question -- is there a better place to be than right here, right now, live 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. >> what traders want one big company to say to twitter. we'll tell you which one and how to 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. >> ah! >> some traders have found a crazy way to make millions within 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 banks? >> yeah. it's kind of the obvious one. right? really, tim was talking about it earlier. a lot of industrial companies. different sorts of sectors in europe that actually won't feel the pain if there is a default in greece. obviously the banks will. we've seen poor price action over the last couple weeks as we trickled into some of these deadlines here. deutsche bank in particular, a tough time. really massively underperforming. the other banks in europe today were actually trading okay. our banks are starting to take it on the chin today. the large money centers down about 1%. >> we learned last time, the banks felt it, a few years ago during the great crisis. now europe's in a better position and the european central bank has come in. do you have to worry about u.s. banks, mike? >> well, i think one of the reasons you might look at u.s.

banks, they're higher than then. right? fairly crowded trade. two sectors, i think a lot of institutional players are liking now is the bank financials are one of them. airlines actually are another. when you get crowded trades and get some kind of a setback you can see material pressure on that sector. i think we actually saw that this week. there's evidence that this is well owned. >> on the fed. >> that's right. well, but that's exactly my point. a little bit of bad news right here for the financial compressions significantly. >> u.s. banks aren't anywhere near at exposed at europe. their total claims are around $10 billion. the issue is, this surely will be, if there is some good problem in greece, the most sensitive sector. not staples, not utilities. obviously, that's your thinking dan, yes? >> yeah. listen, it seems obvious we have not been in a period seeing systemic risk. during the european debt crisis our banks felt we going down for the count. we don't have leverage issues

they do. a lot of people are out there think a lot of european banks are still massively overleveraged, not done raising capital and there is a chance that at some point our banks aren't pricing volatility in from external event. if there's even a 20% chance you have a default, we'll get volatility. >> speaking of systemic risk, larry mcdonald, head of u.s. strategy, you think the banks are under pricing the risk of a greek default here? >> yes, there's a couple reasons why. there's, first of all, 860 billion of total debt that's government plus the corporate debt and the 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 underperforming the equities of late and they're typically a leading indicator. so you've got those issues, and then if you look back to 2012 when we had the grexic scare, the s&p only down 9%. so the financials are definitely the place to watch. >> yeah, but i guess, larry, the big lesson, the fear back a few years ago, if you stayed with the banks, it would have been a really great trade. do you see this kind of reaction, if something goes wrong with greece here lasting more than a few days? more than just an initial reaction? >> i agree, but i think you want to buy fear in the banks. so since lehman you've had four or five opportunities. if you sit in the boat and wait, and wait for some real fear, that's where you'll get values in the banks. this shows the perfect show, because right now, you can put on a puts spread, you can buy puts on an etf that has a lot of

financials in them. >> thank you, larry. larry mcdonald on the systemic risk, we're all watching ahead of monday for greece. dan, the trade here, looking at jpmorgan. >> first things first, larry nailed it. it is the perfect show and we'll put on a put spread. this trade has actually nothing to do with that, but what i'm looking out is an outperformance in jpmorgan, up 25% from the lows in january. that's a massive, massive move. a chart here, a one year. when you look at the steepness, i'm sure carter has a few things to say about it. and the breakout above 64 over the last few months here or just recently, to me i think you have an opportunity into their q2 report and their q3 guidance, reported and the morning of july 14th to actually make a bet that the stock will retrace some of that move back to the breakout level. today, when the stock was 6820 i bought the july 67 half, 62 half put spread for $1. bought one of the july 67 half puts for $1.15, sold one of the 62 halves at 15 cents.

it cost me a dollar. my break even, $66.40 and make up to $62.50. option prices are cheap in jpmorgan. but i did sell that put, because i didn't think it was going there, wanted to offset a little. >> quite a strategy. mike, what do you think? >> this is the strategy. options are relatively cheap, but the critical thing is, you'll look to sell strikes where you don't think the stock's going to fall. one of those situations. 62.5 represents more than a 10% decline for a stock otherwise cheap and this is a catalyst-driven trade, news that will hurt financials, but doesn't necessarily mean the best stocks get sawed in half. right? you want to do that. the other quick point to make, when you sell the inexpensive puts that offsets a lot of decay a trade like this would experience over the course of the next week or two.

that's why these things make sense, even though it's only 15 cents. >> last week everyone was loving on a steeper yield curve and higher rates? >> and hanging in there. the point, not specific to jpmorgan. picking up on a very steep angle, from 54 to 69, up 26%. a general giveback, this participates on the downside. >> final word, dan? >> yeah, and, you know, listen, also the fact you said. you mentioned the fed. talking about greece. that statement was more dovish and the banks rallied ahead of what they thought would be a more hawkish statement. >> still saying the feds will have to raise interest rates and eventually that's going to help bank profitability. >> eventually. a stock run in front of it massively outperformed the s&p this year. crude falling nearly 2% according to our resident chart master, that could mean big trouble for energy stocks. carter, what are you looking at? >> well, a bunch of stuff. go check it out on the screens, good charts. the issue, of course, this is a bad area of the market, worst performing on the week, one month, two months, and so forth and obviously except utilities worst on the year.

