we are live from the nasdaq marketsite in a very hot and humid times square. but carter's, he's always cool. the cucumber. guys are getting ready for the show. meantime, here's what's coming up. >> you can never go too far. >> unless you're go it will pro supplier. it may be ready to fall after a massive rally. plus, how would you like to make money if netflix shares go up, down, or nowhere at all. we're talking about a brilliant and simple options strategy and we'll teach you how you can make money, too. forget self-driving cars and i-wear, because google may be on to the next big thing. 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 of twitter which finished lower despite the ceo shakeup. what we don't know is what it means for rival facebook. let's get "in the money" and find out. >> it's all good for facebook. nothing's been bad for facebook over the last year-and-a-half. the stock's had this amazing run. when you think about how few real true social media properties there are out there in the public domain, facebook is absorbing all of the investor interest. i think twitter's given investors routinely reasons to kind the just not really trust the story around not really feel like this is a stock that they can hold on to forever. facebook, if you look on an valuation businesses with be it trades 13 times this year's expected sales. to me it feels a bit crowded but for good reasons right now. >> some would argue twitter's already been losing or bleeding ad dollars. i don't know how you want to put

it. to facebook. what is this going to do in the end for facebook? such a big company. >> it's first of all hard to -- twitter's loss isn't necessarily facebook's gain. facebook has a lot more ways to interact obviously with their user base than twitter does. i personally like the twitter experience and am kind of hoping that they figure out a way to turn this around. facebook is not overwhelmingly expensive at 36 times next 12-month earnings given their growth rate and the fact they're the dominant player in the space, it is not hugely expensive. that said, we are 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, one person on this desk who's not on twitter. what's your thoughts on twitter? >> well, thanks. that's a mess. you know? twitter, there's something obviously wrong with the business. price action tells us more about a business than anything.

there's wisdom in price and this chart is terrible. facebook, oern the other hand, s been a market performer. it's been a little soft, the market a little dodgy but facebook's hanging in. >> carter, is it hanging in well? this is one of the reasons i want to look at it. the stock has traded moest of the year between $75 and $85. it tried to break out a couple times after an earnings report was good, what investors wanted to hear. they are spending more. their earnings growth is really at 10%, 12% expected this year, not what you'd expect in a high-growth company with sales at 30%. i think it is a crowded trade and that up trend since early 2014, that's about $80. i think if you have some sort of hicc hiccup, you go straight to $75, and who knows from there. >> it is not a high-beta moment.

stock's been very dormant in the sense it's just performed with the market, not showing a lot of volatility. i don't know what causes a drawdown like that, but that's what makes the market. >> this is one to me i think it is a crowded trade, a very expensive stock. while they've done a lot of things right i think there is a moment that could happen. this is an options show and we are not -- we're not telling you guys always to run out and by puts against your stocks. that's a very expensive way to own stocks. one strategy that i think makes a lot of sense in a stock like this in front of a potentially volatile event, facebook will report q2 earnings in late july. you could do what's called a collar. you could sell an up side call and use the proceeds to buy a downside put. you want to try to do this for as little premium as possible. here is the trade in particular. when the stock was 81. $70

that cost you 30 cents. here's the deal with a collar. you own the stock. if the stock was 81$.7 .70, you stock would be called away at $90, that's up 10% from here. that's a pretty good breakout level. remember the fact the stock has not been able to break out on two occasions above $81.75. $82 is your break-even. between $82 and $75 you have losses in the stock but you are protected below it. you basically set up a trade structure where you have participation to the up side and disaster protection. i think this makes sense in front of potentially volatile events. >> you are paying essentially nothing to put this collar on. those levels, $7 to the downside, those are levels they've seen. it's never been above $90. there's $12 billion net cash on

this company's balance sheet. that would be a substantial increase in the value of this business. it is not one i think it is likely to see before august. this is one of those situations where a lot of times collars, it is tough to put them on because that put puts you out of the money. shares of gopro supplier surging to a new high touching $120 a share. the stock is now up $133 this year alone. that might be just a little too much for our chart master. carter? >> it's to the moon but let's look at the chart and see how to the moon it is. several things that are worth noting here. this is a tremendous winner but sometimes there is such a thing as too much of a good thing. this is what my eyes sees. well defined trend line. we've come off the trend line quite considerably so, again,

