couple days to let it sort out but against 225 i think this is a name you can still own. i know dpan's not going to agree with me on valuation for a number of reasons but it's been a technical trade and the technical support. >> you don't even have to look at it from a valuation standpoint. you really have to think about it from a sentiment standpoint. to me think back just a week ago. they lowered those delivery estimates by about 5,000 cars. that's on a 55,000 number here. i think at one point not too long ago about a month ago when it was making new 52-week highs for all intents and purposes at 290 investor sentiment was very, very positive. they've been given a decent reason to think twice about some very key execution issues that need to go on in the next six months for this stock to continue to work. there's the other one. i just want to bring that up. look at that chart right there. we flagged on a couple of occasions. that is a potentiality head and shoulders top formation. it really feels to me that if the sentiment has shifted and we do have a minor execution blip in the coming months you could see that stock back toward that net line down to 200 bucks. >> to your point the sentiment

has shifted in a lot of the big high valuation growth stocks. basically everybody was willing to buy them all and now we're saying it's not just good enough to hold them and hope. whenever we see some cracks in the story these things are getting thrown right out and i think that's part of what's happening here. but the flip side of that is this really does -- the best part of their growth opportunity still lies ahead of them. >> obviously i'm a little cautious here and i wouldn't be buying the stock at around 245 but i think because it's an options show here we can kind of express our views in different manners and have different break evens. if you want to buy the stock here at 245 you do recognize the potential for some of these execution issues in the coming months. i think you look to do what we would call a risk reversal and you look out to january. you want to give yourself some time here. so today when the stock was about 244 you could sell the january 2016 expiration, 200 put at $10. and you could use the proceeds to buy the january 2016 290 call

for 10ds. that costs you nothing. and here's the trade here, people. if you were willing to give smup potential near-term upside and you want to help define your risk to the down side, which would be 200 on january expiration, then you have the potential for this massive breakout. if they get everything right over the next six months. that's why i think this trade to me is a stock alternative, a stock replacement trade that gives you that functionality to the up side but doesn't get you put in the stock on january expiration down about 18%. >> it's like my brain is exploding from this. this is unbelievable. these are bright guys right here. you know, the think about head and shoulders tops, and i think dan makes a great point and mike talked about it as well, you don't know until it happens, right? so you have to sort of draw a line in the sand at some point. the fact they priced it 242 and it held there to me is pretty interesting. yes, you've got the benefit of a decent tape today and yes elon musk bought a portion of it which i think gave people some sort of hope and enkurnlth but 225 is the ultimate line in the sand through this, then 180

comes back in play. >> levels dan picked here make a lot of sense. what you're hoping for if you're going long the stock is it's going to break out to new highs. i think that's the reason you're looking to that up side call. to the down side this is where the stock has found some support historically. it's a pretty meaningful discount on a valuation basis to take it down 20% from the current levels. when i take a look at this i think it makes a lot of sense. >> what is your concern if any about going to january? by then we theerdically will have the -- whether or not they meet guidance for the year which they've already lowered. >> yeah. so here's the thing. if there's any production issues and we know -- they're producing two cars now. okay? they have a giga factory they're building out and the stationary storage. they have a lot of balls in the air for the first time in a long time and i think you're going to know by the fall whether they are executing on multiple fronts very well. >> we've got some breaking news here on kkr. let's get to cnbc's kate kelly in the newsroom. kate. >> hey, melissa. interesting news here break just out in the "wall street journal" in fact within the last hour. sampson resources which at the time in 2011 that it was taken

private that an lbo by a kkr and others, the largest, lbo, $2.7 billion, planning to file for braups in mid september according to the "journal." i just spoke to kkr. they're declining to comment so far. but this could be the first in a wave of bankruptcies that we see in the coming six months or a year meshlgsa as companies struggle with its cheap flat price for oil and also natural gas in which samson was a key player. just to go over to hedge fund filings and other money management filings from the second quarter which is newsworthy today and this afternoon, some interesting things with dan loeb just jum ng out at me. he's taken some new stakes in some mobile names including t-mobile with a 6.5 million stake and nokia with a 3 million share stake. loeb also joining a large group of hedgies who seem to be bottom fishing on energy names. i'm thinking of here in this case devon energy, which is a $3.8 million stake in loeb's case now. that's been down about 25% this year but no doubt loeb senses a

