question. is there a better place to be than right here, right now at the nasdaq marketsite on a quadruple witching friday evening? the guys are getting ready behind me. while they're doing, that here's what's coming up. >> let's make a deal! >> that's what traders want one big company to say to twitter. we'll tell you which one and how you can make a profit. plus, the markets are doing a dangerous dance with greece. we'll tell you the one sector that could get hit hardest. and talk about instant riches. some traders have found a crazy way to make millions in seconds. we'll tell you how in a special report. the action starts right now. all right. well, the question is simple

this evening. if greece starts rocking and rolling, which sector do you need to avoid? let's get in the money and find out. dan, you're looking at the banks. >> it's kind of the obvious one, right? this is really -- tim was just talking about it earlier. there's a lot of industrial companies. a lot of different sorts of sectors in europe that won't actually feel the pain if there is a default in greece. but obviously the banks will. and we know we've seen some very poor price action in the last couple weeks as we've trickled into some of these deadlines here. deutschebank in particular has had a really tough time. it was massively underperforming. the other banks in europe today that were actually trading okay. our banks are starting to take it on the chin a little today. we saw most of the large money centers down about 1%. >> what we learned last time, guys, was that the banks did feel it. that was a few years ago during the greek crisis. but now europe's in a better position and the european central bank has come in. do you have to worry about u.s. banks? >> i think one of the reasons you might be looking at the u.s. banks is number one, they're a lot higher than they were then. this is a fairly crowded trade. if there's two sectors that a

lot of institutional players are really liking right now, the banks financials are one of them. airlines are another. and when you get crowded trades and you get some kind of setback, one of the things you can see is some material pressure on that spectrum. we saw that this week. there's evidence this is well owned. >> on the fed. >> that's exactly my point. a little bit of bad news. >> but european banks are not nearly as exposed as -- >> their total claims are around 10 billion. but the issue surely the most sensitive sector. it's not going to be staples. it's not going to be utilities. so obviously that's your thinking, dan, yes? >> i mean, listen, it seems obvious we have not been in a period where we've seen any real systemic risk. we know during the european sovereign debt crisis our banks it did feel like we were going down for the count. we don't have the leverage issues they do. i know there's a lot of people out there that think that i lot of european banks are still massively overleveraged.

they're not done raising capital. and at some point there is the chance that at least our banks aren't pricing any volatility in from an external event. and i think if there's even a 20% chance that you have a default we're going to get some volatility over here. >> speaking of systemic risk let's bring in someone who knows a lot about that. larry mcdonald, head of u.s. strategy at societe general. you think the banks are underprice the risk of a greek default here? >> yeah. there's a couple reasons why. first of all, there's 860 billion of total debt that's government plus the corporate debt and banking debt and insurance companies that the world's exposed to, number one. credit default swaps, one of the things we track very closely and we saw this in 2012, credit leads equities. and the u.s. bank credit default swaps have been underperform in the equities of late. they're a typical leading

indicator. if you look back to 2012 when we had the grexit scare, the xlf was off almost 18% in three or four weeks and the s&p was only down 9. the financials are definitely the place to watch. >> but i guess, larry, the big lesson from that grexit fear a few years ago was if you you stayed with the banks it would have been a really great trade. do you see this kind of reaction if something does go wrong with greece here lasting more than a few days? more than just an initial reaction. >> i think you want to buy fear in the banks. since lehman you've had four or five opportunities. if you sit in the boat and wait for some real fear, that's where you're going to get some values in the banks. and this show's the perfect show because right now you can put on a put spread. you can buy puts on an etf that has a lot of financials in them. >> all right, thank you, larry. larry mcdonald on the systemic risk we're watching for monday. darngs the trade here.

we're looking at jpmorgan. >> first things first, larry just nailed it. it is the perfect show. there's no doubt about that. and we are going to put on a put spread. i want to look at jpmorgan. and we know jpmorgan's best of breed and they had a really tough week and this trade has nothing to do with that, but what i'm looking at is the outperformance in jpmorgan. it's up 25% from the lows in january. that's a massive, massive move. we have a chart here, a one-year. w4 you lo when you look at the steepness, and i'm sure carter's got a few things to say about it, and a breakout above 64 over the last few months, to me you have an opportunity into their q2 guidance, q2 report and their q2 guidance is going to be reported on the morning of july 14th to actually make a bet that the stock is going to retrace some of that move back to the breakout levels. today when the stock was $68.20 i bought the july 67 half, 62 half put spread for a dollar. i bought one of the july 67 half puts for 115. i sold one of the 62 halves at 15 cents. it cost me a dollar. my break even is a 66.50. and i can make up to $4 down to

