hey, there, we're live at the nasdaq market site where thousands of people will be here to ring in the new year, but first, here's what's coming up on the show. ♪ >> 2016 may be coming to a close, but a come back is just beginning for one beaten group of stocks. we'll tell you how to play it. >> it's been a great holiday. >> not so fast, tim. apple stocks tanked today. we have a special report. and i love gold.

>> gold just did something it hasn't done since 2012. and the chart master says it could point to major gains in the year ahead. the action begins now. let's get right to it, because 2016 is officially in the books. and the worst performing sector goes to health care. the only sector to close in the red. let's get in the money right now. mike, what do you say? >> yes, i think we absolutely should. this is a sector that ran head long into a political storm, and i think given everything that's happened this year, had we got and clinton administration, troubles would be just beginning. trump's going his plate full. there are names that are going to remain under scrutiny like the mylans of the world.

but secelgene. >> he said in a time interview, we are going to bring drug prices down. >> that's the problem. you still don't know what the margins are going to be. maybe it's not going to be as bad as it was under a clinton administration, but you still have this hanging over the head of the health care name. it's just a no-touch until you get some clarity. >> the reason i pushed back on that is because this whole issue, what drug prices does he actually have direct control over? if you're thinking about something like the epi-pen, there was a lot of controversy about how that got billed and where the pricing went. but there are other drugs, drugs for unusual disease, oncology, those are not areas for those with the r&d. it's really the abuses in places where you have things developed,

off patent. or a device. >> you have to go with the specific names. you can't just buy the sector, because the sector is subject to a tweet. >> i want to go to the chart master. you think there are gains ahead. >> i do. it's devices versus managed care versus drugs versus biotech. but as a sector, the only one down on the year, the spread is quite wide with some of the winners. i want to show you a few charts and make the case for being c contrare. these numbers are now official, in the bag. energy, financials, telecom top three. three industrials, utilities, all positive. then bringing up the rear, down on the year. a very disparate group. managed care's been decent, devices, drugs have been under a lot of pressure, biotech the most. but i want to show you a few

good optics. i don't make these fit or try to jigger them. these are the actual official s&p 5 hundreds gets sector charts for all financial stocks, it's about 30%. and that's about as wide as you're going to see. in fact, it's only happened two other times since 1990 at the inception of data. i want to have the s&p. just financials and health care, put in the s&p. one way to look at relative is to freeze the aggregate. i'm going to hold the s&p. that's going to expose the relevant performance. i'm holding s&p as a constant. and this spread has only happened two other times since 1990, and you know it's quite right to bet for convergence. so i think you want to be

contrary and by xlv. mike has a trade in particular. >> i've referenced this of about. i'm looking at sell gene. it is a very special drug, and it's unique, and it makes it very different than some of the health care stories where they were under political pressure. on top of that, this thing is exceptionally cheap. this is for a company that has double-digit revenue growth. 50% eps growth, and they're looking at growth out to 2020. you don't find too many stocks where you have that valuation of safety. but there is a lot of growth to be had. on top of that, it happens to set up fairly favorably. you can buy the february cost spread and spend about $2.25 for that. that captures basically the next $10, it was trading at around

116.50 when i captured this. you have an opportunity to sell puts down at the level where i think it's going to find a floor. if it does roll over, this is one of those situations where you're only risking about 2% of the stock price. >> if you look at celgene, that seems to be support there. if i were trading options, i would say that's where i want to buy it, so with this structure, you're opening yourself to that opportunity. >> it's been an outperformer relative to the group. but it had that huge heavy line spike and now this quiet, gentle pullback. >> is there another danger in that celgene is one of the largest components of the ibb, that's a vehicle that shorts use to express. if there's a sniff of drug pricing concern in the air. >> it's a fair point that obviously, if you're going to

see either the whole market be sold off or a sector be sold off that the largest components of are going to get hurt as a result, still, that doesn't stop the fact that you always want to be in the best name in the space if you can be. we're trying to be selective. >> you have a defensive area in the market. >> all right. switching now to tech shares. apple falling 1% and reports that the tech giant could slash of production next year. josh has the details. >> so reporters trying to ruin tim cook's new year's weekend. the nikkei is now saying that apple will cut production of iphones by some 10%. it says the 7 sold more sluggishly than expected. based on data from unnamed suppliers. apple stock did end the year

firmly in the groeen, up some 10%. it did slip in today's trade, as did analog devices and qualcomm. people are paying attention to the health of that iphone franchise which is 60% of the company's revenue. they think they will sell 55 million versus 51 million a year ago. cnbc caught up with cook this week. he gave us his take on the holidays as well as the new product the company is now selling. >> it's been a great holiday. air pods are a one away success, and we're making them just as fast as we can. >> how many air pods are actually being produced? remember, apple will only say limited quantities. barclays had estimated initial production of some 15 million units. >> happy new years to you. >> let's talk apple a little bit. are you concerned, mike, they

