live at the nasdaq market site. the band is back together for the first time in a long time, so while they're getting ready, here's what's coming up. >> up in if sky. it's a bird, the it's plane. zpl nope, just a potential new iphone and we'll tell you what that could mean for shares of apple. plus, it's back to school. >> hey, boys, here's a couple of pens in case you learn how to write. >> that could mean a time to buy one dow component in particular. we'll ek plain and -- zpl ♪ >> i'm afraid, all right? want to hear me say it? >> and for good reason, rocky, because the vix is doing

something it's never done before and could be signalling a major sell sign. the action begins now. let's get right to it. this is the fed free zone because next week, only one stock will matter and that would be apple. the tech giant is expected to unveil the new iphone 7 and possibly a new apple watch, so how should you play it going into the event? dan, we turn to you first. >> listen, this is the most leaked product that apple hees had ha n a long time here. i think we know what the phone looks like, know what jacks aren't going to be there. we know what the g brks are going to be like, the camera. the one thing is the watch could be exciting if they were to do something new and innovative. they were initially released this in april of 2015 and the only thing they really updated is the software in bands so, there's not a lot of excitement and enthusiasm. it's about a 2% move between now and next friday's close. that's not saying that wow, you know, there's something here. that could surprise, so, i actually think they'll sell next

week's move. you're inclined to do that, you'd sell calls t first thing to start the week off. i think it's going to be wale made. >> i can't imagine it's going to be that big. do you have an apple watch? >> no. >> you did buy one though i think briefly. >> what did you do with it? >> what could they do to the watch that could get you u to buy one? >> probably nothing. >> drop the price by $300? >> it's not even the money. you have a battery that basically has to be charged all the time. not something people like to do with their watch. it's not helpful. >> they just introduced a new one. if you had a much lower price point, that could be new and exciting. in front of the holiday season, they could sell tens of millions of those. >> my point is that the revenues you're seeing from phones are now like a utility. people are going to change their phones. i don't think the watch is going to go anything innovative, so aagree. i don't think this is going to

be a huge event. >> sometimes, a stock doesn't have to be a buy or sell. sometimes, it's fairly priced. that might be the case here. there's not a lot of upside and frankly, not a lot of downside. why can't it be something you leave it alone, look elsewhere. >> i just heard something, way to sell it. i think the it's really exciting as trading opportunity here because of this event because we know so much. remember, this is a company that usually guards all their secrets, so they're not going to be as surprised. it setups well, so i'm going to lay out a trade. a put calendar. we're not going to get excitement, so you need to sell the move next week, but want to use the sale os options to finance the purchase of longer dated and i want to look to november. you could think of it as a protection trade if you're long financing, puts in november expirations, that's going to catch their fiscal q4 earnings. when the stock was traded about 107.50, you could sell one of the september 105 puts about 75 cents and use the proceeds to help finance the purchase of

november 105 puts. that spread cost you $2.75. that's your matched risk. what you'd like to do is have the stock consolidate. move more towards 105. that's where these converging moving arches, just above that, then you have financed this november put. going to catch that earnings. there's a lot of thipgs e between now and september expiration. they're going to announce how much phones they sold. give us color, we're going to get the earnings guidance. that's what is most important. so, to me, if you're looking for protection or want to make a bearish bet, i think 100 has a target on it. if those, if the guidance is disappointing and i think it could set up well for a move back there. >> this is a limited risk way sernlly to sell the rumor, or sell the fookt it might move on this and i think that makes a lot of sense. earlier this week, you were talking about other ways to do trades. one if you owned stock, you could sell strangles, but this is actually a lower risk way to

make a play, so i think it makes sense. >> what do the charts look like? >> that's the definition of dormant. there are inflection points that are identifiable. i've always, cannot get the trex. the idea is to find something that has the prospect of a move and then call the direction, but at least first, you've got to find something that has the ability to move. this is just nowhere, i think you probably are setting up the trade accordingly. not expecting a huge move. >> say the stock moves a dollar next week. those september puts you're short are going to erode and then obviously, the novembers are going to decay a bit, but not as much as those septembers. you can do a calendar again. turn into a vertical spread by selling a lower sprik put in november. that's how you should be trading options around events. not just being net long. not naked. using tupts like ooebt ooents like nest beak. >> every apple event that goes by is less an less of a catalyst in your view. >> tim cook has done a will the of amazing thing. i don't think he's done a great job of convincing the public they need to have their next

product. ipg i think the watch sell about 15 million since april 2015 tells you that. >> the last several announcements has anything come out that blue everybody's doors off. the lines get shorter. it's a product cycle refresh. everybody carries an iphone, so you're not going to have a lot of people migrate tog it. is it enough of a change that i'm going to get rid of my old phone or hand it off to my kids. >> the risk is to the upside because expectations across the board with are r so low. >> i suppose. just think it's one of those things. not going get a lot. >> crude oil having its workweek since july falling nearly 7%. got the chart master taking aim. what are you looking senate. >> want to look at the oil services. big drillers. they're a great leading indicator for what's going on. we know that crude has been a

wild ride. it hit a low of 29 in january, back to 52 in june. plunged to 39 and yet all the while, the oil service stocks haven't brougought in to the fa crude is okay. from the top down to start with. this is the s&p 500. energy sector, top panel. the actual sector. got all of them. and then it's the performance relative to the s&p. so, this is a classic case where one could say, i bought this and did well and even though it gave back, i'm still up. it's a disaster. it's almost the job losing pick. this is the performance. if you wanted chosen energy versus the market, you've underperformed the entire bowl. this is since the lows in '08, '09. with that, i want to put the numbers in per speck ties. if you were to get involved from gen 1 until present, this is the definition of no alpha. compared to this. okay. so, we know that we have this massive underperformance, even though it's up.