buying opportunity. there point one of two major funds dipping into starwood hotels as well taking a million-share position at the same time as competitor john paulson appears to be the number one starwood holder with 12 million shares in the lodging company announced just this afternoon. lastly some interest this period in a couple of cable names including broadcom where paulsen initiated a 4.2 million share stake. charter with third point and berkshire hathaway in new stakes and time warner cable where soros fund management took a roughly $1.5 million -- million share stake. expectations of further consolidation and arbitrage perhaps's maybe we'll get more clarity in the coming weeks as some of these guys talk about their positions. >> all right. kate kelly, thanks so much for that. interesting when you juxtapose kkr and samson's bankruptcy with some others. bottom fishing in energy here. some people are actually willing to finally step in. >> kkr is one of the bottom fishers. they admitted very shortly after this deal, crude started to fall oust bed very shortly after -- this was a basically really big

hoifrl deal they did. crude falling more than 50% since that deal took place. five-year crude's down 30% in that same time frame. of course in these types of deals you tend to have more heavily levered businesses and that is where the cracks are going to emerge first. we can see that in high yield spreads for example. the energy space is essentially where all the hazards lie. but even kkr is moving it. >> you can see the drop in the after-hours session in kkr. doubled its loss in the past few minutes. >> kate spent some time talking about dan loeb and third point, there's nobody better when it comes to ak visit investing. here's a name that's kind of ground zero for everything going on in the world. at least as far as china fears and everything like that. we know they get more than half their sales from china. here's a stock that when he made his statement and other hedge funds did that they were getting long this stock it went from 80 to 95 and a lot of that is people kind of riegd the coat tails. the stock sold off 10% since. so i think it's really important for viewers to kind of pay attention to some of this stuff. looking at data that could be two, three months old can sometimes be very dangerous.

>> forget about a 52-week le in devon. we made basically a six-year low in devon, levels we last saw in the early portions of 2009. and you would look at the move in the stock and say it's got to be cheap on valuation. it's not that cheap on valuation. here's a stock that's trading close to 38 times or so forward earnings in an environment where they have no earnings growth. this is a play for me for the next couple of years thinking that this thing's going to bottom but if you're getting on its coattails next week that's a fool's errand. >> let's move on. a slew of retailers reporting earnings next week. take a look at this. walmart, home depot, target, lowe's just to make a few. mike, what do you expect in the space especially given we just got retail sales for july better than expected. juchb revised higher. >> the retail sales numbers looked pretty good but still i think we have a secular shift that's going on. i'm not that enthusiastic for the targets and especially the walmarts of the world when you take a look at it. let's look at walmart specifically because here you have a name that's growing

essentially at 1% to 2% in terms of revenues each year. that's less than the economy's growing. in emotional terms it might seem like it's okay but the fact of the matter is they are actually shrinking in real terms and in the exact same time frame you've got amazon which is still experiencing double-digit top line growth. this is ultimately where the pressure's going to be. it's the same story we've been saying for the last five years. bricks and mortar versus online sales. i think they're going to ultimately end up being the los loser. >> target was interesting. that was the clear winner up until the last month or so and now target appears to be rolling over as well. function of the entire space and maybe people taking profits out of tgt. if you ask me to play the game we often play -- >> would you rather. >> would i rather waurnlt or target? i'd still rather target but. but the fact it's rolling over concerns me. but given the choice between the two. wmt. >> i'm going to throw another name in there. costco is interesting. went down to 135. consolidate add round 145. i know mike has a different

stance on walmart. costco looks like it's setting up okay into a sort of back to school sort of selling season. >> i would just quickly say on costco, this one passes what i call the holly test. i look at what shows up on my american express card bill. >> not anymore, american express. >> well, that's american express's fault for having lost that relationship. but as i take a look at this, we've got walmart reporting soon. a simple way to press a bearish bet. and that's really what you're doing here. the stock's down 20% on the year. just to look out and simply look at the october 72 1/2, 67 1/2 put spread, you can spend about 1.6 0ds to put that trade on. again this is one of those situations trading just under 15 times next moss earnings. if you want to make a bearish bet -- >> might want to as a dozen flowers to that bill after that holly. you spent money just like she does i'm sure. right or wrong? holly, i'm on your team right there. >> guy. >> yes. >> walmart, do you like his bearish bet? >> i think he's been spot on.

