hey, there. did anything happen in the market this week is in the guys are getting ready for the big show. while they are doing that, here is what is coming up. >> the only thing we have to fear is fear itself. >> you got that right, fdr. the fear gauge is doing something extraordinary and it could signal your opportunity to buy. plus. >> i wanted to get up right now and go to the window, open it, and stick your head out and yell, i'm as bad as hell and i'm not going to take this any more! >> that is how biotech investors feel this year. but we will tell you why the beaten group in health care particular could be second half sleepers.

and. >> i love gold! >> you're probably looking at the wrong medal, buddy, because silver is surging. we will tell you why it could be going even higher. "options action" starts right now. let's get to it. you want to see something really scary? check this out. that, friends, is what you get for lending your money to the swiss the next 50 years. less than zero in the hunt for yield investors appear to have lost their mind. so what does this mean for stocks? let's get to the money right now and find out. the first thing that comes to mind, dan, is the banks. >> yeah, it does. listen. the big headlines at the end of this week on from the brexit situation was the ftse and s&p filled in the entire gaps you go a lot of damage was done in other asset classes and you're speaking to rates for all intents and purposes. if you think about it the two-year treasury yield is below 60 and where it closed and ten-year treasury yield closed down, what was it? 1.8 at one point last week and

touched as low as 1.33 or 42 this morning or something like that and made up a little ground. when you think about what is going on, a ton of damage that has been done to what i think is just the investment landscape here and then you put that bank stock index specifically in europe out there and you look at how little they recovered, how little of the gap from last thursday's close. and that just tells you something is going on. obviously, the rate situation is a big part of that globally. to me i think you have to look at the banks again. >> >> you can't make money in that environment when you're lending at least. >> not if you're a financial and if you are an investor like a pension trust or something like that, you're left with very few choices. you basically are banking on trying to get 7% a year. you're not going to get that in fixed income right now. at least not unless you really get fairly aggressive in terms of the credit risk you're taking on. the net result you're going to have to see support for equities because you're basically looking at the difference between the corporate earnings yield for the s&p which is probably around 6% and growing slowly maybe but a

chance to grow. bond yields have no chance to grow. you buy what you get and that is it. >> we know u.s. banks is much better, obviously, than europe. the ability to operate and make a decent wage. trading deaths are shrinking and currency market -- the banking is under duress. with it this low, it's not a good proposition. then technical, which i'm sure you'll talk about, you have the sharp breaks and then you all krexlf and thrown back to the scene of the crime. >> yeah. >> this week is interesting because we have the results, right? >> sure. >> some of the u.s. banks got to raise their dividend and buy-backs and pretty good news. i think the price action though, in some of them since the news came out a couple of days ago hasn't been fantastic. i think in the stocks and i think you have to think about the rate environment. it's one of the reasons why i just thought we have a chart of the euro stock bank index. look how par it's acted. it's below 2009 financial crisis lows and approaching the

sovereign debt lows. i think the price action, the bounce was so weak and i think you don't press those on the short side because they are so depressed. i think you look at the u.s. banks and look at a bank of america that has a ton of exposure to the united kingdom more so than jpmorgan and take a shot the thing touched 12 yerm th earlier this week. i think you can look out to august expiration and you're going to catch their july 18th earnings report. i think the -- report on the 18th before the opening and the strategy is really simple. i think you just buy puts. they have come in a whole heck after lot but you have july 27th fed meeting and i don't think a whole heck of a lot there. but if you look at the july -- the way the european bank stocks act there is capitulation this summer so strategy august expiration and buy the bank america 13 puts and pay about 50

cents for those and when the stock was 1315 this afternoon and 50 cent is your max rest and pretty near the money the participation on the move not too far away where trading was two days ago. >> i understand where you're going with this but i don't know if the stock is getting lower. one of the things we have right now is a situation where i think one of the reasons we saw this bounce-back people said brexit, whatever it's going to cause isn't going to face us right now. seems like every concern we have the market is brushing that off. >> you know why they trig. article 50? >> doesn't matter. >> you don't think that matters? >> it's two years from then. >> i know, but what are you talking about? we have seen the banks come out and talk about what they may have to do and weigh not have to do and renegotiate the agreement and it's uncertainty and market doesn't like that. >> you drop from 1412. as any other -- >> i think you could throw a

