>> it is sara. it is. >> you don't take a snake bot with you. >> that is why i was squealing. it senses your arms and knows how to move. that does it for us on "closing bell." what a week it has been. thanks to everyone at carnegie mellon for having us here. "fast money" begins right now. thank you, kelly. and "fast money" does start right now for friday. live overlooking time square i'm melissa lee. we have the panel. tonight a slew of erns from tesla, shake shack and facebook. for one there is a sign of a breakout and we'll tell you what it is. and valt breaking below $100 a share and there was a three-hour long investor call today. but very bizarre comments that were made that have people talking. we'll tell what you he said. but first, the incredible month of the market.

led by materials, tech and energy. and so that was the year end rally or is there a passive run into the year end. guy? is there more to come? >> i think next week -- today is the last day of the month. halloween tomorrow, boo to folks at home. but the fact that we closed low, typically you would accelerate on the close but instead we saw a big reversal. s&p sold off 14 handles. i'm not going to make a big deal out of it. but it is atypical. next week is interesting. i think we can test the levels that stevie talked about to the down side more like the 20-25 level in the s&p. so next week i think is a down week, to answer your question. i don't know what december holds, but next week post halloween, it is down. >> but it sounds like the markets are trading defensively going into a strong period. >> they are. but goldman forecast $13 billion

coming out of equities due to the outperformance so pension fund rebalancing. so i don't think it is shocking that we are weak. i think it is shocking that we aren't weaker than today. so i think maybe higher from here. not really convinced. but i could say upper end of the trading range. gun to the head maybe we grind higher. have to hold 2060 in the s&p. >> i think there are so many hedge funds underperforming this year and nobody is looking at the market and looking at the individual stocks and saying where can i go to find growth to the end of the to -- to the end of the year to bolster my performance. >> so what happens. >> the concentration of stocks that people focus on and we talk about it being a market of stock, not a stork market they can't find growth in any other market. they are focusing on the growth that are working and they will keep flowing money into those

until the end of the year. >> where does the fed play into this. >> we started the month where we thought they would raise rates and then thought they would be easy. and that got the rally going. and then we got the ecb and china. so we have things putting more liquidity into the market. i'm still in the camp this is a rally into the bear market. i say that because of the deleveraging, the debt out there will be paid off and that will put pressure on asset prices. and let's look at things out there. number one, look at the banks today. if we were going into a strong economy where rates were going higher and a steep yield curve, the banks should have -- >> was that reaction to consumer spending data today. >> down 2.5% on spending and 1.5% on -- i don't think so. >> and i think the worst performance and to b.k.'s point is they think it is a one and done and the banks need more than a one and done.

>> you have to have the banks participate because that is the core of the economy. think about what dave said. they can't find growth anywhere. hedge fund managers can't find growth. what does that say about the environment we are in. >> in the month of act, we had a fantastic month, energy, materials and tech, not banks. we rallied fine in october. do we need the financials at this point. >> you do need the financials at some point. but think about what we said yesterday. tremendous rallies but off ridiculously oversold things. i think energy was still a bounce in the bear market that b.k. is talking about right now and i still think there are elements of the stock market that are scary. and there is a mixed bag and the economic data is a mixed bag at best, if not slightly worst than at best. >> look at the energy and the material names. the stocks that have underperformed, it is repositioning. there is short covering going on that making the stocks seem like there is a bid when it is just covering positions. >> now to a very big story this

week. valeant, downgraded from a b plus to a double b minus. after the call today. kate kelly is here set to break it down the four hour call. a loss at $4 an nur on this call. >> i haven't looked at that metric. it does appear they have the reverse midas touch here. a four hour investment call featuring a bathroom break and food delivery and no shortage of technical foul ups did little to assuage the market and established paper losses for pershing square. i shouldn't say the call established them. but today a loss of $2 billion on the name that is billion with a b. acman chided the company for having a poor p.r. strategy and underinvesting as well. and he said outspoken sellers and drug prices have paved the

