hey there, live at the nasdaq market site on this sunny fall friday. the guys behind me. here's what is coming up on the show. >> let's make a deal! >> the world's biggest oil producers meet next week on whether or not to cut oil production. and the news can send energy stocks tumbling. we'll explain. plus, how would you like to get long facebook for free? >> are you out of your vulcan mind? >> maybe just a little. but it is possible. and we'll tell you how to do it. and -- >> money's got to be the shoes! >> shoes! >> shoes. >> you sure it's not the shoes? >> all right, maybe it is the shoes. but nike shares have been terrible this year. and we'll tell you why some

traders think it's about to get a lot worse next week. the action begins now. ♪ ♪ very superstitious >> let's get right to it. while everyone was focused on apple and twitter, a tech titan took it on the chin. check out shares of facebook. inflated a key metric on video views s. this your best chance getting this name? what do you say? >> well, listen, i thought the stock's reaction today was pretty okay. >> robust. >> i thought it was very muted. right? >> wasn't particularly bad. and i think to use the term maybe inflated, maybe inflating the situation there a little bit too. but to have a metric off like that that's so important to this big shift in advertising for as long as it did, that's a little troubling. it may make you think, okay, what does all this growth built on? obviously the revenue growth is what it is. it's been 60, 70% for the last three years. they're expected to do $27 billion in sales. it took google eight years to

get to $27 billion in sales. they're doing it in the last three years. so there's something going on there. and probably some legs. >> that's exactly the point. so the elephant in the room when it comes to mobile advertising is facebook. pure and simple. and the funny thing is, they're going to sit here and report the metrics. they're basically measuring themselves and will report it back. basically at the end of the day, they could say it is what it is, folks. and that's exactly what they are doing and that's why the stock didn't react. the market is down -- >> monopoly and so they charge what they want. >> yes, essentially. who is going to take their place? there isn't anybody. 1.7 billion people watching on their mobile advertisements. >> so it's not like people we'll go to google. because we're more confident in google's metrics. >> good luck with that. it's not an easy substitute. not one for the other. it's -- you know, maybe you also buy meat and you also buy potatoes. but if -- you're the only one who has got potatoes, you basically are going to dictate -- >> meat and potatoes discussion, carter. >> mobile advertising, anyway. >> they're good together, meat

and potatoes. but -- and i've got some charts. i think the key thing is, if there is wisdom in price and there is, the price action today, based on those headlines, could have been a lot worse. and it wasn't that bad. so -- >> actually, before you go -- >> here's the thing. we just can't -- listen. here's a company people keep quoting its growth and it's been spectacular and the only game in town -- >> is there a question about that growth? >> the company that overtook exxon and market cap in the last couple months here. and the only thing i just want to say, people say they're growing earnings at 50% a year and only trading at 32 times. that's on an adjusted basis. on a gap basis, that $4 in earnings expected this year is $3. and when you talk about inflated metrics, there you go. and at some point, they're going to jam one too many video ads in front of one too many people and growth is going to decelerate. >> only -- on that metric, that's free -- a mesh of free cash flow. 17 times and style growing -- >> back in 2012, apple computer,

very different company. they booked $170 billion in sales. the hardware company, okay? they grew 50% that year. that stock went down 45% over the next -- that can happen. >> hardware. >> settle with the charts here. >> let's go look at them. i think you have to say -- i wouldn't fight this. it's -- you know, they say you could draw a straight line, you'll probably be okay in this business and you can draw some pretty straight lines. how would you characterize that? i would say that's sort of bottom left, top right. it's not exactly doing something crazy like that. it hasn't gone bonkers. so take a look. i didn't make those fit. that's the best part. those lines are parallel. and they are simply connecting the top of the bottom of the range. what we do know is obviously overbought and oversold conditions typically yield a mean reversion. but you're just sort of walking along the line here. today's price action, that's all it did.

a little bit of a dip, a drop. back to something of support. pen is not working tonight, which is okay. doesn't often work. now it does. i think you're going to be fine. i like facebook long. >> all right. so mike, how are you trading? >> you know, i think this one is pretty easy. and the trade is going to sound complicated. i'm looking at the december 135, 145, 115 call spread. what you're going to be doing for about even money, buying the 135, 145 call spread and selling the 115 puts against to finance it. earlier today that was trading for about even. think about this. you're going to start making money the minute that facebook goes above 135. but it has to break below 115 for you to start losing. that's, you know, 13% discount to the current stock price. those are the kinds of risk/reward relationships we like. i make money if it goes up 10%, i lose nothing if it drops 10%. to me between now and the end of the year, that's the way to play it. >> you like the straight? >> if you're going to be long, the idea of a call spread makes a lot of sense. i don't love the idea of selling a december put.

