visited, the set of "options visited, the set of "options action". we're in times square where the guys are getting ready for the show. while they're doing that, here is what is coming up -- >> yes! >> that pretty much sums up the action to apple's new phone. so why did shares close lower. we'll explain. plus -- >> shall we play a game? ♪ it's electric >> online competition is coming to your tv and the world of medium sport may never be the same. we have 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. ♪ well it started out

well, yellen saying this week that she wants to raise rates this year. what stocks do you want to buy right now? let's find out. dan? >> i don't think you want to buy too many stocks right now. when you think about just the reaction we've had in our u.s. stock market over the last couple weeks since we had the fed meeting and the volatility that we saw this week and the uncertainty really about what the fed's plan is. 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. so to me, i think you have to think of a pretty defensive playbook continuing, a couple weeks ago we talked about utilities. it was kind of counterintuitive. that trade has worked okay. i think you want to be in defensive. u.s.-centric names like utilities. >> do you agree? >> yeah. think about it this way. in the past we used to see wagss where bad news, the market would sell off early, and what's happening now, even good news as the day digested, people are looking for excuses, it seems to me, to sell stocks. so i don't think you'd be a big

buyer in general. >> what does it really matter what she says. it turns out their messaging is so confused that the market is -- is she going to raise? isn't she? basically that's part of the equation. the market doesn't like it when they're threatening to raise, if they're threatening not to raise. the tape has changed. >> what does history tell us, though, carter in terms of the sectors that perform best? >> well, sure, in a rising rate environment, you don't want to be in things that compete with higher yields, typically. the real cost of capital is still very low and likely to stay. >> they've got. creamed this year. they're down 20% from their repeat highs. so in some ways they've already incorporated a lot of that and we haven't seen rates go up at all in that time period where those risk assets have been getting hit. >> any rate increase is likely to be the last tightening cycle that we saw, there were 13 25 basis-point rate increases essentially over that two-year period from '04 to '06.

so for people to freak out over a 25 basis point raise, a 50 basis point raise over, let's say, six months or even 100, it's all meaningless. >> so carter is taking a look at one name in particular. >> a high-yield name like these but not so sensitive. in this instance it's altria. what i want to look at is obviously it's yield relative to things we've talked about. also 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. and 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, and the dividend-paying etf. now i want to put in philip 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. tal they all traded about the same multiple. it's the technical setup. so here's our chart. you can draw the lines the way you want. here's how i would draw them, one of two ways, a second of two ways. let's go back. there's your chart. you can call this a head and shoulders bottom. either way. the presumption is some sort of resolution to the upside. at least by my work. you could draw your wedge. here, too. so we think you've got 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 is not fed sensitive at least as much as utilities or what have you. >> that coupled with the fact that this is the domestic smoking business as opposed to the international business. so mike? >> yeah, so this is interesting because, you know, 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 at probably 7% to 8%. so actually at the current valuation, it's very reasonably priced. the other thing, of course, is that 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 payer. and for me because options premiums are elevated, i'm

looking at selling some puts in this name. the october 55s was when it was trading at 55.5. it's fallen off a bit since then. you could collect about 2% of the current stock price, sell those for a little over $1. those expire in just 21 days. that works out to an annualized yield of over 30%. and think about it this way. if the stock does decline and it's put to you, options premiums are likely to remain elevated, you could continue to collect additional yield. >> you just want to sell puts in this environment? >> you know, very near the money and the stock was, you know, below 50 during the flash crash in late august, so you have to be prepared for being basically short a put that could be, you know, in the money a few bucks here. i would go the other way and say all right, so if you are playing for this technical breakout and you like the idea of selling elevated and implied volatility, i'd buy an out of the money call. and i'd have a risk reversal. so i would still have risks to being put the stock on the down side, be able to take in a

little premium but also have that leverage to the upside. >> this is a heads, you win, tails, you win. meaning if we're going to continue lower, i think you'll do better in this than you would, let's say, in the s&p. and in the event that there is some stabilization, i think this kind of yield gives you upside that other parts of the market don't. >> even if the stock does fall to that $50 level, we'll call it that mini-flash crash, you're probably going to be collecting another 2% over the course of another three to four weeks. do that habitually. that is going to help obviously lower your cost basis significantly. it's when options prices are basically elevated like they are right now that these options selling opportunities actually creep up. we haven't had any in a while. apple's new 6s and 6s plus available today. josh, do they like the phones? >> reporter: well, melissa, actually, i showed up here in