so, 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 eyes 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 other charts to put it in perspective. bull market move off the '09 low. here's your trend line. we're now toying with and in princip 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 are at 27 times for the sector. the highest obviously going back a decade, and for fun, here is a comparative chart of energy

stocks versus crude oil. energy stocks still up here, and crude oil here. meaning crude oil got to come up a lot or by all accounts energy stocks have to come down. we're sellers of the xle. >> interesting, so, sort of a bearish take on the energy firms. mike, how are you trading energy with the dip we saw today? >> it's interesting. we've tried to time the trade a couple of times in the past. admittedly it hasn't worked out every single time. the story, when you look at the xle, the two integrated names, exxon and chevron. when you trade those stocks, essentially what you're buying is their serves. they have not to carter's point come off in terms of valuation as much as crude has. if you look at the term structure and crude how much that's dropped they have not dropped enough. some kind of inconsistency here. either crude will rally or these come in. one of the two has to happen. the simple thing to do, looking at xle, out to september, buy the 69 put spread pay $2.70 for

the 76 puts and then sell 69s at 80 cents, giving yourself 90 days to make the bearish bet. wouldn't want to short it here. there's been some fairly sharp moves. people sometimes go in and think they're bottom fishing in these things. they're not on a valuation basis. you're right, you'll see a spike. >> and we saw a stronger dollar. that helped. >> listen, give these guys credit, they've been right. the timing, all of us know when trading options can be very difficult, but they've been right. sellers of rallies and they have been focused on exxon. from a couple months ago i know, and chevron and driving the train here. so, until you're proven otherwise, you've seen crude oil stabilize, but stocks are not. that's bad price action. >> and big integrated, exxon, chevron, are basically half the weight act the worst, it really coming through the bottom. >> leave it there. if you have a comment, tweet us. great articles on the website. fabulous tutorials and exclusive trade.

so, check it out. here's what's coming up next -- >> i bet on sure things. >> and some 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 tyke 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. welcome back to "options welcome back to "options

action." we have changes to the s&p 500. now, as of june 30th at the close of trading, a drug company and a spin-off of baxter international is going to be replacing qep resources, oil and gas production and exploration company, in the s&p 500. baxter international will also remain in the s&p 500 and begsalta ink not trading it will trade once these changes take place at the close of trade on june 30th. back to you. >> thank you for bringing us that. twitter today announcing that it's testing new pages for products. other steps make it easier to buy stuff. cnbc's 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. the company announcing pages for products and places gathering tweets, photos, videos, product

information and the option to buy a product or book a trip. twitter also announcing its it's inviting over 40 twitter influencers from the disney store to stylist rachel zoe to share collections of products and places with the option to buy. now, this comes on the heels of twitter talking about big upcoming changes for the service to address concerns about stagnating growth, including curating content around live events. now, twitter's product are writing a social selling wave after it along with facebook started testing buy buttons, instagram just announced a shop now button and pinterest is readying a buy button, but the trend is not about diversifying into retail. pinterest like twitter is not charges users or merchants, it's about being more useful to advertisers. hoping to benefit not only improving results keeping users within the service so then the

dough have to leave pinterest or twitter if they want to buy something they just saw a tweet about. back to you. >> thank you for bringing the latest piece in a big week for twitter. and its turnaround strategy. who will buy twitter? >> they're addressing things right there that actually fix the company, fix the product and fix the problem. >> fix the problem. >> they don't have a problem monetizing users. a problem growing users and getting them to be engaged. to me, yes, 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. i think about a trade like this and i had a smart tech investor, kicking the tires on twitter, not for takeover. my response, you need time. when you're buying options, time is not your friend, time means money. i detailed the trade to him that i think makes sense. look out to december. you need this company to

