i'm i'm here live from the only place the pope seemingly hasn't visited the set of "options action." here is what's coming up. >> that pretty much sums up the reaction to apple's new phone. so why did shares close lower? we'll explain. plus, online competition is coming to your tv and the world of media and sport may never be the same. we've got a special report. and that's what people are saying about the airlines and one name in particular could soon take off. the action begins right now.

yellen saying that she wants to raise rates whachlt 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. i think that when you think about the reaction that we have had in our u.s. stock market over the last couple weeks since we had the fed meeting last week and volatility this week and uncertainty about what the fed's plan s i think that for the most part if they do what ms. yellen said yesterday and raise this year i don't think rates are going anywhere fast and so to me i think you have to think of a pretty defensive playbook continuing. a couple weeks ago on the show we talked about utilities, it was counter intuitive that is correct trade has worked okay. i think you want to be in defensive u.s. centric names like utilities. >> i think you do want to be in a defensive spot. in the past we used to see situations where bad news the market would sell off early, you would see the futures. what's happening now even good news it seems like we seem

weaker. people are looking for excuse toss sell stock. >> the truth is what does it matter what she says. it turns out their messaging is so confused that the market is she going to raise, isn't she going to raise? that's not a part of the equation right now. the market doesn't like this t. when they're threatening to raise, doesn't like it if they're threatening not to raise. the tape has changed. >> what does history tell us in terms of the sector that perform best? >> in a rising rate environment you don't want to be in things that complete with higher yields, typically utilities and rates, but the truth is even if they do raise, 25 base points, whatever it is, the real cost of capital is low. >> when you think about rates and utilities they've gotten creamed this year, they're down 20% from the recent highs n some ways they have already incorporated a lot of that and we haven't seen rates go up in that time period where those risk assets are getting hit. >> any rate increase is likely to be modest. the last tightening cycle that we saw there were 13 25 base

points over that period from '04 to '06. for anyone to freak out over a 25 basis point raise. a 50 point raise or 100 base point it's all meaningless. >> carter is taking a look at one name. >> a high yield rate but not interest rate sensitive. it's altria. i want to look at its yield relative to the things we've talked about but the chart itself. in a conversation relating to the cost of capital of course at the bottom of this small screen that i have created we have the benchmark, right, by which many assets in the world are priced. at the top of this of course we've got altria. so you can -- 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 is important.

now, some charts. these are the three that really matter in the middle here, and look how closely correlated they have been over the last two years. so utilities as measured by the xlu, all reads and the dividend paying etf. now i want to put in phillip morris. here they are without, here they are with. so all about the same yield and yet the one that's got the best yield has been the best performer. they all traded about the same forward multiple in terms of earnings, but i like of course not only the yield, it's the 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. there's your chart, you can call this head and shoulders bottom, either way the presumption is some sort of resolution to the upside, at least by my work, could you draw your wedge, here, too. so we think you've got a nice

defensive high yielding asset if you can even 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 rates or what have you. >> that coupled with the fact that this is the domestic smoking business as opposed to phillip morris which is the international base. we were just stalk being saying domestic. >> yeah, so this is interesting because you would think about tobacco as probably a declining business overall. actually, this is a company that's seen 2 to 4% top line revenue growth, they've been growing eps partially the need of the creative effect at probably 7 to 8%. at the current valuation it's reasonably priced. the other thing is as carter was pointing out not economically sensitive, that's obviously 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 one of those situations where you actually are going to look to try to sell some premium and actually enhance what you would otherwise get in a dividend pair.

for me because options premiums are elevated i'm looking at selling some puts in this name. the october 55 is when the stock was trading at 55 1/2, it actually had fallen off a little since then. you could collect 2% of the current stock price, sell those for a little over a dollar. those expire in just 21 days. that works out to an annualized yield of over 30%. think about it this way, if the stock does decline and it's put to you options premiums are likely to remain elevated like they are now, you can then look to sell covered calls against it. >> you just want to sell puts in this environment. >> 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 basically short a put that could be in the money a few bucks here, but i would actually got other way and say, all right, if you are paying for this technical break out and the like the idea of selling options prices here i'd maybe sell a little out of the money put and buy an out of the money call and have a risk reversal on.

