hey, there, we're live at the nasdaq markets. the band is back for the first time in a long time. so while they're getting ready, here's what's coming up. >> in the sky, it's a bird, it's a plane. >> no, it's a potential new iphone, and we'll tell you what it could mean for apple. plus, it's back to school. and that could mean a time to buy one dow component in particular. we'll explain. and -- >> i'm afraid, all right? you want to hear me say it? >> and for good reason, rocky, because the vix is doing something it's never done

before, and it could be signaling a major sell sign, the action begins right now. let's get right to it. this is the fed-free zone. next week only one stock will matter, and that as apple. they are set to unveil a new iphone and possibly a new apple watch? >> this is the most leaked product in a long time. we know what the phone looks like, we know what the gbs are going to look like, the camera. the watch could be something new and innovative. they released it in april of 2015 and the only thing they updated was the software in the bands. there's not a lot of enthusiasm. the option is about a 2% move. that's not technicalparticularl

wow, there's something new. >> you think there's going to be a move? >> i actually think it's going to be. >> i can't imagine it's going to be that big. do you have an apple watch? >> no. >> you did buy one briefly. >> what could you do with it? >> what could they do to the apple watch that could get you to buy one? probably nothing. >> drop the price by $300. >> you have a battery that basically has to be charged all the time. that's not something people like to do with their watch. it's not fully waterproof. like a fit bit. >> they introduced a new one, if you had a much lower price point, focussed on health, that could be something new and exciting. in front of the holiday season, they could sell tens of millions of those things. >> the revenues you are seeing from phones are now a utility. people are going to periodically change their phones. i don't think the watch is going to do anything particularly innovative. so i agree with you. i don't think this is a huge

event. >> and sometimes a stock don't have to be a buy or sell. that might be the case with apple. there's not a lot of upside and not a lot of downside. why can't you leave it aloin. >> i think it's exciting as a trading opportunity because of this event, because we know so much. this is a company that usually guards all their secrets. i'm going to lay out a trade, it's a put calendar. my view is that we're not going to get excitement, so you want to sell the move next week but use the sell of options to purchase longer data. and i want to look at november. you can look at it as a put for the q4 earnings. when the stock was 107.50, you could sell one of the september 105 puts at about 75 centiscent use the proceeds to help purchase one of the november 105

puts for $3.50. that is your max risk. what you'd like to do is have the stock continue to consolidate, move towards 105, that's where these moving averages, it's just above that. i think you'd probably i have the stock work that way, and then you'd finance this november put. there's a lot of things between now and the september expiration, they'll announce how many phones they sold in that first weekend, give us color on, we're going to get the earnings guidance. so me, if you're looking for protection, i think 100 has a target on it. if the guidance is disappointing, and i think it could sell up well for a move back there. >> falling back to hit the gap. >> yes. >> their is is a way to sell th rumor or the fact that it might move on this. i think that makes a lot of sense. earlier this week you were talking about similar ways to do trades. this is actually a lower risk way to make the play. so i think it makes a lot of sense. >> what do the charting look

like? >> that's the definition of dormant. there are reflection points that are identifiable. it's to get something with the prospects of a move and call the direction. but at least first you have to find something that has the ability to move. you probably are setting up the trade. you're not expecting a huge move. >> let's say the stock looped a dollar next week. and obviously, the novembers are going to decay a bit, but not as much as the septembers. then you set up, you could do a calendar, could you turn into a vertical spread. that's how you should be trading objections around the bends, not just being long net premium, but not naked, using opportunities like events next week to sell short-dated premiums. >> every apple event that goes by is less and less a catalyst to you? >> tim cook has done a lot of good things, i don't think he's done a good job of convincing the public that they need their

next watch. >> the last several announcements, has anything come out that blew everybody's doors off and everybody had to rush out and go buy it. the lines get shorter. everybody already carries an iphone. you're not going to have a whole bunch of people migrating to it that don't already have them. is it enough of a change that i'm going to get rid of my old phone? >> expectations across the board are so low. >> i suppose. i just think it's one of those things, you're not going to get a lot. >> all right, let's move on here. crude oil having its worst week since july 17th. what are you looking at? sbr >> i want to look at the oil services, the big drilleris. we know crude has been a wild ride. it hit a low in 29 in january, back to 52 in june, plunged to 39, and yet all the while, the