dart! >> the action in the european banks. i would think, just looking at at the charts from when it was released wednesday evening, it's been pretty decent. i thought a sell for news event and wasn't on thursday and held on to gains pretty much in today's session. >> the question is is it more positive than the proceeding negative? meaning the collapsing associated with brexit. meaning if it was really, really positive, you would retrace all of the damage done and. >> like the broader markets? >> at least attempt to do that and not all but the banks didn't come close to doing that. >> in the midst of all of this we have other things that are overshadowing the market and stocks still actively. puerto rico default was big news a little while ago. >> bank of america is down for the year. >> i'm talking about how stocks have behaved over the course dash. >> i'm talking about the bank stocks and s&p 500 is within 2% of its all-time highs and the way the european bank stocks act

and something is going on here! had nothing to do with brexit. something is going on here and i suspect this summer we are going to get a sense of that. >> are you bullish or saying don't press this because it's -- >> i think a lot of -- you're spending 50 cents on a 13 dollar stock. you're talking about around 4% of the premium. this thing is going to conspiexn less than 60 dazys. maybe spread it and one by two to take in -- >> i don't. >> the banks is where the premiums is in the options market right now. >> good discussion. biotech is having one of its first halves of the year ever. >> we check in after the first half closed. septemberment is abo we decide to do take a look at the numbers. we actually look add ibb the biotech ebf and performance in

the first half going back through its history. what we found the first half that just closed was the second worst performance for the first six months of the year since 2002. we dropped 24% for biotech the and a half of this year compared with 44% in 2002. you can see the other three worst performing first halves there as well. biotech was going through another bubble and promise run on the human geno project. people say we are seeing confidence getting eroded because people are worried about drug pricing in the election and haven't seen such great data lately. people are starting to lose confidence in others as well. one certainty people are talking about, though, is these big companies need to buy and they have got a lot of cash. a lot of people are hoping maybe that will turn things around in the second half. can you see these gigantic numbers here.

there is wide expectation these companies are going to buy. the question is that enough to turn their stocks around? >> thank you. >> thanks. >> enjoy your weekend. >> you too. the chart master over here is taking a look at health care as a second half sleeper pick. >> we look at amgen in particular. this stock in particular is more correlated with some of the big lower beta names like merck, pfizer, lily. the bottom panel is its relative performance to its peer group. amgen 81 dollars in august. a year ago since that peak, as it has gone down on an absolute basis, it has outperformed the ibb and that is very important. meaning it's a defensive name

within a fairly aggressive group. and i think that is going to serve you well if one were to do this trade. here is the actual chart itself on the long-term basis. you can draw the lines any way you want. my eye sees that and i think we are going to resolve this. keep in mind that when you have a standoff. bears and bulls are very much matched off. a series of high or lows or highs or lows. many people bet it's going to do this and that makes a market. i take the other side. i think the uptrade is coming based on how good the relative performance has been. i want to zero in on this long-term wedge more immediately. here is base of the action of the past year and a half. here is our all-time high. 181. again, let's draw some lines. so no lines. lines. i think we are going to do it. i'm going to play for the past high. 181. sort of an offensive/defensive large low beta name.