i would still have risk, be able to take in a little premium but have that leverage to the upside if you get carter's move on the breakout. >> if you can ever have such a thing on life there is a heads you win, tails you win. if we're going to continue lower i think you will do better in this than you would let's say in the s&p. in the event that there is some stabilization i think this kind of yield gives you upside is that other parts of the market don't. >> even if the stock does fall to that $50 level in that mini flash crash you will be able to sell upside options, probably be collecting another 2% over the course of another 3 to 4 weeks, do that habitually that is going to help obviously lower your cost basis significantly. it's when options price right side basically elevated like they are right now that these options selling opportunities actually creep up. we haven't had any in a way. >> apple's any iphone 6 schlt and 6s plus officially in stores today. josh lipton is in palo alto to

see how customers are reacting. >> reporter: i showed up here in palo alto around 5:00 a.m. local, die hard recall already on line. we did also run into 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 on line. >> i have had all the contracts of home, what's so funny sieve convinced people to drop me off toef over the course of the last 24 hours and meals. it's just been like kind of fun, i feel like i'm camping out but without the cold and i still get the whole experience. and the phone. and the phone. i still get the phone. it's awesome. >> so that robot actually was on line here since thursday morning. she got the 6s plus silver in case you are wondering. i thought that got points at least for creativity. talking to customers here today at this palo alto store about why they upgrade, a few reasons, some say they were upgrading

because of 3-d touch, that pressure sensitive display should make navigating the phone faster and easier, less friction. also tech companies upgrading their apps with this 3-d technology so drop box, pinterest and twitter. others mentioned to me the camera, they did add new sensors to the cam ration should make those phones more clear and accurate and finally the speed, this is a faster phone so users should feel that difference in speed when they unlock their phones or launch apps. the big question for investors how many of these new phones did apple sell this weekend, they are looking for around 12 million, that compares to 10 million last year, one reason because china is involved in a launch this year we should soon find out. melissa, back to you. the question is what does a robot do with a phone once they get to the front of the line? what's your trade on apple, dan? >> i don't think the company has

too many problems here. i think the stock could be dead money and this is a view i think this whole desk has shared for months and we have been selling calls against it, been doing a lot of things against your holdings. if you hold a stock and are worried about that 10% drop you had august 24th, down to 95, the stock did open at 95 and traded lower. you have to have that memory of t to me i think if you share the view that i do that the stock is dead money but you are worried about a sharp selloff you may want to do something called collaring your stock. you could look out to december expiration and sell the december 130 call at $1.50 and then you could buy one of the december 100 puts at $2.50. that structure cost you $1. between 15 and 129 you can make up the $14 that's basically 10% between now and december expiration and that's why you own the stock, because you want it to go up, they will pay a dividend in november. between 115 and 100 you have

losses of the stock. below $99 that $1 premium that's what you are going to have to take away from that strike, then you have protection. this is a trade where you don't want to sell the stock, maybe you have a lot of profits, don't want to pay taxes, you think its stock could be range bound and want to keep the position intact, this is disaster protection. i don't think the stock is going to be over 130 between now and the end of the year. 100 is a big technical support master. >> chart master, what does the chart look like? >> i think the key is how well this has acted since the plunge, all equities plunge august 19, august 24. apple has hung in real well over the last four or five sessions as markets have come under renewed pressure. i think it has a defensive element i like it on the long side. >> send us a tweet to @"options action." we've got the hottest options news, video throughout the week and exclusive trades. here is what's coming up next. . could this buy guy be headed for a channel near you? online game something coming to

tv and it could spell riches for one stock in particular. >> plus, boeing shares are doing something unusual. and it could make more some quick profits. we will 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.

