hey there. we are life at the nasdaq market site. the guys are getting ready. here's what's coming up. >> all right. it's getting crowded in here. >> that's what some traders are saying about the so-called safest trades in the market. it could spell trouble for stocks. plus it is the question every trader is grappling with. >> to be or not to be, that is the question. >> no. do you buy gold or silver? the charts say one is about to surge even higher. and -- >> honestly, we're out of gas. >> pretty much sums up the transpor transports. it could get worse. the action begins now. ♪

>> let's get to it. the story of the week was a collapse in global rates. the u.s. tenure deal hit multi year lows creating a hunt for yields an dangerously crowded trades. dan, what are you looking at? >> we know what the trades have been over the course of the year. really into the course of the last year it was utilities u.s. tel-co and consumer staples. one is the defensive nature of some of the businesses. a lot of revenues for the most part here. not as much on consumer staples. there was a dividend yield. to me they have become crowded trades and the most important point is that the stocks have gotten expensive. the s&p 500 is trading 16 and a half times on a forward basis. then you have consumer staples like procter & gamble that's trading 21 times forward earnings. to me, that's an obscene valuation to pay for really what's been atrocious growth over the last year.

it's been negative. >> if you think all growth will be atrocious that's the reason it looks appealing. you figure you get a corporate earnings yield of 5% and think at best the economy has 2% growth you're looking at other spaces that don't seem they will turn around. especially with oil rolling over. maybe you're playing for a rebound there. that's the reason. people are saying 5% is okay with me if 2% is what we get. >> in the case of procter it's the worst of a questionable group. its valuation is just as high as the entire s&p 500 consumer staples. yet the growth rates are worse. >> they are negative. >> negative on earnings and the top line down 15% over the last year. at this point there is something not right. finally the softs, sugars, corn, wheat and soybeans are going like this not just for procter but the staple stocks. that's not good either.

>> there is demand. >> at what point are you a seller? when it's 16 times earnings? clearly at 16 times earnings which is a 20% discount it would be a screaming buy. smr between wherer with in the stock and that level is basically what you are looking for. >> for the better part of the year the stock has been in the mid to low 80s. i think at some point this is a crowded trade. there are a couple of scenarios when you look at procter. to me if you were to see an up tick in global growth, okay. so this stock should do well. carter just said, the sales topped at $84 billion in 2013. they are expected to be in fiscal 2016 like $64 billion. that's a massive swing. to me they need to actually make up a good bit of that. people have to see they will get back towards peak sales for this thing to work higher from here in my opinion. listen, i don't like it.

you could say 5% yield. think about how much cash flow they are using to buy back stock, manage the eps 2 that's also down significantly. >> that's disgraceful, of course. >> let's get to the trade. >> it's a crowded name. if there is a scenario like last summer where global growth sees a down tick and people are worried about the crowded trades you have to remember that procter and gamble august 24, 2015 went to 65 from a high of 93.50 the prior year. you want to look at options as cheap as they are for a break of the up trend from the august lows. it's well defined, not able to break out of 85. define your risk. look to august expiration. two events will report which should give guidance for the full year in august. you have the july 27 fed meeting to add volatility. my trade simply when the stock was $83. you could buy the august 82 half

70 put spread paying two dollars for that breaks even at 80 and a half, make up to 10 and a half down to 70. i don't think it's going to 70. you have a chance of the mid 70s if they were to guide down for the fiscal year and we'd get volatility. i like the risk reward give how option prices are. >> how does the chart work? >> the lines are straight. >> thank you, that helps. >> it's the relative performance. we know campbell's is doing better, coke, flip morris and clorox. pick your stock. kimberly clark. there is something wrong with the behavior. i would rather do what you're doing than playing this for a catch-up. >> you hit on the reason it's weak. the input costs are rising and could go higher. corn, soybeans. these are the input costs. the other thing is selling that down side put for the 25 cents may seem like why bother? it helps to rent the trade effectively.

that option will decay more rapidly than you think. at lower levels it's a screaming buy. i advocate this trade. >> really about the down side put, you're waying $2.25 for the at the money or near the money put selling another for 25 cents. doesn't seem like a lot to mike's point. i don't want to be naked. it could give me the opportunity back to 81 to roll up the put to the 75 strike at a level where i would be taking the position off. >> now to technology. shares of apple tumbling -- alphabet, excuse me, tumbling and posting the worst session in two months after citigroup said they could see a decline in ad spending. carter said another bank stock could follow. >> some of the relationship between facebook and google and other things. a couple of charts here. the first is a comparative chart of just that. it's facebook, top line here, the blue one. versus microsoft and google. it's year to date. while they are all different

businesses, different growth rates and valuations, in a world where things are just being bought, sold and row taegs is the issue, not valuation, this is a little bit of a spread that at this point starts to suggest that maybe facebook will go the way of microsoft and goog. year to date search, past 12 months now about playing for convergence here. you have green and orange, microsoft and google, facebook at the top. okay. let's take you back further. this is over a two, three-year period. same general circumstance. you could say that's the better growth company. it has been. the question is more recently it's starting to stall as these have. my bet is it will come off here. this is a chart. short term. past year. my eye you can draw it the way you might juan. my eye draws it like that. i see a low here and here. at a minimum we are coming back to the low. the stock closed at 113 and