62.50. and i just want to make one real quick point about this. option prices are cheap in jpmorgan. but i did sell that way down side put because i don't think it's going there and i wanted to offset a little bit of decay. >> that was quite a strategy, mike. what do you think about that? >> i think this is the strategy. first of all, options are relatively cheap. but the critical thing is you're going to look to try to sell strikes where you don't think the stock's going to fall. and this is one of those situations. 62 1/2 represents more than a 10% decline for a stock that's otherwise cheap. this is a catalyst-driven trade where we think there could be some news that's going to hurt financials 37 but that doesn't necessarily meant best stocks are going to get sawed in half. when you sell those inexpensive puts, actually that offsets a lot of the decay that a trade like this would experience over the course of the next week or two. so that's why these things make sense, even though it's only 15 cents. >> carter, i have to sate sentiment's really changed on the banks this week. last week everyone was loving them on a steeper yield curve. >> and they still are hanging in fairly well. i think the point is here it's not specific or id yo sink ratic to jpmorgan. you're picking up on a very steep angle obviously having

moved from 54 to 69, up 26%. and if there's going to be a general giveback this will participate on the down side. >> final word? >> listen, this also has the fact like you said, you just mentioned the fed. we were talking about greece. i think that statement was a lot more dovish and i think the banks rallied ahead of what they thought was going to be a more hawkish statement -- >> but still saying the fed is going to have to raise interest rates and eventually that's going to help bank profit bilt. >> eventually. but here's a stock that's run in front of it. massively outperformed the s&p this year. >> let's move on because we saw a big move in crude oil today falling nearly 2% app cording to our resident chart master that could mean big trouble for energy stocks. carter, what are you looking at? >> a bunch of stuff. and i'm going to go check it out on the screens here because we've got some good charts. this is a bad area of the market. worst performing on the week, one month, two months, so forth, and obviously except for utilities worst on the year. what we know is this. monday is the one-year anniversary of the peak in energy stocks. and we are down on the lows of

january 29%, and as of now about 25 because we're still off those lows. what my eye sees is this. there's your trend line. and the presumption is, having just broken these lows, that we are actually going to reapproach the prior low, which is 71.70 from january. that's about 6% lower from here. but i want to look at some other charts just to put this in perspective. here's your bull market move off the online low. here's your trend line. we're now toying with and in principle starting to break below not only the minor trend line but the five-year trend line. and then just two more things for fun. this is your forward p/e in the period. we're at 27 times for the sector. the highest it's been obviously going back a decade. and for fun here is a xhoptive chart of energy stocks versus crude oil. energy stocks still up here, and

crude oil here. meaning crude oil's got to come up a lot, where by all accounts energy stocks have got to come down. we're sellers of the xle. >> interesting. so sort of bearish take there on the energy firms. mike, how are you trading energy right now with this dip? >> we've tried to time this trade a couple times in the past. admittedly it hasn't worked out every single time. here's the story. when you look at the xle the two largest constituents of that are integrated names exxon and chevron. when you trade those stocks essentially what you are buying is their reserves and they have not to carter's point come off as much as crude has. if you look at crude and how much that has dropped, they have not dropped enough. there's some kind of inconsistency here. either crude is going to rally or these are going to come in. one of the two has to happen. the simple thing here, looking at the xle go out to september and buy the 70-69 put spread. you can put 2.70 for the 76 puts and sell the 69 at 86 against it. you're giving yourself about 90 days to make that bearish bet.

you wouldn't want to short it. you can see there's been some fairly sharp moves. people sometimes go in and they think they're bottom fishing. they're not. >> we saw a stronger dollar and that sort of helped. >> i've got to give these guys credit. they have been right. the timing, what all of us know when we're trading options-k can be very difficult. but they've been right. they've been sellers of rallies. and they've been focused on exxon from a couple months ago and chevron and they're really driving the train here. so until you're proven otherwise, you've seen crude oil stabilize here but the stocks are not. and that's really that price action. >> also the big integrateds exxon and chevron are almost half the weight of the entire sector. they act the worst. they are literally coming through the bottom. >> we'll leave it there with that bearish call on energy. and if you have a question send us a tweet to" optionsaction. and for everything "options action" check out our website, optionsaction.cnbc.com. we've got great articles, fabulous tutorials and exclusive trades. so check it out. here's what's coming up next.

