is now. >> that's exactly what it is. these are july dated calls. so in longer term, though, mike, what's your take on this company? >> we were talking about what would be the reasons somebody would reach for this company at this point given how much of a run it's had in terms of valuation. obviously there are some reasons why there are a lot more mature tech companies that would potentially look to this as an acquisition and try to get into an area of growth. but it's awfully tough because generally speaking when you start buying companies at these types of valuations this is not a smart acquisition anymore. it might have been when it was a 1, 2 billion dollar deal. now they'll ask ask for a premium. 4, 5 billion dollars, that seems like a big reach at this point. >> got a question send us a tweet @optionsaction. we love tweets, especially nice

ones. optionsaction.cnbc.com. hottest action throughout the week and exclusive trades. check it out. here's what's coming up next. >> game ochbld. >> game on. >> that's what's google's hoping for. and it could mean big profits for the search giant. plus you could make money on netflix if it goes up or down. want to know how? we'll show you 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.

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. welcome back. i'm eamon javers in washington where we have more computer difficulties here in the nation's capital to tell you about.

the u.s. state department just within the past few minutes has issued a notice saying it is having technical trouble. that technical trouble is preventing it from issuing u.s. passports overseas and also u.s. visas. the state department says that the issue here affected are passport applications accepted overseas on or after may 26th, 2015. why is this happening? the state department saying in this notice that a hardware failure on june 9th halted the flow of biometric clearance requests from posts to the consular consolidated data base. that's the way they vet all these applications. they say the systems in place to perform required national security checks before we issue visas are experiencing technical difficulties. as a result we are unable to prevent visas, regular passports overseas, and other travel documents. the state department does not know whether or not this issue is connected to the broader hacking that we've seen at the office of personnel management. and remember, that issue was going after some of these background documents that are similar in nature to the types

of things that the state department will be doing to vet applicants for visas and passports. as of right now it looks like two separate problems, but we'll keep you up to speed, melissa, as we know what the state department is saying about this new problem. >> eamon, thank you. eamon javers in d.c. game on. youtube unveiling a emo of its new gaming app at its los angeles studio just a couple of hours ago. julia boorstin was there and has the story. >> youtube is looking for a piece of the big business of livestreaming video game play. the company just unveiled a new youtube gaming app bringing together all of youtube's gaming content with tools to make it easy to search and browse. presenting it to an audience of 100 of youtube's top gamers, saying that more than 25,000 games will each have their own page. gathering all live streams about the titles. youtube is taking on twitch, which says it has more than 100 million members in its global community watching and talking about games with 100 million broadcasters. it is a valuable space. amazon bought twitch for nearly

a billion dollars last august, snatching it away from youtube's parent google, which was the expected buyer. youtube's announcement comes ahead of e-3, the sbrigd convention next week. for that youtube's launching an e-3 hub where it's streaming all the video game press conferences. youtube has been building up its attack on twitch. just a few weeks ago unveiling higher quality streaming, which is key to keeping video gamers and those who like to watch them play happy. back over to you. >> all right. thank you, julia boorstin for that. so what does this mean for amazon and google? i'm not a gamer, obviously. you may or may not be. but -- >> i am not a gamer. but i think -- here's the thing. what do we know about youtube? we know they last year had $4 billion in sales and we know they were unprofitable on that. we know it's also growing 30% a year. so i think when google -- if they want to move into parts of video that they think can be more profitable, that makes a lot of sense. they have this huge, huge audience. they have this huge property in youtube and i think they

probably have to do things like this to get that sales profitable. >> all these numbers sound really big. you throw a billion dollars around here and there, it's a big number. but in the context of google it actually is not a big number. okay? this is a $363 billion company. and if you want to figure out what youtube could potentially be worth, i'm not sure looking at the gaming space is where i'm going to start thinking about it. one of the most valuable media properties anyway, something like espn, which is probably a 10, 11 billion-dollar revenue picture for disney. that's probably the place i'd be more interested in. this doesn't really move the needle that much for me. >> something needs to move the needle for google. because that thing is stuck in the mud. but maybe it's this. >> a few weeks ago on the show we talked about google and we talked about being stuck in the mud and i put a call calendar on. they've got $70 billion in cash on their balance sheet and they don't return it to shareholders. and like you say, it's stuck in the mud. and when you look at some of their large cap tech peers that have actually appreciated a lot over the last 12 months, they're the ones that are buying back a

lot of stock. when you think about it, they either need to figure out how to make their existing sales a bit more profitable or get in there and really start -- we know they should buy twitter. i think that checks a lot of boxes. i think they're getting off topic a little bit. but they have big blind spots. can i run through them? you have the time? >> sure. quick. >> one of them's real-time search. we know they don't have a soeshlg media platform. and they don't have mobile messaging. and i think they have to buy twitter. >> sometimes when you take a look at a chart it's at rest and you think that's a good thing as a precursor to some sort of -- >> right. if you think about it, rest is good if it follows a preceding period of strength. so you've been very strong and desirable, and the resting is presumptively just, that resting from the period of strength, consolidating, gathering your force to assert yourself again. versus something that's been quiescent and stuck, having not come from a strong place, it's just a fallow asset. >> it's not even quiet and stuck. this was a stock that was higher six months ago. the market has rallied in the meantime. and i think it's actually totally relevant to talk about twitter because if they're going

to think about what to do with youtube, make media an intera interactive experience in real-time, what could be a better combination than that? and obviously twitter, their valuation has plummeted. probably a good time to look at it. >> coming up next, why is frank underwood green wen vi? because we've got a way to make money if netflix shares go up, down, or nowhere at all. we will explain what that means when we come back. 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.

