and we're live from the only place the pope seemingly hasn't visited, the set of "options actio action". the guys are getting ready for the show. while they're doing that, here is what is coming up -- pretty much sums up the action to the apple new phone. so why did shares close lower. we'll explain. plus, online competition is coming to your tv and the world of medium sport may never be the same. we have a special report. and -- >> it is an entirely different kind of flying. >> that is what people are saying about the arms and one name in particular could take off. the action begins right now.

well yellen saying this week that she wants to raise rate this is year. so here is the question. if the fed is moving, what stocks do you want to buy right now. dan, what do you think? >> i don't think you want to buy too many stocks right now. when you think about the reaction in our u.s. stock market since the fed meeting last week and the volatility this week and the feds plan. for the most part, if they do what miss yellen said yesterday and raise rates this year, i don't think they are going anywhere fast. so think of a defensive playbook -- a couple of weeks ago we talked about utilities and it was counter intuitive and it is okay over the last few weeks. you want to be offensive in u.s. sent rick names like utilities. >> i think you want to be in a defensive spot. in the past there was bad news an the market would selloff early and you see the futures and what is happening now, good news as the day digests. people are looking for excuses

to sell stock so i don't think you are a big buyer. >> and the truth is, it doesn't matter what they said. the message is so confused, is she, isn't she going to raise, that is not part of the equation right now. the market doesn't like it when they are threatening to raise and doesn't like it when they are threatening not to raise. the tape has changed. >> what does history tell us if terms of the sectors that performed best? >> the rising rate environment you don't want to be in things that compete with higher yields like utilities and reits. but even if they do raise, 25 basis points, whatever it is, the real cost of capital is low and likely to stay that way. >> and we talked about that. when you think about reits and utilities, they are down 20% and so they are in corporated that and we haven't seen rates go up in that time period when the risk assets are getting hit. >> the last tightening cycle that we saw, there were 13

25 basis point raises. so for peek to freak out for a 25 or 50 basis point raise or even 100 basis points, it is all meaningless. >> carter is tooking a -- taking a look at one name in particular. >> a high percentage yield. it isality rhea. i want to look at the yield relative to the things we've talked about. but the chart itself. so in a conversation relating to the cost of capital, of course at the bottom of this small screen that i've created, we have the benchmark, right. by which many assets in the world are priced. at the top of this we have altria. so you can get a close yield from utilities and real estate and so forth. but this one is the least sensitive to rates. and that appeals, i think, and it is important. now, some charts. these are the three that really

matter. in the middle here. and look at how closely correlated they have been over the last two years. spo utilities, as measured by the xlu, all rights, and the dvr, the dividend paying etf. now i want to put in philip morris. here they are without and here they are with. so all about the same yield. and yet the one with the best yield has been the best performer. and they all traded about the same forward multiple in terms of earnings but what i like is not only the yield, but it is the tentacula setup. so here is our chart. you can draw the lines the way you want. here is how i would draw them. one of two ways, a second of two ways. so let's go back. there is your chart. call this head and shoulders bottom, either way, the presumption is some sort of resolution to the upside, by my work. and you can draw your wedge. here too. so we think you have a nice defensive high-yielding asset, if you can say that in this kind

of environment, but at 4.1%, better than most other alternatives and it is not fed sensitive, at least as much as utilities or reits or what have you. >> that coupled with the fact that this is the domestic smoking business as opposed to philip morris which is the international basis. and we were talking about staying domestic. >> so this is interesting. you think about tobacco as a declining business over all but this is a company seeing 2% to 4% top line revenue growth and growing eps, partially the net of acreteive effects at 8%. and so it is reasonably priced. and as carter was pointing out, not economically sensitive. that is helpful if you have concerns there. but it has seen an increase in options premiums because the market has been more volatile. so this is a situation where you look to sell some premium and enhance what you would otherwise get in a dividend payer. and because options premiums are