we know the fed is going to meet in mid december, the next catalyst for the broad market in a way and i know that this company has traded independent of the market for a couple of years now. but it is the shiniest thing out there, okay? and it is in a space where you know, it -- the analysts all love it, the investors all love it. think about the news this year. you know, they've had issues with the irs. they've had issues with censorship. a ton of issues. >> and all off -- by the way, when people start panicking about the fed, what do they start running to? they run to the shiny things. they're running to the growth market. >> taking all those hits -- the economic data supports stocks like this. meaning when the business cycle rolls, when data weakens, you don't want to be in beta and money flows know that. you want to be in syncretic growth. >> let me ask about the put then. what was your intention? because dan makes a good point in terms of the fed in december. >> well, i mean, the whole exercise here is, and i think this is an important point. when you are short more options than you are long, as we are here, those are going to tend to decay more rapidly than the one option we're long.

what's interesting, if the stock stays right here, to thanksgiving, this trade is probably going to be up money. those two wing options will have decayed more. this is actually -- you could whip it right. may not lose if it drops within 10% and if it stays right here you could also win. so there is basically three things that can happen. two are good. those are the kinds of odds i like. >> you're defining your risk to a certain point by selling that put, but it's not just being long the straight out premium. have a ball. i think 2017 is going to be a facebook issue. it's going to -- >> i mean -- >> going to be in trouble. >> at some point it's going to be in trouble. every one of these names. think about amazon before it doubled. it had years where it had massive shifts, 30% down shifts. >> let's move on here. shares finish line falling more than 5% today. despite reporting a better than expect earnings report, taking a turn after the cfo said september sales were weak. this could have implications on rival nike which reports earnings neck week. the two have moved in tandem over the last few months.

nike the worst performing dow stock in 2016. so should investors be worried? mike, what do you say? >> well, look. should investors be worried? last week, i admitted i was worried last week. coming into the possibility that there might be a fed increase. and now it doesn't seem like there was any reason to be worried. i don't -- how do you worry about a market that doesn't seem to be willing to sell off in the face of -- >> talking about nike, my man. >> i'm just talking about everything in general. yeah, look. it's hard for me to want to get short things when the market doesn't seem to want to drop. >> let's talk about this -- if i have learned anything from carter braxton, relative performance is important. this stock was atrocious. it's down 11% on the year. down 18% from the all-time highs. tuesday after the close. the implied move is 4.25%. on average over the last ten years, the day after earnings, moved 4.7%. that's a massive move for this stock.

trades at a premium to the market, and many of its peers, not under armour. and to me, i think if you take into context the finish line news, the relative underperformance, we have a chart of nike over the last five years. it's sitting on -- i hate to step on your toes. but it's sitting on -- sitting on near-term support and then if you take the five-year -- look at that one. if they were only to come in line and maybe guide down for the full fiscal year, this stock is going to 50. and i think that's how you can set up and play this in the near term. and i just want to look out to a put spread in october expiration. when the stock was trading 55.5%. buy the october 55 put spread, paying $1.25, your max risk. it breaks even at 53.75 down to 50 bucks. that's three times your potential losses, at that 125, only 2% of the stock price. so to me, i think if you want to take in the fundamental input, the technical input option --

>> i like the trade structure, shaking off their golf business, trading a discount to the group now. and you do have an earnings report that could come out and maybe they're going to -- say they were -- >> down 20% in the last month. under armor cannot get out of its own way. >> there's no growth here. that's really the truth. and two, it didn't react well to the foot locker news. foot locker had a very good and unexpected quarter. and two, adidas somehow, which has been left for dead, coming back, coming back. either way, the lines are good. looks like it's going to break the lines. and the relative strength to the market is terrible. it's hovering, hanging, the presumption is it breaks. >> options aren't that cheap so the put spread is the way to play it. >> wow. two thumbs up for you, dan. got a question out there, send us a tweet at options action and do it before someone buys them. everything options action, one place to go. cnbc.com. while you're there, do check out our super cool newsletter. what are you waiting for? here's what's coming up next. >> no deal!

