hey there. we're live at the nasdaq market site on this tough afternoon for stocks. while they're getting ready, here's what's coming up on the show. >> england! >> yes, you can add that to the growing list of concerns. but relax, we've got a way to protect your whole portfolio for less than five bucks. plus, here's how thursday's investors are for yield. we'll break it down. plus, forget gold and oil. another group of commodities have gone hog wild.

and it's setting up for a perfect trade. we'll explain. the action begins right now. let's get right to it. stocks just posted their worst day in three weeks. should investors brace themselves for a summer swoon? mike, what do you think? >> well, the summer is typically not a great place to invest anyway. sell in may. historically that has been held to be quite true. add to that the fact we're sitting here close to all-time highs. and we obviously have plenty of global economic risks to concern ourselves with. we've got the brexit vote, concerns about the fed. and bond prices are basically telling us we're in no growth forever. you put that together and say to yourself, there is more risk to the downside than potential reward to the upside. >> how are we setting up on this chart? >> here's the issue. the median stock in the russell

3000 has made no progress in two years. on the january lows, you're talking about half of the russell 3,000 had lost a third of its value. now it's a question of whether this is some sort of new bull that's emerging or whether this is just a bull trap, which ultimately results in lower prices. >> so we heard what the guys had to say. there are a lot of people out there who will say because of bond yields, doing what they are doing, and because of what's going on globally, there is no alternative, but u.s. equities. >> well, i mean, listen. all u.s. equities are not created equal here. the s&p 500 levytats here. you think about the risk reward, i agree with these guys. about three weeks ago, fed fund futures were pricing about 35% chance that the fed was going to raise rates next week. then a 55% chance they would raise in july. here's the thing. if for some reason we get a surprise. now those protects are like zero

and 20%. if we get a surprise, u.s. equities are not going to like that a whole heck of a lot. that being said, if they get more dovish and the yields go lower, i get the tina argument. look at how equity markets act in europe and in japan, where trillions of dollars of sovereign debt are below the zero interest rate. i don't think this will be positive for u.s. stocks. >> what you see in japan, what you see in europe is fear. nobody wants to buy risk assets when your central bank is telling you, we're in a whole lot of trouble and we're not exactly sure what to do about it. so we're going to start experimenting. you know, if you're going to experiment, you probably don't experiment by taking your nest egg and putting it in -- >> now they're going to have to experiment if they cannot raise anytime soon. and we have some sort of crisis that engulfs the u.s. >> the real thing about tina, of course, the valuation, if things were working properly, and the earnings yield on the s&p is almost 6%, and most stocks are

yielding more than the ten-year treasury, the s&p multiple shouldn't be what it is. it should be 24, 25. it should be 30. the market doesn't believe in tina. if it did, things would be much higher. something is not right. i think the market knows that. if you look at it op an equal basis, stocks are so cheap, they should be bought, bought, bought. but for two years they're not being bought. something's wrong. >> they're essentially forecasting a decline in earnings. the multiple of the terms right now -- >> that's right. >> we had 120 bucks in the s&p now we're looking at 80. >> i think this is the most vulnerable set of earnings here in the u.s. if you think about it. that's small cap stocks, the iwm. so for those of you who like to look at port foal yo hedges or put some sort of delta position in your portfolio just in case we have a sell-off, i think you get the most bang for your buck

in the ewf. it's made back about 23%. here's the thing. i think you have a good opportunity where if it starts to move lower, i think this is where you're going to get the most bang for your buck. it's still about 10% from the all-time highs. and listen, i don't think you press this early next week. i think you give it an opportunity. we usually rally into fed meetings. maybe you get a lift on monday or tuesday. the iwm, with the etf trading today at 116, you could have bought the august 115, 100 put spread for $3, paying $3.75 for one of the august 115 puts. $3 is your max risk. between 112 and 115 on the upside. max loss of $3 above 115. i like the risk/reward here. it looks like some decent support. it's basically 2%, 2.5% of the