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

interest is about 26% of the float. the other thing that makes that challenging is that when you see that happen the price of puts tends to go up a whole lot. valuation on this company is also similarly off the charts. we are talking about a company that's trading about 14 times less 12 months revenues right now. i look at something like that, that hockey stick and the valuation and i think this is probably a time that you want to start thinking about making a short bet. there is only one way to do it, that's by selling an upside call. we need to cap the potential for a loss. specifically looking at the july 125, 130 call spread. you collect $1.70, 3.30 is your maximum risk. you would not start to lose money until the stock was above that 1.25 call you sold by at least the premium you are collecting, in this case that $1.70.

if the stock sits right here you'll make money. if it goes up and comes back, you'll win and you only risk $3.30. >> forced to choose, what would you choose? >> it is a crapshoot. this stock has doubled since the beginning of march. in the semiconductor space since the beginning of march, there's been $50 billion worth of acquisitions. this market cap has gone from $1.6 billion to $3.7 billion in that time period with all these deals. i think a lot of people are looking at the addressable market for the vertical that they sell into. one of their biggest customers is gopro. i think people think there is a lot of industrial uses for the chips that they make and where they go and so to me i think if you do have an acquisition of this company it is probably not going to be too much more of a premium here. it is getting a little rich here. i like mike's trade. if you want to make a short bet on this thing, this is the way. define your risk. options premiums are high. this is a smart trade. >> i think it doubles from here. if one were to say. it is not so much about where it

is going long term. it is in terms of the path higher probably passes through a lower price. that's the whole point. new high, then a reaction. we're due for some sort of reaction at this point. we are trying to time the next correction and we think that time is now. >> that's exactly what it is. that's are july dated calls. in longer term though, what's your take on this company? >> we were talking about what would be the reasons that somebody would actually reach for this company at this point, given how much of a run it's had in terms of valuation. obviously there are reasons why there are more mature tech companies that would potentially look to this for an acquisition and try to get into an area of growth. typically this is not a small acquisition anymore. it might have been when it was a $1 billion, $2 billion deal. now they'll ask for some sort of premium. >> got a question out there? send us a tweet @optionsaction.

optionsaction.cnbc.com. the hottest options news, videos and exclusive trades. check it out. here's what's coming up next. >> game on! >> game on! >> that's what 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 welcome back. i'm eamon javers in washington where we've got 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 that 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 database. 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 print 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. 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 as we know what the state department is saying about this new problem. >> eamon, thanks. game on. youtube unveiling a demo of a new gaming app at its los angeles studio a couple of hours ago. >> youtube is looking for a piece of the big business of live streaming game play. a new app brings together all of youtube's gaming content with tools to make it easier 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 the videos and 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 video games with 1 1/2 million broadcasters. it is a valuable space. amazon bought twitch for nearly $1 billion last august snatching it away from youtube's parent, google, which was the expected buyer. youtube's announcement comes ahead of the big video game convention next week. for that youtube is launching a hub for it will stream all of the video gaming press conferenc conferences. high-quality streaming is key to video gamers and those who like to watch them play happy. back over to you. >> thank you, julia boorstin for that. what does this mean for amazon and google? i'm not a gamer obviously. you may or may not be. >> i am not a gamer but i think -- what do we know about youtube? we know they last year had $4 billion in sales and they were

unprofitable in that. it is also growing 30% a year. if google wants to move into parts of video that they think can be more profitable that makes a lot of sense. they have a 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 $1 billion around here and there, it is a big number. but in the context of google it is actually not a big number. this is a $363 billion company. if you want to figure out what youtube could potentially be work, i'm not sure looking at the gaming space is where i'm going to start thinking about it. what are the most valuable media properties anyway? probably espn quarterback$10 bi billion revenue picture. this doesn't move the needle for me. >> something needs to move the needle for google because that thing is stuck in the mud. maybe it is this. >> a few weeks ago on the show we talked about google being stuck in the mud.