>> reports that opec won't reach a deal on oil production next week, sent crude plunging 4% today. and the charts show even more pain to come. we'll explain. plus, utility stocks are surging. >> beam me up, scottie. >> but if you missed the rally, fear not. because we've got a way for you to get in. we'll give you the trade when "options action" returns. hey gary, what are you doing? 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.

steve, other than making me move stuff, 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 to "options action." oil plunging on a report there will be no cuts. jackie deangelis with the story. jackie. >> good evening and thanks, melissa. crude oil taking a dive in today's session, down roughly 4% after those reports that you mentioned that the saudis said there will be no deal resulting from next week's informal meeting in algeria. energy funds i spoke to are not that surprised by the news, as this isn't really an official meeting, but crude prices have seen support from the "what if" factor surrounding next week's conversation. more signs in the last few weeks that the cartel is fragmented, but the saudis have the most influence and if they want to freeze or don't want to freeze, it really is likely that opec will go with them. more commentary about prices dipping back into the 30s if there is no action, as well as supply will continue to outstrip demand and rebalance of the street is called for in the back

half of the year will be much slower than anticipated. these meetings can create market volatility. this one is three days long with the decision, if any, expected on wednesday wants that's what's to watch for. melissa, back to you. >> jackie deangelis, thank you. also chart master, there could be more pain ahead for oil? >> the oil and energy stocks. basically people trying to play this for a long time. i think it's a value trap. it's trapped a lot of people. yes, if you caught the low in february, but let's look at the charts. sort of a hot mess all over the place. how would you draw the lines? i would say maybe this is a pretty good way to draw them. a series of lower highs, higher lows. you're working into an apex, a decision point. so i guess, right? this would be opec cuts. and this would probably be opec doesn't cut. but if there is wisdom in price, energy shares typically lead the commodity. and here is the s&p 500 energy sector. and it is already starting to break down out of that formation.

so crude in the formation, you could see it's 50/50. but if there is any wisdom in the price of -- i've gone -- there we go. so the presumption is that this is the message for crude and ultimately energy stocks galore. a few more charts. important. relative performance. one of the biggest and most efficacious factors in all quant models. the sectors that manage to basically ascend its relatively performance to the s&p is poor. that's a tell. okay. another tell. the leading edge. this is the whole sector. but the leading edge of energy is drillers. baker hughes, halliburton, schlumberger. look how they act, poor to the sector overall. that's where the future is, where people make 18-month decisions or two-year decisions. drilling wells. that's another tell. so here is the xle. this is the thing you can trade. i think it's starting to go -- break the line. i'm going to make the bet we're going lower, lower, lower.

i want to sell energy and i want to do xle as the vehicle. >> all right. so chart master says three lowers. >> yeah. >> and the volatility really -- you saw it today. there was that one headline that jackie was talking about. we saw that intraday turn in wti and the intraday turn in energy stocks. it's almost like getting headlines from fed members. >> yeah, well -- the energy stocks really have more actually to headwinds really than just the supply/demand imbalance. take a look at exxon, the biggest constituency stock of xle and attorney generals, and had them going after the value of their reserves and then the s.e.c. jumping in. and the fact they have massive negative cash flow trying to support a dividend which could get cut and if it does, people in the stocks for those dividends are likely to dump them, as well. there's a lot of things that create a lot of headwinds here. and not a lot of things that could potentially support them. the saudis aren't going to suddenly cut off production. they need the money.

>> so you agree with the chart master in terms of the direction. are you how trading if? >> december put spread, spend $2 and buy the 67 puts for $2.70, sell the 59s for 70 cents. similar to the trade dan was talking about and nike trying to take advantage of the fact that out of the money puts and a lot of places, actually, the premiums quite high in a lot of these. we keep looking at the vix. things look complacent. we like to sell those. this is a very good way, i think, to make a bearish bet. >> yeah, and december makes sense, obviously. the dollar has been very range-bound here. we know the probability is 50/50 they're going to hike. >> when carter brings up his charts about crude, it's interesting. when i look at the xle, i look at since may it's really been very range-bound. gone sideways here, gets a lot of really good support in its 200 moving day average, 64 bucks or whatever. and the only thing i might

consider buying the same put mike is doing but not sell out of the other one and maybe look to own it outright, wait for the break and look to sell something after the fact or a calendar or something. because i think the likelihood of the xle being down near your short strike is very low. could we agree on that? >> that's a good point. if there are headwinds and you're looking for an opportunity to spread, if there is little chance of something going sharply higher and a decent chance it could stick here or go lower, your opportunity to sell that put will probably present itself at some point between now and expiration. >> when you take a look at the chart of the dollar, does it look capped to the up side? >> well, the dollar is range-bound too. we're talking about 18 months. most currencies have. i'm biased the long side of the dollar, which would be crude for principle, but could be the dollar is in a range and stays in a range and the crude and energy potential move is idiosyncratic and specific to whether it's a cut no cut or whether the valuation. >> part of the thesis on xle, by the way, doesn't have to do -- you don't require lower oil prices.