underlying etf price to get a lot of protection and bang for your buck if things hit the fan this summer. >> you want to be hedged in this situation. it's pretty simple. we had a little bit of an uptick today, but it's incredibly modest given where we are in terms of equity prices and the risks we face. >> obviously, these have outperformed from the absolute low, because of their higher beta. it's where they are in relation to their prior peak. they're still down 10% from -- it shows how not fixed the market is. the s&p is flirting with this notion that i'm going to break out or not. the russell 2000 is nowhere near that kind of circumstance. >> all right. what would you -- >> well, if we just made a new high from the other day, and it just got back on course, but listen, i actually think the fed is not going to be raising rates this summer. i think that is going to raise a whole heck of a lot of

volatility. i'm not of the belief that lower yields in the u.s. from here is going to be good for risk assets. that's my trade. >> it would actually also increase volatility. >> now to commodities. because while everyone focuses on gold and oil, quietly one area of the space has been surging. our main man, dom chu. hey, dom. >> the stock and bond market, of course, all the time we talk about these things, nice change of pace to talk about commodities. we know what's happening with oil. it's been a week, a huge one for some of the softer side of the commodities. wheat, corn, soybeans, sugar, some of these commodity futures took a hit today after a government report forecast bigger wheat supplies. but outside of today, over the course of the more medium term, these have been pretty hot trades. if you take a look at how these trades have performed over the last one-month period, wheat futures have gained 7% in that

time frame. soybeans around 9%. corn around 11% as well. if you check out the sugar high, i call it that, because you've seen about a 24% gain in sugar futures. that's just in the last month. so as traders look for some of these opportunities, there has been some decent action in some of the soft commodities, and of course, melissa, you can see the sugar trade there. i can't leave you, guys, with at least of a hat tip to how much all of us watch what happens to frozen concentrated orange juice futures or pork bellies. i knew it, i knew it. melissa, back over to you guys. >> dom chu, thank you. one stock that could benefit from the surge. carter? >> the biggest fertilizer company in the world, potash. sugar up 72% off its low. soybeans up 42. corn and wheat up 25 from their absolute lows. i thought i would start with all commodities. this is a broad index of equal weighted commodities going back

to the 1960s. what's incredible is the analog. a ten-year move from 1980, 1979, 1980, and ten-year move from 2000 to 2010. a five-year pullback. from 1980 to 1985. a five-year pullback, 2010-2015. what we started to do here, if the analog plays out, we're in the midpoint of that. ultimately it doesn't really go anywhere. what's so crazy is this was inflation. this was deflation. but it isage gous. now with that, while this has all commodities, copper and oil, i want to look specifically at food stuffs. this is the crb food index. it has coffee, corn, wheat, soybeans and so forth. to my eye, i see the lines like that. a break above a downtrend line, or you can draw them like that. something of a head-and-shoulders bottom. but i think we're going to move higher. now, holding that thought, take

a look at this index. same index relative. now here's potash. largest single fertilizer company in the world. what appeals to me is the recent bottoming out action. we're playing for a catch-up with the commodity. here is the chart of potash. here's one way you could draw the lines. it is just now starting to get above its line the way the food stuff index did. what i'm thinking is, something quite nice like this. higher, we want to call this an asymmetrical risk/reward. >> what's your take or trade? >> somebody got ahold of the crop report. the reason i say that is there's something called the stocks to use. it tells you how much inventory you have on hand. and we basically have been right around five-year highs. the usda report that came out on corn and soybeans today is forecasting 14.2%. that is the lowest basically it's been in five years. one of the lowest in a long time. that has been between 12 and 46

basically going back about 50 years. 46 is when we were doing farm aid. we had a lot of agricultural problems obviously. i think the way to play this, look out to september. and you're going to do something called a call spread. buy the september 18 calls, spend 83 cents for those, sell for 33 cents, and then sell the september 15 puts for 60 cents. net net you'll collect a dime for this. you're long at 18, up to 20. you don't have the stock put to you until it's down around the 1490 level. that, by the way, also happens to correspond to the recent lows. you're basically saying i realize it's had a run, i won't take risk right here, i will buy it basically on the local lows if it dips back. participate on the upside. >> i don't think i've ever heard the word potash come out of dan nathan's mouth. but what's your take on the trade? >> it's at 420 here.