oil service stocks haven't really bought into the fact that maybe crude is okay. let's look at from the top down to start with. this is the s&p 500 energy sec for, top panel, the actual sector. it's got all of them, exxon, hal burten, apache. and then it's the performance relative to the s&p. i could say i bought this and did well, even though it gave back, i'm still up. it's a job-losing pick. if one had chosen energy versus the market, you've underperformed the entire bull. right, this is since the lows in '08, '09. with that, i want to put the numbering in perspective. so if were you to get involve from gen one, 2009, this is alpha. we have this massive underperformance, even though it's up, and you see if i can

pull you over to the here and now as it relates to the drillers. so we've got a five-year chart, this is the market, and your honor' g -- you've got orange, s is the drillers. so even as the energy sector has drifted higher, drillers have been relatively poor to the sector, which is relatively poor to the market, that's a problem. so here's another way to look at it. this is the actual osx index. we'll talk about the oyh. here too, notice how it's bounced, and all the while, underperforming. this is performance relative to its sector. to be clear, the oyh is exactly the osx, right? it's an etf that matches this index, they are 100% correlated. so the trade, here's what i see. you could draw your lines. some people think this is head and shoulders bottom, but if it were, it should have done that and not this. what i'm thinking is this.

that you've worked yourself into a point where we're going to break down. and this tells you a lot about what i think's not the upside for crude. >> all right, so does your fundamental take match up with what carter's saying? >> in the energy space, it's good news, and it's bad news. let's start with the good. the good news is there seems to be a whole lot of interest in the perm yan basin. we see people going in and buying land in west texas. we've seen a mild uptick in energy hiring. we got that from the latest jobs report. but we still have a massive amount in storage, the strengthening dollar, wti prices, and finally, all of these businesses are so heavily levered to the crux point, which is the lifting cost of oil that when you get down below $50 you have a real problem. these companies aren't making any money at those prices. so from my perspective, that

bounce is something we want to fade. oih has bounced a little. you can look at the october 28 put spread spend 95 cents to put that trade on. we've seen very low volatility, but not here. the options markets recognize the risk and recognize that a lot of these stocks have a little bit of air under them. >> do you this i they're overrecognized? carter likes to say draw the lines any way you like. when you look at the short term chart, i sigh a pretty nice consolidation between 26 and 28. >> that's what that head and shoulders might be. >> if you're going to make a bet, you better have conviction. and that's kind of my point. i would look to buy the oih at 26, the xle at 64. >> what's interesting if you overlay the price of oil-related companies, the drillers and the oil service index versus crude

and you saw how much crude fell off and you say crude was $145, thousand it's $45. so these sector stocks should have come off two-thirds. it doesn't work that way, folks. because if they were making as an industry $200 billion, and you multiply that times15, you've got $3 trillion. they're very heavily levered to the price of oil, and they should fall further. integrated names, exact same problem. >> in terms of your assessment of the trade. >> i like the trade. >> if you're convicted. and you're not. >> i don't know what the conviction is. right now it seems that crude oil is pretty well banging around between the low 40s and the high 40es. i don't know what the catalyst is going to break that out. if the dollar were to rally, ft. fed were to surprise the market and rally, a raise in september, then the dollar's going to shoot up, and what's going to happen to oil?

it's going to go down, and your trade will make sense. how does it fit into the holistic flow of the macro? >> a big move in the dollar will impact not only this commodity but all commodities. is there a structural change that would suggest that it's right to be aggressive with energy stocks in general, relative to other stocks or relative to any other asset, whether it's real estate or gold, and i don't see that. >> got a question? send us a tweet, only one place to go "options action." what are you waiting for? be afraid, be very afraid. >> that's because the vix is doing something it's never done before, it might be ringing the top for stocks. plus -- and retailers might have just done that. we will 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, wh "options action" is sponsored by sink or swim by td ameritrade. 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 to optioning action. i'm dominick chu. if you're flabbergasted, you're not alone. the vix took a leg lower. it may put interest rates on hold a little longer, and the

language, if you're wondering how low below 14 it is, it's not relatively speaking. since 2010, there have been 414 times when the vix has traded lower than the 14 mark. many are bunched together in a series. so when you break out the ranges, you still get a bunch of times. if you look at the times when the vix has traded below 14 and the euro has traded below $1.14 like now, and we've had an effective fed rate of 37 basis points or lower, had crude oil low of 50 and the unemployment rate below 5%, this has only happened three distinct time frames in history, all within the past year. so it's fair to say we're in uncharted waters for how markets

will react in the unprecedented factors. so, melissa, we're still waiting to see how it will resolve itself. there's hardly any history to beg it on. >> chu's burning the mid night oil for us. have a great weekend. >> you too. >> should you be playing offense or defense? >> i think when options prices are very low, you actually have an opportunity to do both. and that's actually what we're going to do here. one of the reasons the vix has gotten this low is the market hasn't been moving around. for the month of august we reached rell-life volatility levels that have only been seen since 1970. so here we are, the markets right around all-time highs, and you want to stay bullish, but you're getting a little nervous. so we're going to take a look at a call option, a call option is