and you see if i can then pull you over to the here and now as it relates to the drirl. so, we've got a five-year chart. this is the market. got energy underperforming and then green, a subset of the origin line. this is drillers. so even as the energy sector has drifted higher, drillers have been relatively poor to the s sector, which is relatively to the market. that's a problem. here's another way to look at it. this is the actually osx index. there's an etf we're going to look at and here, too, notice how it's bounced and yet all the while, underperforming, so this is per forms relative to its sector. it's exactly the osx. an etf that matches this index. they are 100% so, the trade, here's what i see. you could draw your lines. some think this is head and shoulders bottom. but if it were, it should have

done that an not this. what i'm thinking is this, that youf worked yourself into a point where we're going to break down and this tells you a lot about what's not the upside for crude. >> all right. so, does your find mental take match up with what carter is say something. >> on the energy space, it's good and bad news. start with the good. the good news, there seems to be a lot of interest in the basin. see people going in and buying land in west texas. we've seen a mild uptick in energy. hiring. got that in the latest jobs report. that's a positive. here's the bad news. we have a massive amount in storage. we have the possibility of a strengthening dollar. we have wti price, which is where the domestic stuff is going to be priced and finally, all of these businesses are so he havely levered to this crux point, the lifting cost of oil, that when wu you get down below 50 bucks, you have a real problem. these companies rrpt making any money as those prices that

balance is something we want to fade and i think you can do that easily. spend 95 cents to put the trade on. not here really. that's because the options markets recognize the risk and they recognize that a lot of these stocks have a little air under them. >> carter likes to say draw the lines any way you like. i love that line because it's really important. when i look at the short-term chart, the year to date, i see a nice consolidation. when i back out -- >> it's not working. >> but so what that says to me though if you're going to make a 28, 25 bet between now and october expiration, you better have conviction. that's kind of my point. i would look to buy the oih as 26. xle at 64. >> what would be interesting if you were overlay the price of

related companies versus crude and saw how much crude fell off and you say crude was $145 and now, it's $45. these sector stock should have couple off two-thirds. doesn't work that way, folk, because if they were making $20 billion when oil was 140 bucks and you multiply that, you've got $3 trillion worth of business. if they're make iing no money n now, no multiple makes it work. integrated name, same problem. >> in terms of your assessment of the trade. >> i like the trade. >> if you're convicted. but you're not. >> i think on a short-term basis, it seems like crude is banging around between the low 40s and high 40s. i don't know what the catalyst is going to break that out. but your point, if the dollar were to rally frk the fed were to suprise the market and rally and raise in september, then these raise is definitely on the table an the dollar's going to shoot up. what's going to happen to oil?

go down, then your trade makes sense. how does it fit into your holistic view of the macro? >> obviously trk the dollar, a big move in the dollar will impact not only this commodity, but all commodities. i guess the issue is there a structural change that would suggest that is right to be aggressive with energy stocks in general relative to other stocks or other asset. and i don't see that. >> all right. got a question, send a tweet. only one place to go. while you're there, check out our newsletter. 100,000 of you have tried it out. what a number. what are you waying for? here's what's up next. >> be afraid. be very afraid. >> that's bauz thebecause is vis doing ng sms never done before. we'll explain. plus. and retailers might have just done that. we'll tell you why it could get

worse 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms

where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. welcome back. if you're flabbergasted by how low stock market volatility is, you're not alone. the cbo volatility index took another dip lower that put fed interest rate hikes on hold for a little bit longer and the measures frit much languished, so if you're wondering how common an occurrence a reading below 14 is, it's not that rare at least relatively speaking. according to data partner, since 2010, there have been 414 times

when the vix has traded lower than that 14 mark. many of the days are bunched together, so when you separate oit the issues, you get bumplgs of time since 2010. but it isn't the reading that's intriguing, it's how it looks in the ecosystem. if you look at the times when it's traded below 14 and euro has traded below 1.14 and we have an effective rate of 37 bases points or lower and a ten-year treasury below 3% and crude above 50 and gold below -- like these things together, this is only happened three time frames in history. it's fair to say we're in unchartered waters for how markets will react. so, melissa, traders, still waiting to see how this range bound markets going to revolve itself if you take a look at the action right now, it's hard to