may for a market shellacking after the story of the last two weeks. he praised the management team and the low cost model. he said when a stock tanks 50%. you have two choices. sell because you didn't realize what you were buying or buy additional shares because it is so cheap and you still believe in it and he has gone in the latter direction having bought 2 million shares recently. and more revelations are expected on monday from citron on what is wrong with the stock. and after the call like a prolonged discussion of the 1963 salad oil commodities scandal -- i'm serious -- investors are annoyed with pershing square too. they are down through late october. we'll see mid-week when they put out the end of the month results how october treated it. >> this is an unbelievable story, kate. pressure from all sides when it comes to valeant. but did bill come out and say i

don't think what they did was wrong. it sounds like he is saying they didn't invest in p.r. and lobbying. that is no defense of a good business which is what you have to defend at this point down 50%. >> i would say that what he said, melissa, echoed the comment from the sequoia fund which is the biggest holder in a letter two or three days ago. they said, look, this company has suffered from a lack of transparency and sometimes even we believe at this stage they were operating within the let letter -- the letter of the law and we want to see the ad hoc committee probe they are doing and they're hired a lawyer mark philip i believe is his name we think they have operated within the law but that has not created shareholder value clearly. and sequoia said the company needs to think about reputation more than they have. bill had an interesting point. he said he thinks that mike pearson, the ceo of valeant and the m.o. is this low-cost rollup strategy and reflects in the last of investment and p.r.

lobbies and he took a big at the outside p.r. job saying they did a better job on the herbalife defense than on the valeant defense. >> we were talking yesterday in the green room about acman and herbalife and valeant and he went after herbalife as sort of the lack of transparency right. you are not sure where the sales are coming from and for valeanter defending this model with a lack of transparency. >> so do you think it is coincidental that herbalife was up 4.5% until late in the day. the answer to the question is there are no coincidences. what am i getting to. the market will absolutely try to run this guy in. and you can look that up on your google machine. but it means they'll go after the positions he has and force his hand and you're seeing it manifest in the move in herbalife. and we talked about valeant a month or so ago when we said they absolutely changes their business model and said it was a

no-touch. and that coincided with maryland lynch with a buy with a $290 price torgt. check that out. allergan continues to be the play. >> people have been critical of bill acman today but today seems like a jump the shark situation only because he is no in the hot seat in the way that the stock is. and for him to take so long. he literally took 160 questions. it is defensive to an extent that he doesn't need to be. it may be a bad investment but it happens to people. and for him to be so defensive i think raised questions. >> and i know -- i'm not quarreling with that at all. but when you set yourself up with the level of huberous that he has, people will be -- we saw with carl icahn with a couple of of years ago and now with the market now. >> and still ahead, shake shack and disney and cbs reporting next week. so we are playing stock versus stock earnings showdown on which will have the better earnings

report. plus where there is smoke there is certainly not david tenner. the billionaire shutting down the rumors saying he is breaking in must be well high. we'll break that down for you. much more "fast money" right after this. the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. at&t has the tools and the network you need to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most.

people probably smoke a lot of marijuana out in your viewing audience and people on twitter. because i don't understand where stuff comes from. i've never talked about stocks on this program. we haven't had any big positions in my book for a year. i was just -- i mean really truly, there must be some good gaugea coming into the country. >> that was in response to the question wlz he had amassed a stake in the solar stocks saying believers in the sun edison rumor must be high. they popped yesterdayond rumors and ended the day lower by more than 12%. today, just interested in chatting with somebody yesterday, they said yesterday's pop was a nice exit for somebody like a david einhorn that got buried in the name. >> it is true. a lot of the names, i can't

figure out how to trade. you remember when we said there was no correlation to the price of crude. and when you look athe chart, there is it. and then you could trade off of tax subsidies. so i think you are in the deep end of the pool when you trade these names. i would rather be a buyer of energy at this point, regular oil. the pxd, eog or downstream names. even valero and tesoro versus playing solar names. >> today the trade was exacerbated by solar city results and guide down for 2015 and 2016 last night. and you contrast that with what we got for solar and sun power which was a beat and raise. so we are seeing a differentation of the stocks. >> quality. people are gravitateing to the quality and staying away from the residential. there is too much risk there. and the quality players and the more industrial plays with less exposure to the residential side, you stick with and those will win. we talked about the dislocation