the stock has not been able to rally on what has been until recently an up tape. if you ask yourself it can't rally when the tape is in its favor when is it going to rally? >> i'm going to take the other side and we're going to -- >> you want to -- >> well, mike and i go way back here. when i look at the long-term chart of walmart, 70 is a massive level. the stock closed today at 72.38. if it can hold 70 you have a push back to 80 in the fall. i'm going to go with an extra trade here. the october 70 call offered at 3.70. 2.50 or so in the money right here. that looks like a good way to make -- >> this thing has not shown any real signs of support the way i look at it. the thing is trading straight down. and their competition in the online space is going straight up and that is telling you pretty much everything you need to know. >> i like how guy joins the set here, he gives us his advice on stock, marriage advice. >> i just want to help the brother out. he's traversing the -- i just

saw him in new york. now he's here. it's nuts. buy some flowers, you're off the hook for the weekend. >> got a question out there? marriage advice question? @optionsaction. check out the website optionsaction.cnbc.com. we've got the hot nest options news and videos throughout the week as well as exclusive trades. check it out. here's whaelgs is cot else is c. >> they've got the golden arches. mine is the golden arcs. >> and now shake shack has options but that may not be a good thing for the stock. we'll explain what it is that has some traders feeling indigestion. this woman has a stern message for twitter shareholders. and she'll reveal it 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. the spreads are pretty wide and a lot of people who are uninitiated about options are going to see the prices and find them confusing and the reason they've kufrzing is this stock is hard to borrow. there's a small float a high short sxirnt what that means is when people want to short the stock you've got to pay up to do that and so option prices are going to reflect that and

actually you can look at options prices and it is suggesting shake shack has a $47 stock come january. so i think when you take -- and you know, you look at the options prices there people are, they're saying i have a hard time figuring out the price. >> some of the enthusiasm about the stock that we've seen this year, you know, kind of carried forward today on the first day. call volume was more than 2 1/2 times that of puts and nine of the most active strikes were all calls too. i think that some investors are looking for ways to define their risk but i think the main point here very simply is that the spreads are really wide the prices of options are expensive here. i think you need to see marketmakers kind of settle in here and -- >> but you hit on exactly the right point which is that if you are really enkind to get long shake shack at this point i don't think you want to buy the stock. want to use the options because the calls are cheap relative to the puts. because of that dynamic we just discussed. and you're limiting your risk. you know how much you're putting out there. go out and get the lockhart link burger at the shake shack in austin. i'm tlg you it's one of the best sandwiches i've ever had. and then buy calls if you want to be long the stock.

but i personally would not be. the options market is telling you this stock is going -- >> i wouldn't recommend that burger for you, guy. >> my constitution i would not do well. especially with the fact i've got to get on a plane and fly for 5 1/2 hours. i have a comment and i a question. my comment is mcdonald's has been trading well. got to give tim seymour credit, i think dan mentioned it last night. the fact it continues around this $100 level where it's had trouble the last three years maybe they finally figured it out number one. number two, a question for the esteemed panel on o.a. will the fact options take the volatility out of the underlying stock, will we no longer see the crazy fluctuations in price? >> kuo can handle that question. >> i have an answer for you. we can look at almost every other hot ipo that has taken place. what has happened after options started trading was we saw the volatility started to go down. and i think that's exactly what we're going to see happen here as well. >> another way to think about it is if if you do own the stock and you're looking to add some

income you could sell calls against it. the stock is not likely to go back up to 100 anytime soon. you could use the opportunity to sell short gaining calls, add some yield to that position. >> coming up next twitter shares getting a boost today on hopes of new leadership. kara swisher in her "options action" debut will tell us if she thinks should take the top spot 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. welcome back to "options action" call to the west. we're out here in beautiful san francisco just blocks away from twitter's headquarters. and today shares of the social giant got a nice pop amid whispers that the company's search for a new ceo could soon be coming to an end. here's what suntrust robinson analyst bob peck said today on the halftime report. >> we think it will be this triumvirate structure with jack dorsey as ceo while probably still being ceo over at square. adam bain as president. and ed williams as chairman of

the board. we originally targeted right after labor day and then we heard it was speeding up the process and so it could happen as early as next week now. >> so is twitter about to make a move? and who might top that list? kara swisher is the co-executive editor of re/code. she joins us here in her "options action" debut. hello, how are you doing? >> welcome to sunny sfras. i wanted to dress the part for you. >> and you are dressed appropriately. to the nines in fact. >> yes. >> in terms of you who think is tops on the list. there is probably jack dorsey. >> yeah. it's interesting. i would think a company should have 100% of a ceo. that's just my -- it's a public company. square has filed to go public, or is filing to do that. and i would assume if you're a shareholder you wouldn't want a 50% ceo. that would be an issue. i think henry blodgett brought that up. it's a souper fair point. that said, he's the founder. he's a product visionary. you know, he's got the support of the board in many ways. and so we'll have to see. i don't think it's imminent. >> you had chris sacka on, the