that's 108. so a 5%. pulling it back more, sort of more draconian. if we stayed in the channel but got to the bottom we have been in we are looking at something like 98. this is marked the range in which the security has traded consistently and reliably. sort of at a minimum objective, a 5% move of 113 to 108. with a little luck, a little bit lower. >> what's your take? >> we can't say this is an expensive stock. it's got spectacular growth rates. think about a stock like priceline which had a prolonged period of good top line, eps growth, facebook is setting up for the same thing. however, there is something else we aring looing at. this is an options trader perspective on this. the options are quite expensive when you look a how volatile the stock has been. the spread between how much the options cost and how much they should cost has widened considerably. to go along with the thesis, we

are going to do one of the higher probabilities options trades you can do and that's sell a call spread. this is the august 115, 120 call spread. collect a little over $2 for selling. the nice thing is if it goes down as carter has predicted you will make money. even if it stays here or rises slightly you will collect the premium. the most risk you take is $2.95 in the event it runs through both strikes by expiration. >> i'm snickering here. so many things i disagree with. mike, you're saying it is not expensive. that $3.50 expected to earn on a gap basis is $2.50 at 55 times earnings. i know they are growing sales dramatically. it's a monopoly, we get it. they have 1.5 billion users. that will decelerate massively. it already has. it's at 13 times sales. the $330 market cap stock. i agree with carter's technical

takes and think mike's probabilities make sense. use the premium. if you agree with carter, buy a put or a put spread or something. sell the upside call spread and use the proceeds for a put spread. >> it's a function of how fast they are growing. yes, fair point. they are trading at 50 times but growing at 50%. when you look at price earnings to growth. >> hang on, mike. we can talk google which went sideways for a few years. growth decelerated. they were the only game in town there. the universal bullishness. i have been wrong for the stock on 30 bucks. keep buying at 113. have a ball. you're making the argument against me which doesn't make me want to sell your call spread. >> the call spread is a high probability trade regardless of your fundamental view. >> carter, where do you think it's going? is this a big call? >> the minor trend line, the more length or duration it has the more important it is.

the intermediate trend line is a 5%. just to stay still in the bullish channel is down to 98. you are talking about 13 plus/minus draw down. that's a reasonable price objective. >> we started off the segment talking about alphabet and ci citi's projected decline. do you think there is a correlation? >> i do. alphabet is under a great deal of pressure. i believe investors think they had the monopoly essentially. that monopoly is being eroded by the likes of facebook. i don't think linkedin and microsoft will challenge them. at the end of the day that's the issue here. alphabet, google. is alphabet going to own the class? they are not. >> tweet us, check out the website and while there sign up for the super cool newsletter.

over 100,000 of you have. why not you? here's what's next. oh, of course gold doesn't grow on trees. >> true. but it is surging. however there is another commodity that might be a better buy. we'll reveal. plus, one hot sector is suddenly not. ♪ i said hotter >> it could have big implications for the rally. we'll tell you when "options actions" returns. sponsored by think or swim by td ameritrade. 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.

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♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. 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. welcome back. i'm seema mody. investors are transfixed by gold. it's closing up 1.5% this week and 23% over the last six months. the near term catalyst is uncertainty around the brexit which investors fear will cause longer term risk. low to negative yielding bonds hitting a record high of 8.3 trillion pushing more investors in search for yield or income. this as a fed dialled back the pace of rate hikes. betting on gold is a popular hedge fund trade to paul singer. gold traders say the vote will play a role in driving investors into safe havens like the shiny yellow metal if the momentum behind the leave camp continues

to strengthen. >> seema, thank you. carter is looking at another precious metal that's surging. carter? >> these are fraternal twins. dwold and silver, silver is poor man's gold. it can lag and come to life in a big way. a lot of juice. so a comparative chart over three years has gold on top and silver on the bottom. the lag appeals to my eye. i want to show you something for fun. this is what silver can do when it's exciting. it overshoots and undershoots. the hunt brothers tried to corner the market. it had a perfect double top and fail. juice up and down. not only did it over shoot but it undershot here. at this point back to this we are playing for a little bit of catch-up. not only liking it relative to gold but liking silver on an absolute basis as well.