my take on the trade is that mike has nailed the levels here. $14.90 was the actual multi-year low here. that's where you would put the stock. i actually would get a little more aggressive. i might not sell that september 20 call, because you have a really nice relationship between the put that you're short and the call that you're long. i know what you're trying to do. you're not trying to expand any premium. this is a stock so beaten up, if there was a reason for it to rally, it could blow through 20 and there's no resistant until the high 20s. >> the upside call is going to go down in value, you would have an opportunity to trade around it a little bit. >> the commodity related stocks come to life. >> you wouldn't sell that upside call either? >> i would leave that to my man mike here. are the odds of this better than that? i would say they are. >> basically what i'm saying is the forecast inventories for corn, look at the end of the

year, it's historically been bullish corn. own corn and things associated with it. maybe deere is a buy on the heels of this. >> send us a tweet to "options action." check out the website. while you're there, sign up for our newsletter. here's what's coming up next. >> esop, i want some more. >> that's what investors are saying about yields. we've got a way to generate income out of thin air. we'll explain. plus, talk about a bank job. >> this is a robbery. >> shares of financials are in a free-fall and it could just be the start. we'll explain why, when "options action" returns. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart

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welcome back to optio"optio actio action". how low can they go. fears of global growth have investors searching for yields. if you're an investor hunting for yield, how should you play it? dan is over at the smart board with a simple strategy. >> we know where investors are looking right now, at least in the u.s. they're looking at utilities and some big pharma here. but here we want to talk about a strategy that actually looks to kind of super size that yield. let's look at a stock like verizon. 4.3% dividend yield. let me give you a few reasons why you might look to sell strangles if you are long verizon stock. one of the reasons here is you're there because of the defensive nature. we're going to get to what's selling a strangle is. one of the other things you want to think about, do it in a stock

that you don't think is range-bound. we'll be selling options against your long stock. we talked about overriding. that's selling a call against your long stock. you want to do this in a stock where you're willing to buy more. let's look at the chart right here. this, to me, we've had this recent move here as treasury yields have come in in the u.s. over the last few weeks. but if you look here, there's pretty well defined range. this is the breakout level, about 48. it kind of got rejected up here at 54. so what am i doing here to add yield to verizon? i would look out to august expiration. think about selling the august 48.55 strangle. about 40 cents, selling one of the august 48 puts at 45 cents. i'm taking an 85 cents in premium here. and what that really does is sets up an 85 cents buffer to the down side. it also gives me added yield in

between the short strikes while i'm also long the stock. i can make money right here. up to $55. august expiration, my stock would be called away. that would be at 5585. if you add back the premium i receive. that's up about 6% over two months. consider what that dividend yield, and on the down side, it gives me a buffer from $52.75 to $51.95. the stock is down 9% at 48 worst case scenario. i would be put another 100 shares of stock. down 9% from current levels. but remember, you have that dividend yield, you took in some of that premium from the strangle sale. this is a strategy that if you're comfortable owning a stock, did this routinely, you could actually super size that dividend yield. and it would annualize to something far greater than that dividend yield. >> i think a lot of people out there are watching this strategy and thinking, this is something i should consider. everybody's been flocking into the yield stocks. they're trading at a premium to

the s&p 500. they don't know where they go from here. but they want to hold on -- >> look at the put he's selling at the 48 level, collecting 85 cents. if you put the stock, own it at $47.15, a hair above the level of what it was trading before it broke out in january, this is actually a really smart investment strategy. it's one that a lot of very sophisticated long-term investors systematically use. leon cooperton is a good example. this is a good smart trade, i think. >> and a nice yield for what it's worth. in a yieldless environment. >> exactly. >> as the bond yields go lower, this just makes it even more attractive. >> up next, financials tumbling to the tune of 2% this month. why there could be more pain ahead, after this break. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns.