say there's any kind of history to peg any kind of future move on. back to you. >> all right, thank you. burning the midnight oil if for us. have have a great weekend. with the vix this low, should you be playing offense or defense? mike? >> actually, i think when options prices are very low, to do both and that's what we're going to do here. one of the reasons the vix has gotten this low is because the market just hasn't been moving around. for august, we reached realized volatility levels that have only be seen three weeks since 1970 and it seems unlikely that could be maintained for a long time. you want to stay bullish. but you're getting nervous. so, we're going to look at buying a call option. it's a bullish bet. so this is how we can do that. secondly, you're concerned about downside risk, who wouldn't be. we've got a bunch of things going on. we're at all time highs, got a presidential election coming up and we're worried about what the

fed is doing september 21st. and finally, we just talked about it. option prices are low. so, you could take a look right here. see this is -- just pointed out, the s&p really hasn't been a complacent as we've seen last month. right now, you could go out to january and buy the january 220 call, spend $5.25 buy that option. mikt seem expensive, but that's just a little over 2% of the current level of the s&p, so, basically, if the s&p is up three plus 4%, by next january, this is going to be profitable. of course, you're going to lose the $5.25 if the s&p pulling back, but wouldn't have to pull back much more. >> and it's not just making a bullish bet. it's with stocks, maybe some

stocks want to lock in some gains. >> nobody mos what wr the market is going. i didn't think it would be trading where it is looking poised to break out again. if you're one of these fear of missing out people, it makes a lot of sense. you've defined your risk and have some room to the upside. >> let's be frank. we are in a bit of a goldilocks scenario for the next few weeks. say mrs. clinton starts to pull away from trump. stocks are likely to break out and mike's trade like lie works and gives you the opportunity to sell a higher strike call, turn it into a call spread. >> the alternative to being long equities right here is to go into fixed income and regardless of what the fed does, is long end of the curve isn't move iin around much. if you use a fed model, you're

kind of caught. are you going to stick it under the mattress? >> you can decide what maybe some of this giveback in you tillties is buyable or frankly, sometimes, you just don't have to be involved. like apple. the market is frozen. just as you implied. no one knows which way it's it's going to get resolved. it's a seasonally bad period. election rs a wild card and it is quite possible that the fed stays pat. because of all -- zpl jou yus hit on a dpraet point because september and october are some of the more volatile ones. here, we came off a low volatility period. we're going into the higher volatility period. >> s&p's up almost 4%. we have a month left here, a little less. what if fund managers just decide to heart attack this up and you get the breakout. that's something i could see at the end of september. >> 4%, yet over the last 16 month, it's up two. we're still going nowhere. >> question here. what do rodney dangerfield and

mike have in common? they both had big hits on back to school plays. but mike's got more respect. we'll tell you about what after this break. i'm here at thtd 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.

oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders?

i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. zblmpblt we take a look back at on a winning trade. at the beginning of august, dan made a bullish bet on nike. >> today, could have sold it 52.5 september put about 40 cents and used the proceeds to buy the september 57.5 call for 55 cents. your net debit is 15 cents. between 52.5 and 57.5. all you're going to lose is the 15 cents. >> still bullish? >> here's the thing. that stocks moves above 60 for a short period of time. at that point, you want to be quick and take the risk off.

the risk of the trade is that short put and then possibly sell a higher strike call. that's how i like to trade risk reversals. don't want to leave that out there for too long. next up, kohn carter made bearish retails. >> i think your going to fail, you're stuck in all this, then it's going to break this trend. and head lower. whether you look at it in short-term or long-term, not good relative action. >> december puts -- >> nice trade. so, now what? carter? >> well, i would think it trends lower. doesn't act well. the presumption is lower. >> you can stick with this. look to spread it and by the way, i don't think shipping rates are going to go down from

here. that was a nice low shipping rates, good for retail, rising rates, not as good. up next, final call from the options pit. stay with us. 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 at 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. mshe said i should think of my rteeth like an apple. it could be great on the outside not so great on the inside. her advice? use a toothpaste and mouthwash that strengthens both. go pro with crest pro-health advanced. it's uniquely formulated with activestrength technology to strengthen teeth inside and is better at strengthening the outside than colgate total.

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mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade. welcome back. time for your tweets. steve is asking us longer lines at chipotle, how about sell iina put, happy labor day. oa for life. smiley face, smiley face, smiley face. >> here's my take. i think the worst is over for these guys. they still have a long way to go though. before they dig their way out. they've got earnings coming up object 18th. if you're a lit bit more concerned because valuation, you could look at selling a put spread, but if you have a bigger risk appetite and bigger appetite for burritos, maybe the putt's all right. >> put just about the right of smiley faces. one fewer, we might not have taken that tweet. >> sell short. >> no ia.

>> dan. xrt. i like the direction. >> looks like our time has expired. thank you so much for watching. check us out next week on friday for more options action. have a great labor day weepd. "mad money" starts now. my mission is simple, so make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now! hey, i'm cramer! welcome to cramerica. other people want to make friends, i just want to make you some money. call me at 1-800-743-cnbc or tweet me @jimcramer. close watchers of "mad money" know i'm not a chartist, but i do play one on tv weekly, showing you patterns that can predict the next big move