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 competitive video game

playing may not be physically grueling like regular sports, but it is competitive and big business and soon it could be coming to a tv channel near you. julie boorstin is in san francisco with the details. >> over 110 million people around the world are e sports fans. the business has been dominated by youtube and twitch by amazon bought for a billion dollars last year but now the business is ready for prime time. turner and agency wmeimg are teaming up to create a new e sports league, broadcasting 20 friday night telecasts each year. and delivered announced an e sports league for call of duty. they have a pro and amateur division and $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 potentially you could deliver an audience size to what thursday night football is. >> traditional sports company are bracing e sports.

draft kings is bringing it to league of legends next week. espn has aired various competitions but the ratings have not been huge. wilson predicts that will change once these new big leagues launch. melissa, back over to you. >> thank you julie boorstin from san francisco. >> how big can these become? these are big numbers. >> really big numbers. i think it's something that's caught traditional media off guard. we've been talking about the fantasy stuff and twitch and we are going to see acquisitions and i don't know how you really play it right now for the moment. i think some of these gaming companies are one way to do it but i think a lot of people probably think why buy the cow when you get the milk for free. it's going to be a different medium how people are consuming that content. >> we were speaking with rich greenfield and talk being how fall ratings have fallen off a cliff particularly for the young male demographics. it seems like this would line up

perfectly with the younger male demographic. >> this is the most sort of -- of all landscapes that are shifting and changing quickly, this is it. it's even more of other parts of the equity complex. i guess the issue is what price you want to pay for disney because this is a terrible chart. this one broke and dropped hard before the market and then broke with the market. so the question is at what discount, what options trading 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 is reasonably attractive. the last earnings were digested badly by the market but this thing saw a year on year kwrl eps growth that the in the double digits. it is it the premiere property that you can have and trading at a cheap multiple. >> it sounds like you like this anthony, it sounds like you are a skeptic. >> the disney chart looks a lot like apple. disney was up 30% at one point, it's holding on for dear life at

100. the price action is down right horrible, i think the sentiment has gotten bad. i'm not willing to step in here right now and i will tell you why. i think that these sorts of things the overshot on the upside i think it's going to do on the down side. we were talking about new media. let's talk about old media, december 18th. it happens to be december expiration in the options market and "star wars: the force awakens" is going to be coming out. if we were still in a regular bull market and we are not anymore, i will tell you that right now, this would be a catalyst that people would be owning this stock for. if you were inclined to buy disney today at $100, down from $120 just about a month and a half ago i would consider using elevated options prices not too different than what these guys were stalk being in morris. see that one year, 90 bucks, that's the level it stopped on a dime on august 24th. that's really big support and then on the upside 110 was a breakdown level. i would look out to december 18th expiration, that's the day that "star wars" opens and i

would look to sell a down side put. today and this is a hypothetical i think you want to do this when it breaks 100, when it's down towards 95 but i would look down to when the stock was 100 today the 90 put in december, sell it for $1.30 -- excuse me, $1.80 and then you use the proceeds to buy an upside call the december 110 call that was the break down level for $1.30. take nothing a 50 current credit. you're taking that 50 cents. >> i don't think you should mind being put the stock and i don't think that you need to get all that ecstatic about buying the upside call. we just said that we are not in the bull market anymore, options premiums are elevated. i'm looking at the november 97 1/2 and 100 puts you to get 2.25 for the 95 puts so you are getting over 2% in less than two months and i think that is an easier way to play this. >> it's the nonbull way to approach t anyone who is saying

i'm willing to buy 10% lower is not bullish on the stock. >> and i'm not. stock alternative dbd a would consider selling some stock that i owned and getting out of it and doing a structure that gives me the leeway up and down. boeing shares did something wild this week and made dan a whole lot of money. we will 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. suffering from ringing in their ears, there's no such thing as quiet time. but you can quiet the ringing with lipo-flavonoid, the number-one doctor-recommended brand. relieve the ringing with lipo-flavonoid.