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. i can fix things. i'm learning spanish. i'm a part of a community. maybe this is exactly where i'm supposed to be right now. >> that was a scene from the third season of the wildly popular prison series "orange is the new black," which debuted last night on netflix. the company stock is anything but locked up. it has been on a huge tear, climbing nearly 100% this year, despite the run, though, mike kuo's got a way to make more

money on netflix if the stock goes up, down, or nowhere at all. mike. >> so we're going to talk about how to sell a covered call. we're going to use netflix as an example. it's tough in a low-volatility environment to find a sufficient premium. but basically one of the things i usually try to look for is i want to collect at least 12% annualized yield. that essentially means that if you're going to sell a call it's 30 days out. you want to get at least 1% for it. the next thing i try to look at is i'm looking for good ideas odds. i don't want to sell calls there's a good likelihood the stock's going to blow through it. for me that's two to one. you want a quick and dirty way to figure that out, take a look at delta of the option you're elling if it's below 30 probably a good chance it's not going to be in the money. the other thing is to avoid obvious catalysts. the thing is if there's something coming up that's likely to move the stock a whole lot make sure you're being rewarded for it before you do a trade like this. looking to netflix we're looking out to july 10th.

you can sell the 6.90 calls for 8.50. that's when you're going to get called out of you why netflix stock up another $30 but you still get to collect that premium. really you'd be telling the stock about $40 higher than where it currently is. obviously that gives you a little bit of insulation to the down side. because we're go going to collect that premium. you're still going to see losses if the stock goes down a lot further. but bear in mind that would happen anyway because you already own the stock. >> this is a great strategy. >> it is a great strategy and i think you have to actively manage it. one thing i'll say is if the stock did spike $30 and it's at your strike you can cover the call again. it's not like you have to be called away. a lot of people don't like to do these strategies sometimes because they're worried i don't want to pay taxes, this thing's up 100% this year. you can always cover that call. you have to remember this is a probabilities game and the probability is that you're going to make some money on this call decaying at some point in the next couple weeks. >> carter has a chart. >> it's very good in that yes, steep and we can say so was amba but you have these gaps. and gaps are to be associated with news.

and on the day of a gap up a stock actually gets cheaper in the sense that the news athat was rendered once the security opens it never quite prices in fully. so we like this a lot, wouldn't sell a share. >> all right. so will they or won't they? as everyone debates when the fed will raise rates, jim cramer's preparing you for whatever comes out of next week's big meeting. do not miss cramer's fed survival guide. that starts off at 6:00 p.m. on "mad money" tonight. coming up next we've got the final call from the options pits. 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.

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. the latest installment of "jurassic park" hitting theaters today, transporting movie fans back to the land of dinosaur mayhem. the movie is produced by universal studios, which is owned by cnbc's parent company, comcast. so we wanted to see how entertainment stocks typically perform following the release of a universal blockbuster. our friends provided us with the following data. since 2010 after a $50 million

or larger opening weekend for a universal movie several entertainment stocks have been big winners. dreamworks tends to trade positive 80% of the time with an average return of 2.03%. regal entertainment trades positive 90% of the time with an average return of 1.47%. so here's hoping to a good box office this weekend. time now for the final call. the last word from the options pits. carter braxton worth. >> sometimes there's such a thing as too much of a good thing. if you have armba reduce it take calls, take measure zblpz it's a trade we don't recommend enough probably. selling call spreads is a great way to collect some premium. we found a stock where i think it's really appropriate. premiums are elevated here. and it's a good way to take a bearish position. >> dan nathan. >> yeah, you know, facebook, everything's going great until it's not and i think it's a very crowded trade. i think at some point you want to look to consider getting some protection, not paying a whole heck of a lot for it. consider collars into the q2 earnings event in late july. >> all right. it looks like our time has

expired. i'm melissa lee. thanks so much for watching. for more "options action" check out our website, optionsaction.cnbc.com. and of course our daily segment inside "fast money" every day. see you back here next friday at 35:30 p.m. eastern time. in the meantime don't go anywhere. "mad money" with jim cramer starts right now. tonight, on rich kids of beverly hills. >> it's amazing, i couldn't be with somebody who was not going to be with my friends. >> i only feel like it is that much to handle. we secured you fashion. isn't that exciting? >> i feel like i'm on a really good streak. ♪ ♪ ♪ ♪