actually have some time to figure out what their new management, or strategy is or to get taken over. to me, a risk reversal. looking out to december when the stock was 36. you could sell the december 32 put for about $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 to the put strike and gains as a stock moves closer to the call strike. but really what you're trying to do here is, leverage to the upside, not buy the stock where it is now you know it will be noisy over the next few months and you want to define a wide range and get leverage for the up side. >> you're not alone, mike. open interest for calls rising faster than open interest for puts since what? may? early may? >> there's been a lot of speculation 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 that he's selling is he's willing to buy the stock, but he's willing to buy it essentially on its all-time lows. right? it's post-ipo lows just above $30, it's had a couple of these situations where the stock collapsed. had brief rallies, then collapsed again. this is essentially what you want to do. essentially saying i'm willing to buy it, only at cheaper levels, more than 10% where the stock is currently trading or if the stock breaks out, either way. >> and what about it, carter? >> it's a mess. so something's got to happen. all of the things you're talking about, or this is just a dead duck that it's been for one or two years. the burden of proof is on the bull. >> carter, this is not groupon. this is really an important point. not groupon, a massive scarcity value for this property and useful ten years from now. >> the scarcity value and you actually have growing revenues. this is a growing company and not a lot of places to buy growth in social media essentially close to its all-time lows and this trade

actually sets you up to do that. >> what you said. the revenue growth. >> there you go. >> all right. 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.

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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.

all right, it turns out options traders have been making a killing on deal chatter. mike, how are they doing it? >> you know, interesting. we've seen several deals this year. i'm just going to use two examples. the first one i'm going to look at, a deal basically the news hit the wire back in march. we saw on march 27th, on that day a whole lot of options trading, people bought thousands of the april 36 and 37 calls, they spent less than $200,000 to do that and by the end of the day over $4 million what they were worth. what's interesting about that, when did that 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, so the entire profits were made within just minutes. let's look at another one more recently, yesterday in martha stewart living omnimedia, we saw

the same thing. a lot of short dated june 5 and july 5 calls bought. they spent about $129,000 to buy those things. by the end of the day, take a look. it almost tripled their money. so 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. 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 professionals are using machines to do it. >> i was going to say. thanks, mike. what do you think? this is -- it's legal. right, you can do this. >> totally. >> this is what they do. >> it's called fast fans. mike said those people who bought them i suspect they're machines and a lot of sophisticated algorithms that track news and then they go and take options, because that's the most, the quickest thing they can do. so to me it's not likely. >> in stock trading before deals are announced a lot of times unusual volume and activity, the premise of trying to buy options at the right time is sniffing out opportunity.

>> what's interesting is, 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. >> wow. >> for those keeping your eye on the news, these were done by a bot for sure. newswire comes out, trading them. keep watching the news, you'll see those as well. >> if you're an individual trading options, how do you compete with that? >> i think it's a horrible strategy when you see a headline, go out and try to take options. think about what you're doing. all of a sudden when the news is out, the bid asks, the spread widens, volatility goes up. the prices you're paying, it's not a high probability event that you're going to make money. >> i would disagree with that actually. in the case off altara, interesting. that happened quickly. all of those options traded in 130 milliseconds. we're talking a about an eighth of a second. the stock didn't halt for a period of time there. >> how often does it happen like that? the stock goes up 25%? that's the point. often times, you get a 3%, 5% move, retail people are the ones driving it

up the last few percent and smack down. >> trading weeks from the deal. >> my point is you obviously have to look at it on a case-by-case basis. there was time in martha stewart. gotten ahead of the headline. and altara, there was a window of time before it stock ended add traded dollars higher. >> that's the reality were all of the computers. coming up, making it rain with their ambarella trade. what their next move is after the stock took a beating today. that and the "final call," next. 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. ambarella shares fell more than 6% today. that was good for khowu and carter. should you stay short? a scathing not on this company. >> i didn't see that. happily i stay away from that stuff. just the facts. the issue is this, that we have something of a reversal day. record volume at or near 10 million.

a flare-up on a big weekend. closing on an absolute. panicking to get in. nothing underneath it. we would stay? >> yeah. this is a situation where we basically wanted to try to take a bearish position while limiting risk, which is why we were selling at call spread to do the trade. one of the things we looking for, a catalyst, though. we touched on the valuation issues. the fact the stock looks like a hockey stick. i think what we do, we have until july. sit with the trade now. >> take a tweet. steve says, awesome show. how do you feel about july 125, 130 vertical call spreads on the siwm? >> interesting you choose iwm. more than doubles than the s&p. worried about external things in greece hitting the s&p then you basically small cap u.s. should be less affected. that's the way to play if you play for breakup. >> very quickly, time for the "final call."

the 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 sara eisen. go to our website for more. have a great weekend. happy father's day. see you next week. >> announcer: the following is a paid presentation for the power pressure cooker xl, brought to you by tristar. do you love sitting down to a big sunday dinner with the entire family? do you wish you could enjoy the taste of those all-day, slow-cooked, labor-intensive recipes without the time, the work, or the wait? well, now there's a new way to take grandma's favorite recipes and turn them into everyday family meals with just a push of a button and do it in a fraction of the time. how would you like to make a hearty pot roast with all the fixings done in 25 minutes... fall off the bone short ribs ready in 40 minutes... or how about chicken wings, going from rock-hard frozen to steaming hot in just 10 minutes? a tender, shreddul