a bullish bet. secondly, you're concerned about down-side risk. who wouldn't be? we've got a lot of things going on, all-time highs, a presidential election coming up and worried about what the fed will be doing september 20th and 21st. and finally, we just talked about it. option prices are low. so you can take a look right here and see this is just going back five years, but as i just pointed out, the s&p really hasn't been as complacent as we've seen over the course of the last month in closer to 35 years or 40 years. so in is really quite unusual. right now you could go out to january, and you could buy the january 220 call and spend $5.25 to buy that option. now that might seem expensive, but consider this. that's just a little over 2% of the current level of the s&p. so, basically, if the s&p is up 3-plus, 4%, something in that neighborhood, by next january, this is a trade that la be

profitable. of course you're going to lose the $5.25 in premium if the s&p pulls back, but it won't have to move back much more than this. >> some stocks you want to lock in some gains and you want to do stock replacement. >> nobody knows where the market is going. i was very skeptical. i did not think the market would be trading where it is in the range it is, looking poised to break out again. it might make a lot of sense. it gives you a placeholder, you define your risk. let's be frank. we're in a bit of a goldilocks scenario. let's say ms. clinton starts to pull away from trump a little bit. the fed doesn't raise interest rates. it maybe gives you an opportunity to have a high higher-strike call. >> alternative to being long

equities is to go into fixed income, and regardless of what the fed does. the long end of the curve doesn't move around much. so if you use a fed model to price equities, you're caught. are you going to stick it under the mattress? nobody wants to do that either. >> there are alternatives within equities. maybe some of this give back in utilities is do-able. the market is frozen. no one knows which way it's going to get resolved. it's a seasonally bad period. the elections are a wildcard and it is quite possible that the fed stays pat. >> september and october are historically some of the more volatile ones. here we came off a low volatility period. we're going into what is a higher volatility period. >> quarter to date, the s&p's up 4%. we have a month left, what if fund managers decide to mark

this thing up and you get that breakout? that's something i could see to the end of september. >> over 16 months it's up two. we're still going nowhere. >> question here. what do rodney dangerfield and mike, myike coe have in common. mike's got a little more respect. we'll tell you about that after this break. i'm here at the td ameritr tr "options action" is sponsored by think or swim, by td ameritrade. 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 to "options action." time for an upside call. back at the beginning of august, dan made a bullish bet on nike. take a listen. >> so here's the trade when the stock was about 55, 65. today you could have sold a 52.5 september put and used the proceeds to buy the september 57.5 call for 55 cents. your net debit is 50 cents. between 50.5 and 57.5, all you're going to lose is that 15 cents. >> still bullish? >> it moved above 60for a brief

period of time. the risk is the short put and possibly sell a higher-strike call. that's how i like to trade risk reversals. you don't want to leave that short put out there too long. >> last week, carter made a bearish call on retail. >> you're stuck in all this. and you're going to basically break this trend and head lower. so whether you look at it short term or long term, not good action, not good relative action. december 45 puts. about $1.90 when i was taking a look at those. >> nice trade, so now what, carter? >> i would think it trends lower. it doesn't ability wect well. that's an unscientific term, but the presumption is lower. >> you can stick with this, look to spread it. and i don't think shipping rates are going to go down from here.

that obviously was nice low shipping rates, good for retail, rising shipping rates, not as good. trader off ices. sponsored by think or swim by td ameritrade. 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 to "options action," time for your tweets. steve is asking, longer lines at chipotle, how about selling on labor day? >> they still have a long way to go before they dig their way out. they have earnings coming out october 18th. you could look at selling a put spread, but if you have a bigger risk appetite and a bigger appetite for burritos, maybe the put's already. >> one fewer, we might not have taken that tweet. final call. >> oih, sell short.

>> use a put spread, no oih. >> it looks like our time has expired. i'm melissa lee, thank you so much for watching, have a great labor day weekend. don't go anywhere, "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for luminess air. take a look at this blemish. now you see it. now you don't. >> it is amazing. >> announcer: do you see this age spot? don't blink. it's gone like magic. >> luminess is stupendous. >> announcer: watch this redness disappear at the touch of a button. >> people have said to me, "you look amazing. what have you done?" >> people ask me if i've had a face-lift. >> people asked if i got botox. >> announcer: these women all switched to a new foundation. >> people come up to me and say, "your skin is beautiful." >> announcer: it's not a