i put a call calendar. they got $70 billion in cash on their balance sheet and they don't return it to shareholders. it is stuck in the mud. when you look at large-cap tech peers that have appreciated a lot over the last 12 months, those are the ones buying back a lot of stock. they either need to figure out a way to make their existing sales more profitable or get in there -- we know they should buy twitter. i think that checks a lot of boxes. i think we're getting off topic but they have blind spots. one is real time search. they don't have a social media platform. they don't have mobile messaging and i think they have to buy twitter. >> sometimes being stuck in the mud, when you look at a chart it's at rest and you think that's a good thing as a precursor to a move. >> rest is good if it follows a preceding period of strength. you've been very strong and desirable and the rest something presumptively just that, resting, consolidating, gatheringy you are forces to assert yourself again versus

something that's been stuck, that's just a fallow asset. >> it's not quiet and stuck. it's rallied in the last six months. i think it is totally relevant to talk about twitter. make media an interactive experience in real time. what could be a better combination than that? twitter, the valuation of that thing has plummeted. probably a good time to look at it. . next, why is frank underwood green with envy? because we've got a way to make money if netflix shares go up, down, or nowhere at all. we'll explain what that means when we come back.

maybe the universe is making me a better person. i can fix things. i'm learning spanish. i'm part of a community. maybe this is exactly where i am 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 in enetflix. the company's stock climbing nearly 100% this year. despite run, mike has a way to

make more money on netflix if the stock goes up, down or nowhere at all. >> we'll talk about how to sell a covered call. it is tough in a low volatility environment to find a sufficient premium. one thing i try to look for, i want to collect at least 12% annualized yield. that means if you're going to sell a call that's 30 days out, get at least 1% for it. next thing, i look for good odds. for me that's usually 2-1. you want a quick and dirty way to figure that out? look at the delta of that option that you're selling. if it's below 30, probably a good chance it is not going to be in the money. the other thing is, avoid obvious catalysts. avoid obvious catalysts. the thing here is if there's something coming up that's likely to move the stock a whole lot, make sure you are being rewarded for it before you do a trade like this. netflix, just look up to july 10th. those are weekly options. sell the $6.90 calls for $8.90.

that's when you'll call get out of your threnetflix stock. you'd be selling the stock $40 higher than where it currently is. that gives you a little bit of insulation to the downside because we're going to collect that premium. you still going to see losses of course if the stock goes down a whole lot further. but bear in mind that would happen anyway because you already own the stock. that's a great strategy. >> if the stock spiked $30 and it is at your strike, you can always cover that call again. i think a lot of people don't like to do these strategies a lot of times because they don't want to pay taxes, this thing's up 100% this year. you can always cover that call. this is a probabilities game. probability is you'll make some money on this call in the coming weeks. >> the chart is steep but the thing is you have these gaps. gaps typically are associated with news. on the day of a gap up, a stock

actually gets cleep cheaper in sense that once the stock opens, it never prices in fully. we like this a lot. >> so will they or won't they? as everyone debates when the fed will raise rates, jim cramer is preparing you for whatever comes out of the meeting. coming up next, we got the final call from the options pit.

"jurassic park" hit theaters today. the movie is produced by universal studios owned by cnbc's parent company, comcast. we wanted to see how entertainment stocks typically perform following the release of a universal blockbuster. we were provided 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. regal entertainment trades positive 90% of the time with an average return of 1.47%. here's hoping to a good box office this weekend. time for the final call, the last word from the options pit. >> sometimes there's such a thing as too much of a good thing. if you have a premium stock, it is a good way to take a bearish position. >> facebook, everything's going great until it is not. i think it is a very crowded trade. at some point i think you want to look to consider getting some protection, not paying a whole heck of a lat for it. consider collars in the late q2

earnings. check out our website, optionsaction.cnbc.com. see you back here next friday at 5:30 p.m. eastern time. paid advertisement for the revolutionary 21 day fix, brought to you by beachbody. >> thank you! [ laughs ] hello there. i'm tom bergeron, and this show is about transforming how you look and feel, starting right now. >> announcer: are you struggling right now to lose weight? >> i've struggled with my weight my entire life. >> i really want to... lose this. >> i didn't want to walk down the aisle weighing 220 pounds. i need to do something, and it needs to happen right now. >> announcer: now there's a breakthrough new way to lose those pounds and inches, and it happens in just 21 days.