>> 181 is quite some upside. mike, what do you think? >> i do think we are in a world right now it's hard to imagine what the good news for any stock is going to be. but some of them like the financials i wonder whether a lot of bad news baked in. i've seen that chart sideways and make a mild bullish bet here because it could track sideways. i'm looking to collect premium and looking to sell the august 150 and collect 3.60 for those. these things expire over 50 days and collecting more than 2% of the current stock price to sell that option and basically in a world with no yield, this is a place you could look to get some. >> what do you think? >> i actually like the idea. >> oh. >> when you think about this. sometimes that is some pretty cheap option pricing in general. sometimes good to sell cheap option pricing and carter detailed how the stock has shown and it's trading within a range. i'd take that premium if you agree with carter's breakout

call and take that and use it to buy a call or call spread and you get that leverage to the upside move. mike is making a mild bullish bet and i think that makes sense but you're capping your gains the amount of premium that you could receive from the put sale. >> the issue is can a lagger group catch up? that is part of the premise. >> right. >> if you make that kind of bet, two, do you go with something held up a bit better during the carnage? sort of the setup here. you saw in the brief segment before, it has the most cash. it has the lowest beta and the most offensive. it's a hedgy win, tails -- heads, you win. tails, you win. >> they have a diverse number of products for chronic disease. one of the places no reason why the bottom should fall out of a stock like this so the reason i'm willing to sell that put -- >> could you have said that a month ago or two months ago? >> if you sell this put, so you might be putting the stock down effectively at 146 and 122, 133

not a lot of down side risk. if buy this at 146 and low is 132 in this market that's not a terrible amount of risk to take and you're collecting less than 2% in two months and i'd say a pretty good trade. >> got a question? send us a tweet to the address on the screen. while you're there, sign up for our newsletter. it's better than the fourth of july fireworks. or something. here is what is coming up next. >> hey. you want to see something really scary? >> don't look at this because the so-called veer gauge coulding signaling happy times ahead for stocks. we will explain. plus. >> fraternal twins. gold and silver. >> talk about a sterling call. carter said silver would soar and he is right. now tell us where he sees it going next when we return. i'm here at the td ameritrade trader offices. 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 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.

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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. welcome back. we're wrapping up a week when a lot of traders and investors decided to buy the brexit dip and, boy, did they. we saw an impressive rally in stock, at least measured by the volatility index or vix. now, after trending higher in the days ahead of the eu referendum vote in the uk and the surge after the voting result, we've seen the collapse of the fear gauge since then. since that high in the vix, we've seen it fall by around 40%, maybe a bit more.

that may mean that the bottom is in for stocks, at least according to tom lee. in a note to clients, he showed the last four full-times we have seen the vix fall by at least 35 in four trading days. those stretches were the ones end in january 4th, 2013, october 21st, 2014, december 22nd, 2014 and august 28th, 2015. he notes that in each of those instances in hindsight, the market had already made a bottom and in each of those four cases, stocks finished higher three months later. now admittedly, it's a small sample size. but might be something to consider as traders look to see if these lows are in of course only time's going to tell, so something to watch. back to you guys. >> thank you. have a great weekend. so i go to you, mike, on this first. what do you make of this incredible round trip we've seen

in the vix? >> first of all, the vix absolutely went too far too fast. the news is out, typically, what happen ss the vix will go up about one point. what actually happened, a 5% decline. the vix went up by about ten. you take a look at that. you say, all right, options premiums got a little bit hysterical and generally speaking, when options prices get hysterical, that's the time you want to get long. we have taken a long look at this. through many different cycles and we found that if the vix is is above 25, chances are you're probably going to get a bounce off that. >> so you missed it? >> we talked about it several times. >> i don't mean you, but in general, people probably missed it. >> yes. number one. maybe you did, maybe you didn't. maybe you said, what just happened and before you got a chance to think about buying or selling anything, the market had come back. i don't really feel like there's a lot more upside from here. i don't really. >> so, you don't agree with tom lee.

i just mentioned this. if you look at to the vix future, they're still pricing about 20 in december. do you know what i mean? so if you're looking at spot vicks at 15 after such a historic decline, it's not telling you a lot. >> it's all noise. has anything changed materially for the better over the past week or two? >> arguably gotten worst. >> some data was better. nothing has changed expect worst and we know equities and asset classes have done nothing for 18 month, yet they've treated you to three 10% plus drawdowns. >> one thing is certainly happen. everybody has gotten a second chance. right? brexit happened. market got slammed. and options premiums went through the roof. now, we've round tripped it and option premiums are down. so ask yourself this one thing, which is that if you had another chance to hedge, would you? to me, it makes sense. >> use the low vix now to hedge. buy insurance. >> up next, mike doubled his

money off carter's bullish call on silver. so why does he have regrets? we'll explain when "options action" returns. i'm here at the td ameritrade trader offices. 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 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.