palo alto around 5:00 a.m. local. diehards were already online. we did also run into one really dedicated apple fan who came up with a pretty unusual way to secure her new phone. she actually, melissa, representrepresent ed -- rented a robot to save her a place online. >> i've had all the comforts of home. what's funny is i've convinced people to drop me off coffee for the last 24 hours and meals. it's been kind of fun. i feel like i'm camping out but without the cold. i still get the whole experience. and the phone! and the phone. i still get the phone. it's awesome. >> reporter: so that robot actually was online here since thursday morning. she got the 6s plus silver in case you're wondering. i thought that got points for creativity. talking to customers here today at this palo alto store about why they upgraded, some say because of that 3-d touch, that

pressure-sensitive display should make navigating the phone faster and easier, less friction. you've already seen some tech companies here upgrading their app with this 3-d technology, to dropbox, pinterest and twitter. others mentioned to me the camera. you know, you did add new sensors to the camera, should make those phones more clear and more accurate. and finally, the speed. this is a faster phone, thanks to that new apple processor. so users should really feel that difference in speed when they unlock their phones or launch apps. of course, the big question now for investors, how many of these new phones did apple sell this weekend? piper's jean munster is looking for around $10 million. one reason munster says, of course, because china is involved in the launch this year. we should soon find out. melissa, back to you. >> josh lipton in palo alto for us, thank you. the question what does a robot do with a phone once they get to the front of the line? dan? >> i don't think the company has too many problems. i think the stock could be dead

money. this is a view i think this whole desk has shared for months and we've been doing a lot of things against your holdings. to me i think if you own the stock and you're worried about that 10% drop that you had august 24th, down to 95, remember, people, the stock did open at 95 and traded lower. you have to have that memory of it. so to me, i think if you share the view that i do that the stock's dead money but you're worried about a sharp selloff, you may want to think about doing something called collaring your stock. let's say the stock closed at 115 today, you could look out to 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 could make up to $14. that's basically about 10% between now and december expiration and that's why you own the stock. they're going to pay a dividend in november. and then between 115 and 100, you have losses of the stock. below $99, that $1 in premium, that's what you'll have to take

away from that strike. then you have protection. to me this is a trade where you don't want to sell the stock. maybe you have a lot of profits. you want that dividend. you think the stock could be change round and you want to keep the position intact. i don't think the stock's going to be over 10 between now and the end of the year. that was the breakdown level in july. 100 is a big technical support level. >> chart master? >> think the key here is how well this has acted since the plunge. august 19, august 24, most equities rebound, so has apple, but apple's hung in real well as markets have come under renewed pressure. i like it on the long side. got a question? send us a tweet to @optionsaction. we've got the hottest options, videos from throughout the week and exclusive trades. here's what's coming up next -- ♪ head games >> 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. notes tick to come tick ♪ and it could make for quick profits. we'll explain when "options actions" continues. 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. 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. julia boorstin's in san francisco with the details. >> reporter: that's right, melissa. over 110 million people around the world are e-sports fans. the business has been dominated by youtube and twitch which amazon bought for a billion dollars last year, but now the business is ready for primetime. turner and agency wme img are teaming up to create a new e-sports league. broadcasting 20 friday night telecasts on tbs every year. and video game giant activision blizzard for a call of duty." the league will have a pro and 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. potentially you can deliver an audience size of a similar size and caliber to what thursday night football is. >> reporter: traditional sports companies, draft king is bringing fantasy sports to video games starting with a world championship for 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, julia boorstin from san francisco. so how big can this become? dan? those are big numbers. >> really big numbers. and it's caught traditional media off guard a little bit. we've been talking about a lot of the fantasy stuff and the twitch, and i think it's all stuff we'll see acquisitions, some of these large media companies go into it. i don't know how you play it for the moment. i think some of these gaming companies are one way, but a lot of people think why by the cow when you get the milk for free? >> piece the data points together. we were just speaking with rich greenfield in the last half hour talking about how fall ratings have fallen off a cliff particular reply for the younger male demographic. and this seems like this would line up perfectly with the younger male demographic, carter. >> that is it. look, this is the most sort

of -- of all landscapes that are shifting and changing quickly, this is it. yes, it's even more than other parts of the equity complex. and i guess the issue is, you know, what price you're willing to pay for disney because this is a terrible chart. there's no other way around it. this one broke with the market. the question is at what discount? what options strategy can one use to get it at the right price? just buying it here, i don't think there's any technique to that. >> but the price here actually is reasonably attractive. i realize that the last earnings were digested very badly by the market, but let's bear in mind that this thing still saw year-on-year quarterly eps growth that was 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. >> okay. it sounds like you like disney, you're skeptic. >> it's funny. the disney chart looks a lot like apple. disney was up 30% on the year at one point. it's holding on for dear life at 100. i agree that technically in the price action is downright

horrible. i think the sentiment has gotten really bad also. i'm not willing to step in here right now and i'll tell you why. because i think that these sorts of things overshot on the upside i think it's going to do so on the down side. there is one identifiable catalyst. let's talk about old media. let's talk about december 18th. it happens to be expiration and "star wars" is coming out. if we were still in a regular bull market and we're not anymore, this would be a catalyst that people would be owning this stock for, okay? if you were inclined to buy disney today at $100, down from 120, just about a month and a half ago, then i would consider using elevated options prices, not too different than what these guys were talking about in morris. you see that one-year? 90 bucks. that's the level it stopped on a dime on august 24th, okay? 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.