>> i bet on sure things. >> and 134 traders have found an even better way to make money in the market. we'll show you how. plus is a twitter takeover closer than you think? we'll take you behind the massive bet on a big deal 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. i'm kate rogers with some changes to the s&p 500. now, as of june 30th at the close of trading baxalt aechlt is going to be replacing qep resources inc. which is an oil and gas production and exploration company in the s&p

500. baxter international will also remain in the s&p 500 and baxalta inc. is not yet trading. it will begin trading once these changes take place once again at the close of trade june 30th. sarah, back over to you. >> thank you for bringing us that. kate rogers at headquarters. twitter today announcing it's testing new pages for products. another step to make it easier to buy stuff. julia boorstin is live in los angeles with a look at twitter's latest move and the social selling trend. julia? >> that's right. we got another piece of twitter's product overhaul plan today. sarah, the company announcing pages for products and places gathering tweets, videos, product information and the option to buy a product or book a trip. twitter also announcing it's inviting over 40 twitter influencers from the disney store 20 sielist rachel zoe to share collections of products and places with the option to buy. this comes on the heels of twitter talking about big

upcoming changes for the services to address concerns about stagnating growth including curating content around live events. twitter's product pages are riding a social selling wave after it along with facebook started testing buy buttons yesterday, instagram just announced a shop now button and pinterest is readingy a buy button but the trend is not about scifresifying into retail. pinterest like twitter is not charge users or merchants. it's about being more useful to advertisers. now, twitter and pinterest hope to benefit not just which improving marketers' results but also by keeping users within the service so they don't have to leave twitter or leave pinterest if they want to go buy something they just saw a tweet about. >> thank you for bringing us the latest piece in what has been a big week for twitter and its tunaround. the big question traders want to know is who will buy twitter? >> they're addressing things right there that fix the company, fix the product. so to me i don't think they have

a problem monetizing their users. they're growing sales at 50% a year. they have a problem growing users and getting those users to be engaged. to me does twitter make sense within a large property like google and you increase your scale dramatically? no doubt about it. but i think buying a stock based on rumors of a potential takeover is probably the worst possible scenario. when i think about a trade like this and i had a really smart tech investor ask me, he's kicking the stierz on twitter not exactly for takeover, my response is what you need here is time. and when you're buying options time is not your friend. time means money. so i just actually detailed a trade to him that i think makes a lot of sense. i think you want to look out to december. you need it company to actually have some time to either figure out what the new manager-s what the new strategy is or get taken over. there's a strategy that makes sense, risk reversal. i was looking out to december when the stock was 36. you can sell the december 32 put for $2.50 and use those proceeds to buy the december 42 call for $2.50. and here's the thing.

if you have that stock on december expiration between 32 and 42, no harm no foul. you do not have any losses. mark to market you will have losses as the stock moves closer pop to the put strike and gains as the stock moves koeser to the call strike. but really what you're trying to do here is get leverage to the up side, not buy the stock right where it is right now because you know it's going to be noisy over the next few months and you really wanted to find a very wide range and get leverage to the up side. >> you're not alone, mike, and that is open interest for calls has actually been rising faster than open interest for puts since what, may? >> there's been a lot of speculate about this. one thing i would say about this trade because dan has actually done risk reversals in twitter before and timed them very well. the idea here with that lower strike he's selling is he's willing to buy the stock but he's willing to buy it essentially on its all-time lows. its post-ipo lows were just above 30 bucks. it's hay couple of these situations where the stock has collapsed, we've had brief rallies and it's collapsed again. this is essentially what you want to do.

you're essentially saying look, i'm going to be willing to buy it but only at cheaper levels. more than 10% cheaper than where the stock is currently trading. or if the stock breaks out. either way. that's where i'm willing to get lo long. >> it's a mess. something's got to happen, all the things you're talking about or this is just the dead duck it's been for one year two, years. the burden of proof is on the bull. the bear -- >> this is not groupon. this is a really important point. this is not groupon. there's massive scarcity value for this property and it's going to be very useful ten years from now. >> you also do have growing revenues. let's not forget this is a growing company and there's not a lot of places where you can buy growth in social media essentially close to its all-time lows. and this trade actually sets you up to do that. >> and that's what you said, the revenue growth. >> there you go. >> up next we'll tell you how one savvy trader made millions in just a matter of seconds. 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.