within the sector from an energy book. there are energy books that own the names. they are not energy plays. there is smift going on -- a shift going on into technology. we saw that months ago and a year ago. the technology guys are buying the names. and the quality ones will work out long-term. >> and let's switch gears an talk earnings next week. we have tesla to shake shack to disney. and it is time to take your position in a stock versus stock showdown. who will have the best earnings report. seaberg, we start with you. who is going to come out on top. >> shake shack will come out on top. they have good comps. there is a beat and raise and they will guide higher. no question about it. but does the stock move higher on that reaction. it should not. and the reason why it is trading at a premium multiple. there is no way they can grow into that short-term. >> so by defult that does mean wendy's. >> wendy's is a steady eddy and

you will see them do well. they will come in with a decent comp and they have been marketing over the last few weeks and the read is positive so i think wendy's will be okay and it will work out long-term. >> so wendy's over shake shack. next up earnings from cbs on tuesday and disney. guy, disney or cbs on top. >> the answer is disney. ding ding ding. steve grasso, great job. he said they will fill the gap down to 98 it. overshot a little bit to 95. but disney is $113 stock within a whisper of the all-time high. i can't believe they'll have two dismal quarters in a wrong. bob iger way too smart. if you look closely. cbs topped out 2014 beginning of and never really recovered until the bounce we've seen recently. i think disney will get you done. >> tesla and toyota reporting next week. grasso. >> tesla. and now guy has done a good

job -- some mad love tonight. >> pointing out love. the it numbers have about 200, and 202, it is oversold. middle of october it went into the rsi, oversold status. toyota motors might look good. i use the word optically might look good. but i think tesla is ratcheting up to spike higher. >> i'm going to guy. >> what? >> tesla -- are you with grasso on this one? >> i'm always with steve, by the way. it is a sicilian-italian thing. but i think there is a good test to the level. we talked about a move down to 180 and i think we may visit that unfortunately. >> and kate spade and michael kors both on deck. which comes out on top. it is not which handbags you think are better but which earnings. >> well then i don't know. i'm only here for handbags.

michael kors and not because i think they will come out with better earnings but the sentiment is so bad that i think it is set up for a pop going into it. so dave seeberg sent me something from cowan and talked about michael kors is no longer the bag to have and kate spade is the bag to have. i prefer kate spade bags. but in terms of earnings i think you can be long kors going into it because of sentiment. >> till ahead. after a record october, traders tell you what they are watching as we kick off a brand new month next week. you're watching "fast money." here is what else is coming up this hour. coming up -- the stanley cup is -- the stage is set for game three between the mets and the royals. but when it comes to your portfolio, which stocks could be the real home run winners. and later -- after months of pounding have several retail

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welcome back to "fast money." we're just a few hours away from game three of the world series between the new york mets and

kansas city royals. eric chemi is live in citi-field on what it could mean for the yankees. eric. >> how are you doing, melissa. we are out here on field. it is cold and windy. the mets are behind me getting ready and warming up for batting practice. so there is the world series. and also the battle for dominance in new york city. and we've seen the mets have a great year. attendance is up. tv ratings is up and merchandise is up. but on the flip side it is the yankees who are suffering. you've seen the numbers go down. and wee even talked to mitch model, the owner of the sporting goods store and he said this has hurt yankees performance. >> met fans are coming out of everywhere. there are yankees fans converted to being mets fans it. doesn't hurt. it just takes a bigger part of the market share. >> so there you heard it. that market share word that we

hear about when it comes to companies, it is the same thing. drarl stau berry played on both things and he thinks no matter what the mets do the yankees are still the number one team and that will be a lot of years before they can take over. take a listen to what darrell said. >> the pitching staff is young. they're going to get better. so that is the exciting part. >> so darrell strawberry is going to be here tonight. he is rooting for the mets to close the gap against the yankees but for now it is still a yankees town no matter what happens tonight. >> if you are a yankees fan converting you were never a yankees fan to believe it. >> right on sister. >> eric chemi from citi field. we agree, right? >> i can't believe -- you sounded like you understood the sports when you said that. >> i grew up a yankees fan. i went to yankees' games growing