we're talking about lower prices for energy stocks and specifically the biggest constituents of this particular group. >> you mentioned exxon dividend cut. never happened before, ever. i mean -- >> that would -- >> that -- >> that would be chaotic. >> yeah. >> people are going to say, okay, this is what happens to us. i mean, i think that there are people who depend on that. this is one of the places people have been able to get some yield and they're pretty shaken up if that drops. still ahead, home depot shares down more than 6% last month and traders betting on more heart ache for the beaten down stock. how bad it could get when "options action" returns. hey gary, what are you doing? 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.

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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. welcome back to "options action." time for a little total recall where we look back on some of our open trades. just last week, dan thought utilities were about to shine bright. take a listen. >> today when the xlu was trading at $49, you could look out to december expiration, buy the 49.54 call spread, paying $1.50 for that, selling one of the december 54 calls at 15 cents. when $1.50 is your max risk.

>> utilities was the best sec to tore on the week. what are you doing with this trade? >> i'm sticking with it. i did not think the fed was going to raise rates. i think it kind of gives the all-clear for those yield hunters there. i think if you get this thing back towards the prior highs at 53, you take it off, it will be more than a double here and the risk/reward is really not great once this spread is worth most of the width. >> i thought there was a chance they would. what was i thinking? no clue. >> now to home depot. two weeks ago colin carter thought it was in trouble. take a listen. >> you can say it's broken here. not a good scenario. either way i want to sell home depot. >> the november 130 put, spend $4.40 for that. shares are down around 5% since then. so carter, what do you see the charts now? >> just -- the break of that trend is just that. a break. and presumptively, goes lower. so stick with it? >> yeah, our effort was actually for a move sharp -- more sharply lower than the one we have seen. so we definitely want to stick

with it and have time to expiration. >> up next, your tweets and the final call for the options bids. hey gary, what are you doing? 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.

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. coming up on "mad money" tonight, get your notebooks out. cramer sharing his game plan for the big week ahead. plus more on the twitter takeover talk and the stock's huge run today. so stay tuned. "mad money" top of the hour. all right. time to take some of your tweets and let's start with this one. do the traders like the fall or the spring? carter, i go with you. >> i think -- let's see. i'm going to go -- i like them both. if you're talking seasons, not options, you've got to say those are the two best. >> okay. >> agreed. wholeheartedly. this is going right into the christmas season, which i absolutely love and spring leads to summer, which i also love. so -- obviously a lot to look forward to. it's like friday. >> you guys -- >> so -- it's like do you like

one better? i like fall! done! >> i'm a spring forward, not a fall back. >> i like fall. next up, this is a serious one. this one is from chris. how do you all like to play weekly options? mike. >> weekly options are very good for two things. short dated options decay rapidly. generally speaking, if there is no catalyst, a good opportunity to collect premium. if there is a catalyst and you don't want to lay out premium and make a defined risk bet that's the way you can do it. >> i like to use them by selling against longer dated ones. the same reasons michael just mentioned. decay quickly. >> time for the final call. last. carter? >> short energy. via xle. >> mike? >> december put spreads and xle the way to get short. >> dan. >> that was boring. the nike earnings -- defined risk, bearish plays. october puts. >> i like fall because it's usually the start of the school year and i always enjoy school. looks like our time is expired. i'm melissa lee. thanks for watching.

for more "options action" go to our website. optionsaction@cnbc.com. don't go anywhere. "mad money" with jim cramer starts right now. >> announcer: the following is a paid presentation for starshower motion brought to you by bulbhead. hanging old-fashioned lights can take hours and cost you big bucks. even untangling that box is a frustrating chore. not anymore. last year, millions of americans transformed their homes with the newest rage in decorative lighting -- starshower laser lights. so popular, it sold out everywhere across the country, and this year, we're back with an amazing new feature you have to see to believe. now here's joe fowler to tell us more. >> we're coming up on one of america's most famous residences, and this is the perfect setting to introduce you to this spectacular new lighting