had this data out, using data from asian suppliers. so they're relying on the supply chain for a snapshot of production. >> basically the best bull case i could come up with as far as the phone sales with them is what is going on with samsung, basically the note 7 not being there, that was really the thing. at the end of the day we're talking about a one-trick pony hardware company. and at some point, a threat is going to emerge on the horizon. it turns out, it's not going to be samsung. could it be the pixel? it very well could be. but that is not the reason to sell it necessarily. the stock is still cheap. >> guess who showed up to the party here? i hear mr. dan nathan is joining us. you came off the slopes? >> hi, people, happy new year. let me weigh in quickly on this apple situation. notice what i have in my left ear here, these air pods. here's the thing.

the next identifiable catalyst for apple is going to be their fiscal q-1 earnings. in the first year in declines in ten years. the stock is discounting some potential good news as we look into early 2017. that's a difficult setup. back to the air pods, this is apple's second foray into wearables. this is a winner. if this is what people are investing in for innovation, they are on to something. it's not going to be in that christmas quarter or move the needle at any point in the first half. so you have to think about what's going to happen on that january call. the trade very simply to me is you want to replace stock. you walk in january 3rd, you have this 10% gain on the year, if you're long stock and you're worried about the guidance, and i think the guidance is going to be poor, then you may want to

replace stock with a call. when the stock was trading at 116 today you could buy it. >> we're obviously having difficulties with dan's of connecti connection. >> he was talking about the february call. this is just a little over, you know, it's 2% of the stock price, give or take. i think this trade makes a lot of sense. this is something that has moved 10%. could it fall back that same 10%? very easily, it could. you're not risking a whole lot. you've maintained that upside, and you've given yourself to have that upside exposure and you can play another day. if it falls back to a level of support, that's where you could write some puts. look for puts that are going to cost you $2. but right after new year is a good time to do it for tax reasons. >> it said that key level, we know this stock declined some 35% from its peak last year to its low this year. and ever since, it's been

carving out a bottom. its relative strength is good. the presumption is that it works higher. it does exceed that key level that dan cited and moves higher. i like it. >> this is the second half of the year story. i'd like to get it closer to 110, but this isn't about the iphone 7. this is the yoe cho, the ipho iphone8. >> check out our website. we've got the hottest options news. videos and throughout the weekend, exclusive trades, and while you're there, check out our super cool newsletter, it's sure to be all the rage in 2017. here's what's coming up next. ♪ and up through the ground come a bubbling crude ♪ >> oil just posted its best year since 2009, but if you missed out on the rally, we've got a way for you to get in. plus ♪ it was all a dream

investors are pulling back from many of the so-called trump trades. we'll tell you what it all is when "options action" returns. "options action" is sponsored by sink or swim by td ameritrade. retty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. i mess around in the garage. i want to pay more to file my taxes. i want my tax software to charge me at the last second. paying $60 to file my taxes was the highlight of my day. and you just saw footage of me flipping burgers. want to charge me extra to itemize my deductions? no problem. i literally have too much money. said no one ever. file for free with credit karma tax.

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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." crude oil was one of the hottest commodities. jackie deangeles is at the desk with more of this. >> when we look back on crude's run this year, to say it was a rollercoaster ride is no

exaggeration. let me walk you through some of the highs and some of the lows. last january we started in the high 30s, then prices slipped down near26 in february. then there was nowhere to go but up. all the way back to 50 in june. summer driving season, but the market got a little ahead of itself, and by august, crude was back in the high 30s. in october, 50, november, low 40s, and wti finished today at $53.72. year-to-date saw a 40% increase and the largest since 2009 where crude gained 77%. the question now, where do we go from here? going as low as this year, probably not likely. the upside is limited, but over $60 a barrel is definitely possible in 2017.

opec's yes, ma'am p y yopec's implementation of its plan. mike has an under the radar way to get in with a call of action. >> first, let's talk a little strategy. we're going to talk about one of the most basic strategies in options, the buy right. buy right is when you buy stock and sell calls against it. what to you want to look for? first of all, you want to be bullish on the underlying stock. you're buying it. you're going to look to collect premium by selling options. i look to collect 1% per month. obviously, if the stock is much more volatile, it might be more than that. if it's less, slightly less. i want to sell calls at a strike where i'm leaving upside, room for appreciation. we're taking a look at neufeld

exploration. it's been bouncing around the 44 level. today it was around $41. and when i was taking a look out to march, you could look at buying the stock here and selling the march 45 call, you're going to collect $1.45. nice thing about that, obviously, as long as the stock stays below that level you keep both the premium and gains on the stock. so this is a situation where you get to collect a little, give yourself a dividend. you have about 10% to that upside strike, because the stock's 41, up $4 from here. so this is a way you're giving yourself some upside, a little yield, and a little down side protection. >> what's technical picture? >> most energy stocks have been ascending over the last month or two with the move in crude, and yet this is a stock that has done the exact opposite.