up. >> yankees fans root for the mets and mets fans are jealous. it is a problem. you have to fix that. >> yeah, you out there. metsies. we want to see what stocks could be a home run and let's get the picks here. grasso. >> apple. it has been out of favor. but after earnings you start to see it tick higher. if you look at a valuation trade, like at microsoft over 20 times mult pl and google. whatever you want to call it trades at 35 times. apple is still 13 times. i'm looking for a catch-up. apple, i'm still long. >> it is hard to believe that google has changed to alphabet. >> alphabet city. >> and that is another variation. seaberg, home run. >> i think the home run is teva. it is trading in the 50s. and they are buying the generic from allergan. i think december is the date

they will come out with the financing financing. after that is established, they will pay down debt and acquire more assets. i think this stock that could work to 100 easily over the next four months. >> remember the teva sandals. >> not the same. >> but i remember i have an image of dave wearing the sandals. >> that would be a good image. >> my home run pick general electric. g.e. we talk about solar stocks but they make the pieces that go into the solar things and if you want to build a fast electric train, you have to talk to ge. you buy it. home run. >> you need to believe the energy sector is going to pick up don't you. >> not necessarily. >> they sell a lot of turbines. >> but they sell other things too. so this is a long-term home run play. >> okay. gee. >> i love the crack of the bat. >> you like that. can't spell home run without

allergan, people. check it out. h.e.n. and we talked when the valeant thing started, we said look at it trading 318 today. pfizer is in the mix. there are many chapters left. many chapters left. unlike the mets' season. >> hum. interesting. >> that is neat. that is not nice. that is not nice. maybe there may be a couple more. >> before we get to the final trades we should note that you at home and three of your guests can bid for a chance to hang out with us here at "fast money." so log on to charity buzz.com to enter. your bid supports the lulu and leo fund. it is a great cause. we have a week left to place your bet, so please visit the site and consider making a bid. great cause. final trade. around the horn. grasso. >> disney. i'm long on it. to

know. moving closer to 120, stay long. >> seaberg. >> i'm a seller of finish line. there is nowhere to hide in the retail space. this stock is going much lower with the inventory issues. >> beaks. >> you buy puts when you can and not when you have to so protect yourself. >> go mets. bang. >> that does it for us here at "fast money." but do not move. option action is right after this break.

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hey there, live from the notice -- nasdaq market. this is "options action." are you excited? of course you are. here is what is coming up. >> what are you going to do charge me with smoking. >> because we might. even the cigarette smoke is on fire. and one could be too hot and it could set off an actions trade. plus looking to cash in on christmas. >> that is right. >> we have the one retail options traders see surging and how to profit. and how would you like to protect shares of facebook for free. >> i like it a lot. >> well it is quite easy. and we'll show you how to do it. the action starts right now. all right. let's get to it. retail had a rough year but

options traders place a big bet, a couple of them on a number of beaten down names today. so is this the area you want to be in. let's get into the money right now. and dan, traders get in on the holiday spirit early. >> i think we talked about it a last couple of months that there is a beaten down rotation out of energy and a lot of tech and biotech. and we saw that in commodities names. maybe today is a start of a move into retailers that were beaten down. the theme this year is retails and consumers would benefit and they would have more money to spend at retail stores and they haven't done it. and there are two stores that get owl of the sales from the u.s. kohl's and macy's today, they were both up 3%. a lot of options activity and macy's was a buyer of 10,000 of the january 2.5 calls when the stock was $51, way out of the

money so somebody is looking down for a beaten down stock. >> and where are the consumers going to spend gas savings or whatever money saved from energy at this point in time. especially since the numbers were horrendous for the month of november. personal income is flat. >> income is flat. and lower gas prices does put more cash into the pockets of consumers and if they are going to spend, when would they do it? now is the time. a lot of stocks are cheap and a lot of them get punished from august until the present when most of the rest of the market has recovered. if you take a look at the s&p consumer discretionary sector the whole, that has taken losses. but nordstrom, kohl's macy's they are down 20%. so if there is room to the upside, that is the point. >> the sectors are making new highs and retail in that is dragging to point where you could play for a meaner version. i think that is probably what is

on your mind dan. >> yes. but the macy's trade got me thinking today and this is what i saw in the market a large, sidable, out of the money call purchase. and we know that star board and activist investors are involve and we know the guys have the potential to spin out real estate. some of the hedge funds could be worth more than the existing market cap. so when you see those sort of potential catalyst out there and you see implied volatility in a stock like macy's move the way they have to multi-year highs something is going on there. >> low commodities prices help the consumers and the stores. if you are talking about kohl's and macy's and nordstrom, cotton is trading at lows. so low commodities prices could improve the margins and putting additional discretionary income -- >> and this stock is down 36% -- >> from the highs. >> and that kind of underperformance will get you a bounce. >> and listen again, this is stock specific in macy's because i think there are catalysts.