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liberty mutual insurance ♪ "dinner!" "may i be excused?" get the new xfinity tv app and for the first time ever stream live tv, watch on demand, and download your dvr shows anywhere. steve, other than making i'm here atme move stuff,rade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and 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. td ameritrade. time for the upside call. we look back on some of our wins

trades. last week dan said this. >> if you want to make a directional bet against citigroup, look out to september expiration, chart it. their q 2 results on july 15th. simply, look out to september expiration. today when the stock was 45.50, buy the september 45 puts paying $2.30. that is your max risk. >> shares of citi tumbled along with the rest of the space this week. what do you do now? >> i think you stick with this. we know we have the fed meeting next week. there's another fed meeting in july that will come after citigroup's what i think are likely to be disappointing q-2 earnings. so i think you want to stick with this trade. what i'm going to do eventually if we get a movement down to maybe $42, $2 from here, that means for every dollar it moves lower, these options would be worth more about 40 cents. at that point i am going to roll the premium to a lower strike. i think 40 is the breakdown level. i think you want to be here for

september action. but you have to manage the risk. as it goes lower the options are going to be more expensive. >> this one trades like water. you can get in, get out. and it looks bad. >> all right. now to nike. a few weeks ago colin carter thought the stock would retest its low. >> what i'm expecting is that we're going to reapproach these prior lows, if not more. close around 56 and change. i think we did get 52. i want to sell nibke. not a good setup. >> you can sell the july 50. sell the july 57 1/2 call. cover the upside for $1. >> now, nike did hit a year-to-date low on june 1st. but it's managed to climb back this week. carter, what do you see in the charts now? >> we didn't quite get the 52.

annoyingly, red tape today. stick with the trade. that's what i see. >> yeah, i agree with this. even at today's prices, we've made small profits. it's up about 3 bucks here. bear in mind, they do report on the 28th. we're probably going to revisit it. >> up next, "final call" from the options desk. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: 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. td ameritrade. don't put off checking out your medicare options until 65. now is a good time to get the ball rolling.

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steve, other than making i'm here atme move stuff,rade trader offices. what are you working on?

let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and 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. td ameritrade. you tweeted, we listened. first up, jennifer asked why do you keep playing duran duran. please make it stop. i think the explanation can be found in the executive producer of this program, who is of another era. even though he's a young man. >> that era. >> we've got another tweet from brad. brothers and sisters, what cruise control trade is there in ford? >> i think that's the key thing. being flat after the market

rallied the way it did, the last couple of weeks, relative strength comes back as a factor that's efficacious. the group is worse. global autos -- >> the stock looks immensely cheap. forecast to make about two bucks. peak auto sales, declining quality level on loans. rates can't go any lower. the fundamentals are going to deteriorate. the only way to make a bullish bet is buy a longer dated call. but i woeblt buy the stock. >> real quickly, ford, we have autos, home builders, most retailers in the u.s. -- something's going on here. >> financials. >> time for the "final call." carter? >> long some potash. playing for catch-up with the move in the underlying commodities. >> i love the way you say potash. >> in potash, i'll follow the lead on that. september 15, 1820. collect a little bit of money and make your bullish bet.

>> don't sell the upside call. i love the trade. we're losing a couple of good ones behind the scene. iwm, get a bounce in the meeting next week. >> our time is expired. we'll see you here next my m make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i'm promise to help you find it. "mad money" starts now. >> hey, i'm cramer. welcome to "mad money." welcome to kra mare can a. people want to make friends i want to make money for my job. not just to entertain but teach and coach. call me 1-800-743-cnbc or tweet me @jimcramer. all right. tough day, what can i say? >> look, we've moved too far too fast. last three w