it has pulled back. and in that selloff, it's closed an unfilled gap, and it is right to a trend line which you can see on your screen. you've got a much more favorable entry point. i like it here. >> oil is going higher at least for the first quarter of 2017. opec has finally got everybody corralled, all the cats herded. so i think you get higher prices. >> where are the cracks in the oil, do you start to second guess neufeld? >> it was a little lower. we saw the ultimate lows. but the fact is, the amount of down side here is a little bit more limited now. on top of just the better picture for oil prices there is a better picture for capital flows. we've seen a lot of capital equity funds.

plus with technological improvements are lowing the lifting cost for oil. all of those things put together, we're in the high 50s, low 60s, i think the oil business in north america will be good. >> we were at 52 at the summer driving. we're only at 53, 54, despite all the good opec news. it gives you a lot of protection. still ahead, gold did something it has not done since 2012. and it could point to more gains next year. more objectio"options action" r after this. ♪ guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert.

wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade.

hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary.

well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. welcome back to options action. time for total recall. last week, carter thought gold was about to shine. >> number one, so despite all this, the best single thing you could have done, picking stocks and s&p is to pick s&p. >> i was looking at the february 108-114 call spread. you could spend about $1.95 to buy that. >> gold just posted its first positive year since 2012, what do you say? >> we've got to stick with it.

nobody wants to talk about gold. that's usually a good thing. let it ride. >> it's done well on a week that was kind of sideways to poor. and we've got a lot of time out to february to let this play out. so my inclination is let it ride. >> gold is up at the same time the u.s. dollar is up. it happens every couple years. i think gold will be a good investment in 2017. >> if you think there's volatility, not to mention the inauguration, is this a good place to park money? >> being long call spread is a good place. there is a chance this is going to be viewed as a safe haven, and i think it could potentially be. >> unless everybody's given up on this and they're all in your bitcoin. [ laughter ] >> i hope they're not, because i'd like some more buyers to come in. >> coming up next, your tweets and the final call from the options call pit.

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.

guyhey nicole, happening here? this is my new alert system for whenever anything happens in the market. kid's a natural. but thinkorswim already lets you create custom alerts for all the things that are important to you. shhh. alerts on anything at all? not only that, you can act on that opportunity with just one tap right from the alert. wow, i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade.

welcome back to "options action." we've got some tweets, first one from matt. how would you play vix options into the new year? >> the deep end of the pool for options traders. it's pretty tricky. very high options premiums, however, a lot of the futures are a little lower than they were a month ago. so call spreads might be the way to go if you're being speculative, otherwise, i like puts. >> i think when volatility's low, and you want to protect the portfolio, puts and spy, that's the better way to play it. >> let's get to the next tweet. what's your look on nvidia. and carter, remember, this is a

stock that andrew miller of citron said he was short. >> trade 115 million shares. 27% of the flow's turned over. a great run, highly unlikely it's a big outperformer next year. i'm a seller. >> this next tweet is for carter. ryan sutton wants to know, does carter have a voice coach to keep that smooth, smoky baritone? >> that's funny. my grandmother used to say it was quite nasally. thank you for that. but anyway, smooth and silky. >> comes naturally, i guess, time now for the final call, smooth and silky, what do you say? >> i like health care for a catchup trade. >> i like celgene. >> in 2017 think about what's going to happen. the fed is going to remove more suppression of volatility. to watch volatility go higher in 2017. >> looks like our time has expired. i'm melissa lee.

thanks for watching tonight. for more "options action," check out our website. and check out our daily segment inside fast. we'll see you back here next friday. have a happy healthy safe new years 2017. >> on this episode of "secret lives of the super rich"... inside the $33-million hollywood hills mansion and the very provocative plan to find a buyer. >> let's be honest. sex sells. >> bespoke chariots... the one-of-a-kind motorcycle that cost half a million bucks. >> it's artwork. it's jewelry. you're not gonna build two bikes alike. >> fly the lavish skies that feature fancy bars, showers, and cost five figures for a one-way ticket. $55 million worth of floating luxury. >> that's the sizzle. >> all aboard the super-yacht where golfing is par for the course. check out the priciest part of this superexpensive new york city condo.