they said this year is an investment year. maybe 2016 it starts to pay out. i want to look to january expiration. today when the stock was $51 you could buy the january 51.5, 62.5 call spreads buying it for $3.50 and selling the january $62.5 at $1. i break even at $55 and in between 55 and $26.5, i request make -- i can make up to 7.50. and i like the potential for earnings and the catalyst to play out over the next couple of months. >> for one thing, it doesn't need to recover back to the highs in the year. it only needs to get back half way back to the levels. so it doesn't have to do the complete reversion trade. and you are looking to sell the options that you mentioned and an institution bought half of those calls today and even though in macy's it is high in general, if

they revert back to where they were 2 1/2 months ago they won't loose a cent. >> where is the chart. >> this is up. this and a few others. but xrt is underperforming in the sector and this is possibly the worst stock in that group which gives you a so bad it is good setup. it is moved up 9% off the low already and if you get follow-through, you will make some money. >> what do you think is the main catalyst through the january expiration. it is the next earnings report. >> so they report in a couple of weeks. when you have sentiment many poor and the stock is so bad and the chart looks so bad and no one is expecting much it won't take much for investors to say, you know what let's give these guys a shot through the end -- >> if they have good commentary. >> if they do. and if not, the stock goes back down. and i very near the money participation and it won't take a whole heck of a lot with a slight move up and implied volatility, i could make some money. >> let's move on to a smoking

hot area. philip morris and others widely beating the s&p 500 this year and they all hit 52-week highs on the back of earnings. but could they be too hot here. and let's ask the chart master. you talked aboutality rhea. >> and that is right. we're going to take the other side on reynolds. let's look at charts and see what we can find. these are low beta names and let's look at the numbers. so i've started with funny-ment funny-mentals. and who is the most expensive. reynolds, compared to philip morris the sector and then the s&p. oafs -- okay here we go. who is more expensive. remember

reynolds. price and sales. who is most expensive. reynolds. let's keep going. how about yield stocks. who has the world yield, ie. and who is the most expensive, reynolds. so here is a comparative chart. this shows how excessive this is. you have a stock up 52% almost doubling the performance of one of the great peers, and the sector in which it is in. a bit sector out of performance. let's take it back longer. same picture. how much of a good thing before it is over. and then back to 99 to 2000. you are talking about a performance double of that of alt rhea and triple that of the sector. that is enough. let's try to make it bet here. we've bounced off this trend line consistencely. consistently

consistently. and i think fade this. we trade around 48 and change and you get a 10% drop. if you have it, trim it and sell it. if you want to short sell try this one. >> a pretty convincing case the chart-master lays out. but could reynolds trade at such a huge premium to the others. you think that is wrong in the pricing? >> i think the only reason we've seen that is they have gotten a revenue boost recently. this is not a long-term secular trend. it is not the friend of tobacco kpz. let's be clear on this. they were seeing declining revenues before the recent boost and they are looking for this to level off and decline. this is not priceline. where is it trading at a premium to the rest of the s&p. so i agree with this. and i'm taking a look at this taking a look at a 10% decline. a good way to play something that will be stretched at this point and use options and risk very little. i was looking specifically at the december 47.5 put spread and you could spend 70 cents. this will pay a 34 cents

dividend before expiration. so it is a close to at the money and you are not risking the current stock price to risk that bearish bet. >> and do you think cigarette stocks are bearish at this point. >> kids, doan smoke -- don't smoke. i think on this year alone, the stock has had 8.5% pullback. so they are targeting that support level. that trend. it is a smart trade when you think about it because the stocks that have gotten extended, they pull back for no real particular reason. >> in our vernacular people talk about a crowded trade. this is a crowded trade. if you are a short seller take a shot at it. >> are they all crowded. >> consumer staples are outperforming the market. but this is one of the most extended of all consumer staple