elevated, i'm looking at selling some puts in the name. in the october '55, when it was trading at 55.5 and it has fallen off since then. you could collect 2% of the stock price and sell them for over a dollar and those expire in 21 days. that works out to an annualized yield of over 30%. and think about it this way, and if it does decline, options premiums are likely to be elevated and you can look to sell calls against it and continue to collect additional yield. >> you just want to sell puts in this environment in. >> very near the money. and the stock was below 50 during the flash crash in late august so you have to be prepared for being short a put that could be in the money a few bucks here. but i would go the other way and say if you are playing for the break out and like the option prices here, i would maybe sell a little out of the money put and buy an out of the money call and have a risk reversal on. so i would still have risk on the down side and take in

premium but also have the leverage to the upside if you get carter's move on the breakout. >> if you could have such a thing in life, this is a heads you win, tails you win. meaning, if we continue lower, that is my own view of equities, i think you'll do better in this than the s&p. and in the event there is stabilization, this yield gives you upside that other parts of the market don't. >> even if the stock does fall to the $50 level in that little mini flash crash, you can sell some upside options and collecting another 2% over the course of three to four weeks and do that habitually and that will help lower the cost basis significantly. it is when options prices are basically elevated like they are right now that these options selling opportunities creep up. we haven't had any in a while. >> while the apple iphone available in stores today. and josh lipton is in palo alto with customer's reaction. do they like the phones? >> well, melissa, i showed up

here in palo alto around 5:00 a.m. die hards were online. and we did run on to one dedicated apple fan who came up with a pretty unusual way to secure her new phone. she actually, melissa, rented a robot to save her a place online. >> i've had all of the comforts of home and i've convinced people to drop me off coffee over the last 24 hours and meals and it is just been kind of fun. i feel like i'mping out but without the cold and i still get the whole experience. and the phone -- and the phone. i still get the phone. so it is awesome. >> so that robot actually was online since thursday morning. she got the 6s plus silver. i think that got points for creativity. talking to customers here at the store about why they upgraded. a few reasons i heard. some were upgrading because of 3-d touch and the pressure

sensitive display should make navigating the phone faster and easier with less friction. and you've seen some tech companies upgrading apps with the 3-d technology so drop box, pint rest and twitter. and the camera, they did add new sensors to make the phones more clear and more accurate. and finally the speed. this is a faster phone thanks to the new apple processor. so users should feel the difference in speed when they unlock the phones or launch apps. the big question for investors, how many of the new phones did apple sell this weekend. piper is looking for 12 million compared to 10 million last year. and one reason they say is because china is involved in the launch this year. we should soon find out. melissa back to you. >> josh lipton inialo alto for us. thank you. and the question is does a robot do with the phone once they get to the front of the line. what is your trade on apple, dan? >> i don't think the company has too many problems. i think the stock could be dead

money. but i think this desk we've shared for months now and selling calls and doing a lot against your holdings so if you own the stock and you are worried about the 10% drop you had august 24th, down to 95, remember people, the stock did open at 95 and traded lower. and you have to have the memory of it. so me, i think if you share the view that i do, if you are worried about a sharp selloff, think about doing something called collaring your stock. say you own 100 shares and it closed at $114. and you could sell at 1.50 and buy one of the december 1, '00 puts at $2.50. that structure cost you $1. between 15 and 129 you can make up the $14, that is 10% between now and december exploration and that is why you own the stock, because you want it to go up and they will pay a dividend in november and then between 115 and 100 and you have losses of the stock. below $99, the $1 in premium is

what you have to take away from the strike and then you have perspective. so this is a trade why you don't want to sell the stock and don't want to pay taxes and want the dividend and you think the stock could be a position in tact and this is disaster protection, i don't think the stock is going to be over $130 between now and the end of the year. that was the broke down level in july. >> chart master, what does the chart look like. >> all equities plunge august 19th, august 24th. most equities rebound, so did apple. but apple has hung in well as the marks have come under renewed pressure. i think it has a defensive element and i like it on the long side. >> send us a tweet at "options action." we have the hottest videos and throughout the week and exclusive trades so check it out. here is what is coming up next. could this guy be headed for a channel near you? online gaming is coming to tv and it could spell riches for one stock in particular.

plus boeing shares are doing something unusual. and it could make for some quick profits. we'll explain when "options action" returns. 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. or the freedom to choose what doctor you want to see. so if you have medicare parts a and b, consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans,