great interview on decode radio the other day. he basically was saying what bob peck was saying today. and what he thinks. and he thinks that it should have this grouping. but you seem to disagree here. >> i think it's not a bad idea. it's just whether it's going to actually happen. i don't like to declare things without -- i'm not clear if that's actually what's going to happen. >> quick question. sacca has tremendous command over the story right now. is he going to be on the board when costolo is out? that would be a great idea. >> i don't think so. i think that italian view angered people at twitter. i think he definitely knows how to push their buttons. he doesn't call himself an act viv shareholder but that's precisely what he is. >> isn't 50% of a visionary better than 100% of a manager for twitter at this point? i mean, take a look at apple post steve jobs. >> they had 100% of steve jobs if i recall. >> they did have 100% of him. but i could easily imagine them getting 100% of jack back after

the square ipo. so to me i'd rather have 50% of the visionary at this point because it seems like they've got zero guidance as far as that is concerned. >> it's a silicon valley myth the founder coming back and saving things. it's only happened really once and it's steve jobs. i think jack dorsey's really talented and stuff like that. but it's really -- it's a myth that is not necessarily workable all the time. jerry yang came back to yahoo! that didn't work out so well for yahoo! and for him. >> and he he did have the alibaba -- he saved the company. >> that was jerry semel. >> a lot of people did. he's a great person. but was he the right ceo? i think they fall in love with this idea of the founder ceo. now, jack was forced out before for evan williams, who's now going to work with him. and twitter is such a dramatic -- it's like a soap opera in a lot of ways. it will be interesting. them working together within interesting. and adam bain, i have nothing but great regard for. he's a really top executive

there. >> we were just talking to roger mcnamee of elevation. he was saying they're one night's sleep away from make the right decision and turn things around and that would be if they turned twitter just from a straw for information for data into a firehose. >> yeah, he said that. he told me. >> i'm just wondering what your thoughts on that are. >> there's a lot of direction that's could go with twitter. i personally think it could be sold through a bigger company. my feeling is -- i know they say it reaches all these people and it could be ksh and it's a great advertising medium. but seems like attaching itself to a larger steam engine, whatever, like a google or something just makes more sense. it would work better. that said, you lose the innovation. >> it seems so obvious to me. that conclusion. but yet your reporting has said that google is not going to do this. it just seems so odd. when you think about it, though, when what's app was purchased for $22 billion twitter has an enterprise value of $17.5 billion and to me it's got to be the most scarce social media and mobile messaging property on the planet right now. >> i think this is a larry page

call and of course now he's running alphabet. so it's whose call is it now within google who would buy this thing? and where would it go? probably under sundar pichai's area. and they've been terrible in social. it's real-time social. it's news. it's advertising. i always thought that was the natural -- but there are others. alibaba, 10 cent, microsoft, apple. you can go through a zillion -- facebook. which also doesn't seem interested at this point. i don't know. >> kara, thanks so much for coming by. >> thank you. >> appreciate it. >> you must acquiesce to the ray-bans. well, i hope you'll be back. >> we'll be back. >> coming up next your tweets and the final call from the options pits. much more from san francisco when we come right back. stay tuned. ♪ it's the time of the season 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.

you would have to be a maniac to not watch my game plan for next week. we've got you covered from estee lauder to john deere. then everyone's joining the subscription-based business game. i've got a company banking off the trend. "mad money" is next. i'm here at the td ameritrade trader offices.

ahh... steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

let's take a tweet. lowe's or home depot? which do you play on? it's almost like would you rather for -- this is a true mashup tonight. mike, what would you do? >> i would rather lowe's. lowe's is about a turn and a half cheaper although they've got the same effective growth rate. they're going to be announcing earnings. one thing i would also point out their options are a little bit more expensive at this point. and you can take advantage of that by getting into the trade with something like a buy right or cash -- >> home depot makes me a little nervous. it reminds me of a crowded trade like disney was last week into its earnings report. ienl not aw buyinger here for the breakout. >> time for the final call, the last word from the options pits. we're going to go to our special guest here. >> oh. you're coming to me. >> guy adami. >> walmart reports on the 18th. mike is -- i've got to tell you something. always spot on. love dan. but mike, the quiet man, is always right. so i think this negative call on walmart might come home to roost next week. >> the quiet trade. the way to play is a put spread.

67 1/2. >> we'll end it with dan. >> twitter -- or excuse me, tesla, i'm not a buyer here but i think you look at risk reversals for stock replacement. >> looks leek our time has expired. i'm melissa lee. thanks so much for watching. for more website. see you back here friday at 5:30 p.m. eastern. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now! hey, i'm cramer. welcome to "mad money." welcome to kram america. my job is not just to entertain but to educate and put it in context. call me 800-743-cnbc or tweet me @jimcramer. you know what, we're at a bizarre moment where overseas woes, who knows who is next,