stocks. >> yeah. >> when you see the staples outperformance, the part of the reason we've seen that is there is a chas back into the -- a chase back into the yield trade. this week people were making bearish bets on the euro and bullish bets on the dollar which could be bets that we'll see a rate increase which is bad for the stocks. because if going in for yield -- and there is no yield. it is below the s&p. >> got a question out there. send us a tweet to at "options action." and there is only one place to go obviously. "options action" at cnbc. we have article and educational videos an exclusive trades to check it out. in the mean time here is what is coming up next. >> you know what is cool. >> protecting your facebook shares for free. and we'll show you how to do that for free. >> and one trader made a bullish bet on twitter and even though the stock is down he hasn't lost any money. >> it is magic. >> no it is just options and

we'll show you how he did it when "options action" returns. an 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 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. welcome back to "options action" and we are toward the tail end of earnings season and that means of course tons of different types of earnings media specifically. take a look at the companies reporting this week. discovery, cbs, 24th century fox, time warner and disney all set to report. but it is one new media company, the social media that will get all kinds after tension and that is facebook. that happens on wednesday. the reason why, facebook has been public -- hasn't been public all that long but this earnings report could factor in some volatility. now the options market is

pricing in what would be a 6% move in facebook stock higher or lower on the heels of this particular earnings report. now it is important here because if facebook does somehow manage to get that kind of a market cast it might, if it gets the boost, it might join some rare fied territory, for the likes of the $300 club. apple, alphabet microsoft, 430 and facebook could be up there as well. so melissa, watch facebook for sure. it is a very important report and possibly a very volatile one. back over to you guys. >> thank you, dom chu. and dan at the smart board looking to protect shares of facebook for no cost. and this is crucial. because today we saw a strange move it. was bound 3% on the session. >> for no reason. and dom was talking about the other tech stocks that have had nice earnings. and facebook has moved up with

microsoft, google and amazon. and when you think about what is going on here we have the earnings event next week. the stock has only moved on average 3 1/4. this is the one year chart. they spent a lot of time consolidating and it broke out it. was just at $85 a month ago. so we had this move and massive breakout here. and to me i think it was up in sympathy. and when they reported q2, the stock was off. i don't know what will happen here. i think the likelihood of google or amazon is low which is why you may want to consider protecting gains in a stock like this up 30% on the year. here is the other thing. so when you think about it we have about a month or two months left in the year. you may not want to sell that stock and pay some taxes. and that is why we'll look at the options market a structure called a collar. against a long stock position. and that is why you do a caller. it is selling an upside call and

using the proceeds to buy a downside put. and that is why i consider it against a long stock thatsy winner. you don't want to sell your stock. this will protect the gains and allow to you participate with the upside. so the three things. you want upside participation, you want downside protection and don't want to pay a whole heck of a lot for it and maybe don't want to pay taxes. so the trade i was looking at today when facebook was 102.5. and look at november and sell the november 110 call at $1.30. you could use the premium against 100 shares of facebook stock and buy the november 95 put for $1.30. that costs you nothing. so the stock has the potential for gains between 102.5 and 110 the call strike that you sold and then the potential for losses between 102.5, where the stock is right now, and the put strike that you were long. but you are protected below the $95 put strike. and the thing here is i didn't

want to pay a whole heck of a lot. i want to participate on the upside. i know i have potential downside risk but i want disaster protection and that is a collar. >> and it is interesting that the options market is affording you the opportunity to put this trade on for close to even. if you think about the odds that the stock could go back down to 87 where we just were versus up to $120 where it would have to be for a move to the upside the fact that you put this on for even is attractive because this is a situation where you still with the strikes that he's chosen, you still get to participate on 6% to 7% of the upside and if we see any move back and bear in mind it is trading at above average multiples and that danger is to the down side. back to the levels that we previous saw. that is why used options in a situation like this you get to stay in your stock and have some of the upside but if we go back to any of the previous levels you are protected. >> it is the only way to do this. the implied move is 6% and this is moving 3% today.