closing at 16.60. you can do it this way, clearly a break above a trend line. you can do it this way, people like to name patterns. you can name it head and shoulders. you can do it this way and call it a cup and handle. i'm thinking higher. 16.60 closed. play for 8% to 12%, up from here. >> nice gain. mike? >> commodities move furtherer and faster than you think they will. this is a perfect place to trade options. in a situation like this it could break out. but there is a significant risk in holding the underlying. what i like to do is the opposite of the facebook trade. we can buy a call spread. i'm looking at the august 16 and a half, 18 call spread. spend about 50 cents for that. we are looking to spend 25% of the distance between the strikes, spending more. the reason is this is slightly in the money. only 40 cents worth of extrinsic

premium. that's how much higher it has to be for the trade to break even. this is a way to basically take relatively little risk in what can be a risky asset. >> i will come at you again fm carter thinks it is going to 20 get the break out and look to spread it. i know you have near the money participation, but you also have a lot of time. if you got the break out. >> you have a little over two months. the numbers i heard were over 10% which is where this will go. we are selling the upside call for 30 cents, 18.30 above that level is where the disadvantage -- >> you're the professor. >> let me teach. >> ooh! >> if it broke out and you have the stock between 17 and 18 and you are short the 18 call and you have a month to wait, will you sit there and wait with a dollar and a half call spread worth 50%? the risk reward doesn't turn out

to be fantastic. that's a good point though. >> what happens if it breaks through the higher strike is you're in a position in a high volatility asset where you are essentially short a put spread synthetically at that point. that's what the trade looks like. you will be collecting decay as time goes on. that's a position i would like to be on. >> carter? >> what about a pairs trade? silver long and gold the short side with almost no capital risk. >> sell a call spread in gold, buy in silver. >> no comment. i got schooled. >> by the professor. >> all right. >> up next, from hot to not. one of the best performing sectors is tanking. it could have a huge impact on the market. we'll explain rve after the break. 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.

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. welcome back. for total recall we look at open trades. last month dan thought health care would take off. listen. >> to trade specifically in the xlv when you look at the price of options is very cheap. that makes sense for a host of reasons. but you could look out to july

expiration, the xlv with the stock trading at 71 and just by the july 71 calls aing 1.25 for those breaks even at 72 and a quarter. that's your max risk. >> health care was the worst performing sector today. what are you doing with the trade? >> this is one to manage. the xlv went to 73 shortly after the call. obviously appreciate it. got up about 2.20. you had an opportunity to spread it like we talked about or take profits. now the thing is back at 70. time isn't on your side. you have only a couple of weeks. you have to cut your losses here. if you didn't do anything prior. today with the stock around 70 it was worth about 85 cents. i would look to do that as we head into a holiday week things should slow down after brexit you want to be out of this. >> carter thought the stock of transportation would tumble. >> this is going to fail and

importantly down this week, worse than the market. down today. this is with an upgrade in union pacific. second or third biggest weight from the street. >> i'm inclined to go with carter. iyt is the way to play. look to september. you can spend about 2.50 for that. >> transports are down since then. mike, what do you do? >> this is a situation. we gave ourselves time for this to play off. i won't do anything. we are up small in the trade but it is a good trade. i'll stay with it. >> we have fed ex earnings. how could it impact what iyt does? >> in the sense they have after the dow jones industrial average which is a price weighted index and next is the top of that. this is the thing. this index is down some 18.5% when equities are almost at the highs. something is wrong. >> up next, final call from the options pits.

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.

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. 25 years ago-ish -- the fine folks over there gave birth to the cable sensation and since then the world of derivatives and television have never been the same. always good to see the nathans on set. welcome to the nasdaq market site. i said "ish." give or take. >> all that knowledge and 25 years, amazing. >> you look terrific. >> maybe not if you take -- let's take the tweets. paul asks what will tlt do if brexit vote is to remain? dan? >> a couple couof weeks ago we a bullish trade. we took it off. think tensions will ease and you will see tlt come back in.

even a couple of bucks off the high. for me you look for reentre to 1.33. >> carter? >> that's fair. the real direction is yields lower, tlt higher. >> i'm looking for reentry on the long side. after the tensions it should settle. >> next question from tom lee, is there a reason for weekly instead of monthly options? >> two good reasons. gives you flexibility with respect to structuringing options trades around catalyst, before, after. some of the options have more strikes than the regulars do. apple is a good example. lots of flexibility. if you haven't looked at weekly options you should. >> time for the final call. carter. >> facebook on the short side, slv on the long. >> mike? >> sell the august 115-120 call spread to facebook. high probability trade. >> mr. 25-year-old? >> we have a will the of fathers watching this program. happy father's day to you guys, my father and you guys.

for me, procter and gamble. get an easing of tensions. it sets up as a good short. >> our time has expired. check out the website options action.cnbc.com. "mad money" starts now. >> announcer: the following paid presentation for cooper chef is brought to you by tristar products incorporated. are your kitchen drawers starting to look like a bad garage sale -- steamers, rice cookers, roasters, slow cookers. and just how many pots and pans does one kitchen really need? and every time you cook, cleanup's a disaster. scraping, scrubbing -- what a chore. what if you could replace all this with one single, nonstick pan? and what if this pan was innovative in design and made of the highest-quality craftsmanship? and what if you could cook with it on the stove and in the oven? introducing copper chef, the nonstick, all-round square pan with ceramitech. it's a breakthrough in technology.