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here at td ameritrade, they work 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. welcome back to "options action." e sports and competitive video game playing may not be physically grueling like regular sports but it is competitive and big business and soon it could come to a tv channel near you. julia boorstin is in los angeles with the details. >> that is right, melissa. over 110 million people around the world are e sports fans. the business is dominated by you

tube and twitter which was bought by facebook and now it is ready for primetime. turner agency and irg are teaming up to create an e sports league. broadcasting 20 telecasts on video every year. and blizzard announced a league for call of duty. it will have a proand amateur division and a $3 million prize pool. >> think about the size of the number of people like call of duty, 40 million people are playing and watching that game on an annual basis and potentially you could deliver an audience size in a cal dor to what football is. >> and draft king is bringing fantastic sport -- fantasy sports to video games starting with league of legends next week. espn has aired various competitions but the ratings have not been huge. wilson predictions that will change once the new big leagues launch. melissa, back over to you. >> thank you julia boorstin from san francisco. so how big can this become.

dan, those are big numbers. >> really big numbers. and it has caught traditional media off guard. so we are talking about the fantasy stuff and the twitch and all stuff that we will see acquisitions and large media companies go into it. and i don't know how you play it right now. i think some of the gaming companies are one way to do it but people think why buy the cow when you can get the milk for free. it is different how people are kmuming the content. >> we were speaking in the last half hour about how fall ratings have fallen off a cliff, particularly for the younger male demographic and this seems to line up perfectly with the younger male demographic. >> that is it. of all landscapes shifting and changing quickly, this is it. it is even more than oath parts of the equity complex. and the issue is what price are you ilg willing to pay for disney because this is a terrible chart. this broke and dropped hard

before the market and broke with the market. so the question is at what discount and options strategy can one use to get it at the right price. just buying it here, i don't think there is any technique to that. >> but the price here is actually reasonably attractive. i understand the last earnings were bear but this still saw year-over-year growth in the low double-digits. it is the premier media property that you could have and it is still growing at a significant level and it is trading at a very cheap multiple. >> so it sounds like you like disney and you are a skeptic. >> it is funny. the disney chart looks a lot like apple. they were up 30% on the year and holding on for dear life at 100. i agree, that the price action is down right horrible and i then the sentiment is bad also. so i'm not willing to step in here right now and i'll tell you why. because i think these sort of things, it overshot on the upside and it will do on the down side. and we're talking about cows.

let's talk about old media. it happens to be december in the options market and star wars, the force awakens, will be coming out. and if we are still in a bull market, and we are not, this is a catalyst people would own the stock for. so if you were inclined to buy disney today at $100, down from 120 a few months ago, i would consider using elevated options prices, like in morris. you see the one year, $90 and that is the level it stopped on a dime on august 24th, that is big support. and then on the upside, $110 was the breakdown level. i would look out to december 18th exploration and that is the day star wars opens. and this is a hip thet cal. do this when it breaks $100 and toward $95 and when it was down to $100 today, you can sell it for 1.80 and you are taking 1.80

in premium and you use the proceeds to buy an upside call, a december 1, '10 call, the breakdown level for $1.30. you are taking a $0.50 credit and you take the $0.50. the worse case you put the stock at 89.5 and -- >> and i don't think you need to get ecstatic about buying the upside call. we said we're not in the bull market any more. options premiums are elevated. i'm looking at the november 97.5 and 100 plus. you could get 2 and a quarter in less than two months if you sell that and i think that is an easier way to play this. >> it is the non-bull way to approach it. anyone who is willing to buy it 10% lower is not bullish on the stock. because it is a terrible pattern. >> and i'm not. it is an alternative. and i would consider selling a stock that i owned that gives me the leeway up and down. >> 100%. >> and boeing did something wild this week and made dan a whole lot of money. we'll tell you what it is when "options action" returns.

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.

here at td ameritrade, they work 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.

here at td ameritrade, they work 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.

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 right now. i'm cramer. welcome to "mad money". my job to teach and keep it in context. call me or tweet me@jim cramer. talk about a roller coaster. so, this market spent the day