now fallen back. bad close. it is a jump ball. >> to that point, dan, the stock does move a lot. do you think there could be a risk you get the stock called away. >> mel that is a great question. if you are long on this stock and short that 110 call strike and the stock is through it and you still don't want to be called away. you can actually cover that call. now obviously if the stock is above the call strike you take a loss. but you have to think there is a risk-reward in every trade and overlay trade. if it is well above the short strike, you have to make a decision whether or not to take the loss on the shortfall. >> that would be an extraordinary level. say bears make money and bulls make money and pigs get slaughtered. i don't through you should get too greedy here. >> up next it is a miserable week for twitter shares but dan's stock is doing just fine. find out why, 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. if you have moderate to severe rheumatoid arthritis like me... and you're talking to a rheumatologist about a biologic this is humira. this is humira helping to relieve my pain and protect my joints from further damage. this is humira helping me reach for more. doctors have been prescribing humira for more than 10 years. humira works for many adults. it targets and helps to block a specific source of inflammation that contrubutes to ra symptoms. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers including lymphoma

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time now for total recall. where we make like arnold schwarzenegger and pump up our trades. dan made a bullish trade on twitter but the stock has fallen but he hasn't lost any money. and here is why. we express ourself in less than 140 care aacteres and that is what dan tried to do on twitter. he was long and looking for a way to get some money back. but stock -- >> what, are you crazy? >> no he is not. he turned to the options market and bought the strike for 1.10. and now he needs them to go above the strike price above 3610 by november expiration. but spending $1.10? >> that is a lot of money. >> it sure is.

so dab sold not one but two of the november 38 calls for a total of the $1.10 and creates his one by two call spread. but he did something even better. he made profits come quicker and here is how. between the 1.10 he spent on buying the lower strike call and the 1.10 he collected on selling the two higher strike call he was able to put his spread on for nothing. yep, nothing. and now instead of needing shares above 36.10, can he see options if shares rise a penny above $35 by november expiration. of course none is for free. and by selling the two calls, dan capped his profits at the strike of the calls he sold but because he is long stock, he could have the stock call add way from him if shares rise to the $38 level. and since the time of the trade, twitter shares are down 5%. leaving dan in a bit of a pickle. now option's action biggest fan -- >> i'm not focused on it --

>> one big fan wants to know one thing. what will dan do now? >> so this is an interesting structure. it is almost like a leveraged override. so the stock were to get going, how would you manage this? >> we have a couple of weeks here. and i will say, yes, the results were disappointing or the guidance was disappointing. but there are things going on. one of the reasons where i did the leverage overright and i thought if it was better than expected news it would pop back to the mid 30s and i could have a trade by trading options against my long stock position will give me the leverage. that hasn't happened. the options are worthless. you are going to let them expire. that is what is going to happen. because i'm not expecting a move above $35 for the next couple of weeks. >> you do need to consider strategies. what happens is the price of options tends to dwindle over time, post ipo. that hasn't happened here though. because there are been questions about the performance and who

would lead the company. we're getting back as we are starting to approach the ipo levels where i think the stock once again becomes interesting. even doing these as we said one by two on the put spread might be an interesting way to play this. >> dan knows when you buy a bad chart, which you are hoping for in macy's and this is a dud, it is a bad chart. >> and it will continue to be a dud. >> it looks that way. >> coming up next your tweets and the final call for 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.

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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. time now for some tweets. the retail trader asks us traders what are your thoughts on gold. so carter i'll go to you first. >> we had a nice bounce $100 an ounce off the low and now dodgy. we have a trade on obviously with the miners an the gdx. the presumption is this will not make new lows.

if you are in it hold longer. i'm thinking higher. >> i think you are going that live with gold the price volatility is not high. if the dollar strengthens, that is bad for gold. >> and this is from butch. could one generate income from writing on alcoa options. >> what do you think, dan? >> this thing is a disaster. i like the idea of a name you want to hold on to that has a dividend yield, the idea of really every month or every two tos looking a few percent out of the money and not expecting a takeout and add yield to the holding. now time for the final call. the last word from the options pit. carter? >> braxo and reynolds have had reduction and take a shot. >> with the december 47.5 put spread, reynolds.

>> dan. >> facebook, i like callers an next week results. >> our time has expired. i'm melissa lee. thank you for watching. for more "options action," check out our website. and our daily segment inside "fast money" every day. we'll see you back here 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 my job is to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job isn't just to entertain but to educate and teach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. yes it is indeed true that the great stock market crashes did happen in october, 1929, the great depression kick off and 1987 debacle.