welcome back to "options action." it is time for a segment called the upside call where we take a look back on some of our winning trades and find a way to make them winger if that's a word. last week against boeing, take a listen. >> i think there is a good opportunity for a retest of those prior loads from last month. i'm going to look out to october 30th weekly expiration and today when the stock was $137 i could buy the october 30th weekly 135, 120 put spread for $3. >> since then boeing shares have fallen 5% so what are you doing to make more money? >> i think a lot of traders were looking out to this china order for boeing this week and thinking it was a positive catalyst, one man's positive catalyst is another man's

opportunity to get a short on here. the stock didn't respond well to this news, it was down below 130, it closed above it today. it's up a couple bucks, at one point it was a double, i think you wait until 125 and take it off. >> two weeks ago carter and mic made a bullish bet on delta. >> i think you can get 10% move out of delta care. >> the simple way to play that in my view also pointing out that option price right side a little elevated is to buy a call spread, specifically i'm looking at the october, 56 1/2 call spread, send $2.10 for that. >> delta shares are about flat since the time of the trade. >> nothing has happened to trade stays. >> mike. >> sell some down side puts at this point to help finance it. >> really? >> yeah. >> we saw a turnover in transports in today's action. >> listen, i think the us airlines, especially the ones that have a lot of overseas exposure they are damned in they do, damned in they don't. i don't think -- i don't want to be in the airlines at all.

>> out of the transports more broadly -- >> that's what lady this entire selloff. the best part of the market in the two-year period sae 13, sae 14 that had the worst collapse but airlines, delta in particular is not stragd with the big rails and truck sneers and it's trading at less than nine times earnings. this is a cheap stock. coming up next, the final call from the options pits. e 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. suffering from ringing in their ears, there's no such thing as quiet time. but you can quiet the ringing with lipo-flavonoid,

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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. asks asks us can i put money in macy's or kohl's under the tree for mist mass? >> i like macy's on a valuation basis, technically i would have to leave it to him to say that it's grim. use call spreads. >> does it look pretty grim? >> pretty grim. >> what would you say in terms of retail? you loved macy's for a long time, it's loving moving to the down side. >> 100% revenue exposure in the

u.s., 72 down to 52 when you're thinking about the strong dollar i think soon at 50 bucks is a decent entry for a seasonal trade. >> another cheap stock with good management. >> in all of retail where would you go? if it didn't have to be macy's or kohl's? >> tj max is another one trading well. >> better than ross and dollar tree and dollar general for sure. >> maybe target. >> maybe target. all right. time now for the final call. the last word from the options pits. carter. >> we want to think of both offensive and defensive position in phillip morris for yield and for safety in the event of further likely declines in the s&p. >> but you seen altria. >> yes. i'm a little old fashioned. >> these made up names. yes. >> i think the way to do it in altria is to sell at premium. 55 straight puts. >> dan. >> apple, i don't think there is any big problems lurking here, i

think it's more a market problem when too many people head to the door at the same time. i think the sfok is dead money, look to sell upside calls and die down side puts. >> thanks for watching. i'm melissa lee. for more "options action" check out the website "options action".cnbc.com. >> announcer: the following is a paid program for the new t-fal optigrill plus, brought to you by groupe seb usa -- innovative ideas you can't live without. how do you like your steaks -- rare, medium, or well-done, but juicy? whether you love tender, juicy grilled chicken or mouthwatering grilled salmon, there's nothing quite like the taste of perfectly grilled food. but grilling it right is never easy, undercooking your meat can be dangerous, and overcooking makes it dry and rubbery. you never get it just the way you like it -- until now. introducing the new, improved t-fal optigrill plus, still the first and only patented indoor grill with builtte