this is a hypothetical. i think when it breaks 100, down towards 95, but i would look down to right now when the stock was 100 today, the 90 put in december. sell it for $1.30. excuse me, $1.80. you're taking $1.80 in premium and use the proceeds to buyen aupsi an upside call. you're taking in a 50 cent credit. between 90 and 1.10 on december expiration. worst. case scenario, above that you have a lot of leverage at $1.10. >> i don't think you should mind being put the stock. we're not in the bull market anymore. options premiums are elevated. i'm looking at the november 97.5. you could get $2.25 for the 95 puts. you're getting over 2% in less than two months and i think that's probably an easier way to play this. >> it's the non-bull way to approach it. anyone saying i'm willing to buy it 10% lower is saying i'm not bullish on the stock which is

what you have to do because it's a terrible pattern. >> i would consider selling stocks that i owned and doing a structure that gives me the leeway both up and down. boeing shares did something pretty wild this week and it 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. 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. it is time for a segment called "the upside call" when we find a way to make our winning trades and make them winninger if that's a word. you know what i mean. last week dan made a bearish bet against boeing. take a listen. >> i think there's a really good opportunity for a retest of those prior lows 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? >> what's really interesting i think a lot of traders were looking out to this china order for boeing this week and thinking it was a positive at catalyst. one man's positive catalyst is another opportunity to get a short. the stock didn't respond well to

that news. it closed above 130 today. i think you wait. it's up a couple bucks. at one point it was a double. i think you wait until 125 and then you take it off. i think you'll get that in the next couple weeks. >> and two weeks ago carter and mike made a bullish bet on delta. >> the simple way to play that in my view also pointing out that options prices are elevated is specifically the october, you could spend $2.10 for that. >> snou, delta shares are about flat since the time of the trade. >> nothing's happened so trade stays. >> sell some puts to help finance it. >> we saw turnovers in today's transport action. >> i think you the u.s. airlines, i think they're damned if they do, damned if they don't. if oil goes back up, they're in a pickle and if they go back down, it's for all the wrong reasons. i don't want to be in airlines at all. >> how do the transports for

broadly? >> that's what led to this selloff inspect in the two-year period, '13/'14 that had the worse collapses, but delta in particular is not trading. >> and it's trading at less than nine times earnings. this is a cheap stock. next, the final call from the options pits. 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. 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. 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. a> let's get to let's get to a tweet. john asks us, can i put pomoneyn macy's or kohl's under the tree for christmas? >> i like macy's on a valuation basis. technically i would have to leave it to him to say it looks pretty grim. i think the best way to use that is call spreads. >> does it look pretty grim? what would you say in terms of retail? we've loved macy's for a long time but it's moving to the down side. >> 100% revenue exposure here in the u.s. when you're thinking about the

strong dollar and stuff, i think very soon at 50 bucks that's probably a decent entry for a seasonal trade. >> another very cheap stock with very good management. >> let's broaden it out, in all of retail, where would you go? >> tj maxx is trading very well. >> better than ross and dollar tree and dollar general for sure. >> mike? >> maybe target. >> maybe target. all right. time now for "the final call." >> well, we want to think about offensive and defensive position in philip morris for yield and for safety in the event of further likely declines in the s&p. >> but you mean altria. >> yes, excuse me. i'm a little old-fashioned. that's right. >> sticker m.o. >> we were laughing before the show about these made-up names. >> sounds like an artificial sweet sweetener. i'm looking at the 55 strike puts. >> dan. >> apple, listen, i don't think there's any big problems lurking. i think it's more a market problem. we've seen when too many people

head to the door at the same time. i think this stock is head money. you can buy down side puts and just keep the position intact. >> looks like our time has expired. i'm melissa lee. check out optionsapgs.cnbc.com. don't go anywhere. "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for derm exclusive instant anti-aging, brought to you by beachbody. >> hi, everybody. i'm deborah norville. and i've got breaking news from the world of skincare. this time, there's a celebrity twist. keep watching. you are not gonna want to miss this. [ cheers and applause ] >> announcer: if you don't like the face staring back at you in the mirror... >> my skin was sagging. really heavy bags under my eyes. >> announcer: ...if age, sun, stress, and life have robbed you of smooth, young-looking skin... >> i don't want to go and get injections, but i thought that was the only choice i had. >> announcer: ...now there's a doctor-approved way to look up to 10 years younger in j