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herthey work hard.ade, 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.

welcome back. how is this for a killer call? >> i'm thinking higher, so 1660 closed. play for eight, ten, 12%. just up from here. >> i'm looking at the august 16.5 call spread. spend about 50 cents for that. >> since then, that was just a couple of weeks ago. a week ago. silver surged 15%. carter, what do you do next? >> this is tough. if you put money to work and you're wrong, you know what to do. get the heck out. you put money to work and it starts really working, what if you take your profits and it keeps going? i just don't know the answer. let's look at this. on the slv, trading here right for the show, if you look at where slv is now in relation to how far above or below it's been, it is now bottom panel here, depicts the percentage.

it is 25% above its 150 average. it's only done that two or three other times going back basically a decade, so do you trim it? that's the problem, then it keeps going. that will be maddening. do you get out and thank goodness because it comes back? here's the daily chart. look. you can draw these lines any way. the original set up. that head and shoulder, also a bigger cup and handle. it's kind of a run-away train. i would take some measures maybe trim, but something this strong can take on a mind of its own. >> mike. >> one of the things is we're short the 18.5 strike, which is close to where slv is trading. so, time is working on our side if we want to stay in this trade. we have more than doubled our money. i think dan made the point don't settle the upside call up if you think it's going to break out. actually, it did. because we did a little over a double.

you would have tripled if you listened to dan and not to me. actually, if you listened to dan and not me and just said i'm going to let the cubes roll here and we'll see how it turns out, but i will say this is the trade off you made sometimes between the probability of profit and allowing premium to work in your favor or just letting it ride. >> that's a great point. you went for the high probability trade. that's generally the best trade. especially when you're doing long premium options, and directional strategies. you had him making a convicted call about the potential for a breakout. my only point was buy that call and if you start getting the move toward the strike you were considering selling. then you have the pun intended, optionalty of kind of spreading it and reducing your premium. >> you currently own mile. since you're in, i think you stay with it. >> up next, the final call from the options pits. i'm here at the td ameritrade trader offices.

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 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.

herthey work hard.ade, 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.

welcome back to "options action." let's get to some of our tweets. robert tweets please explain the difference between selling a put and buying a call. why do you do one over the other? so, mike. >> okay, look, very quickly. if you think it's going to move up slowly, sell the put, collect the premium. if you think it's moving up fast, buy the call. because otherwise, time's not working for you. >> you agree with that? >> yes, it's a matter of conviction. just like the trades we talked about. >> time for the final call ahead of the july fourth weekend. carter? >> i like amgen long side. big steady safe name in health care. >> mike. >> enjoy independence day weekend. if you're trying to catch lobsters as i have been, don't try to disguise yourself as one first. it's not working for me. >> meaning wear sunscreen. >> brexit or not, that was never part of my thesis for bearish banks here and i think something's going on with the european banks here. i think you can look to express

that in u.s. banks. >> looks like our time has conspired. expired. i'm melissa lee. thanks so much for watching. pr more, check out the website. have a great fourth of july weekend. enjoy your weekend. "mad money with jim cramer" starts right now. sement for time life's music collection. (soft music) ♪ (narrator) these are songs that can relax and soothe you. (ray conniff) ♪ somewhere my love ♪ there will be songs to sing (narrator) songs that make you feel good. (frankie valli) ♪ you're just too good to be true ♪ ♪ can't take my eyes off of you ♪ ♪ you'd be like heaven to touch ♪ (narrator) songs that take you to wonderful places.