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.

turns out options traders have been making a killing on deal chatter. how have they been doing it? >> we've seen several deals this year. i'm going to use two examples. the first one i'll take a look at was a deal that the news hit the wire back in march. what we saw on march 27th was on that day there was a whole lot of options trading. people bought thousands of the april 26 and 37 calls. they spent less than $200,000 to do that. and by the end of the day over $4 million is what those were worth. what was really interesting about that, when did they trade? actually, right here. in fact, the news came out, and within one second somebody had digested it and actually bought the bulk of those options. sought entire profits were made within just minutes. let's take a look at another one more recently, yesterday in martha stewart living omnimedia. we saw a whole bunch. same thing, basically.

a lot of short dated june 5 and july 5 calls. but they spent about 129,000 to buy those things. by the end of the day take a look. they almost tripled their money. this is really fast trading. you can take advantage of the fact that some of these options, especially when there's only a week or so to go, are going to be exceptionally cheap. and if you happen to catch the news early, you might be able to take advantage of a trade like this. but bear in mind a lot of the professionals are using machines to do it. >> algorithms i was just going to say. what do you guys say? it's legal. >> totally. >> this is what they do. this is what the algos do. >> mike said those people who bought. i suspect they're machines. and there's a lot of sophisticated algorithms that track news and then they go and take options because that's the quickest thing that they can do. so to me -- >> a lot of times in stock trading before deals are announced there's unusual volume and activity and that's the premise of pattern interpretation, of trying to buy och options at the right time, is sniffing out opportunity. >> you know what's interesting, though. in the martha stewart case, two

days before this news came out there actually was a story online, buy martha stewart before somebody else does. so for those of you who are keeping your eye on the news, these were done by a bot for sure. news wire comes out and they're automatically trading them. but if you keep watching the news sometimes you'll see these opportunities as well. >> if you're an individual getting into options how do you compete with that? >> i think it's a horrible strategy when you see a headline to go out and try to take options because think about what you're doing here. all of a sudden when the news is out the bid-ask, the spread wide enz, volatility goes up, the prices that you're paying. you're probably -- it's not a high probability event. >> i would disagree with that. in the case of altera actually it's interesting. that options trade happened very, very quickly. all of those option traded in about 130 milliseconds. we're talking about an eighth of a second. what's interesting is the stock didn't actually halt for a period of time there. >> how often does it happen like that where the stock goes up 25%? that's the point. oftentimes you get this 3%, 5% move and you have retail people, they're the ones driving it up

that last few percent. >> trading wp for weeks before the deal. >> my point is you have to take a look at it on a case-by-case basis. there was time. in martha stewart's case you could have gotten ahead of the headline and in the case of altera there was a window when it halted and it ended up trading dollars higher. >> that is the reality. coming up, carter made it rain with the ambarella trade. we'll tell you what their next move is after the stock took a beating today. that and the final call next. alt 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. ambarella shares fell more than 6% today, and that was good news for kuo and carter, who got short the start last week. carter, should you stay short? that was a pretty scathing note from citron research on this company. >> i didn't see that. happily i stay away from that kind of stuff. just the facts.

the issue is this -- that we have something of a key reversal day. record volume at or near 10 million. a flare-up on the week. big weekend. then close on the absolute low. that has all the signs of a capitutory buy, people panicking to get in and nothing beneath it. we would stay, yeah? >> this is a situation where we basically wanted to take a bearish position while limiting our risk which is why we were selling a call spread to do this trade. one of the things we were looking for was some kind of a catalyst because we touched on the valuation issues and the fact that the stock looked like a hockey stick. i absolutely think that what we do, look, we have until july. sit with the trade right now. >> let's take a tweet. steve says "awesome show. how do you guys feel about july 125/130 vertical call spreads in the iwm?" dan. >> it's interesting you choose the iwm. the performance year to date has more than doubled the s&p. if you're worried about external things say in greece hitting the s&p, then you basically -- small cap u.s. should be less

affected. to me that's the way to play if you want to play a break-up. >> time for the final call. last word from the options pit, carter. >> energy. be careful. watch out. >> mike. >> use put spreads. >> dan. >> twitter risk reversals instead of long stock. >> that was quick. i'm sarah ivan. >> there's always a bull market somewhere and i promise to help you find it. mad murn starts now. . i'm cramer! welcome to mad money. welcome to cramerica. i'm just trying to save you money. my job is not just to entertain but to teach and coach you. so call me or tweet m me @jimcramer. the financial hostage crisis will soon end. that's the good news out of europe. some act