>> okay, we're live at the max nampblth it's been a tough day for technology. guy is getting ready behind me. while they're doing that, here's what's coming up in the show. >> snap out of it. >> that's what investors in snapchat hope will happen. there is something in the charts that suggest now may be the time to buy. we'll explain. plus, this is the market and this is your portfolio. and if you are trailing, we'll tell you how to catch up. and -- ♪ fire >> banks are on fire having the best week of the year, but there is a key et vent next week that

could sends them back. we'll tell you on "the profit. >> we start tonight in the financials, while tech stocks took it on the kin today the banks actually surged. the xlf rallying 2% the best week since early december. this as bank of america, wells fargo, j.p. morgan and citigroup are up 2% or more. coming on the heels of a dodd-frank roll back. is a pank trade on tractor should you save this mover? dan. >> well, i think fade it. listen, you mentioned the two events. they're well known. we know that the fed is going to raise 25 basis points next week. what happened to the 210 spread? it didn't move this week. okay. also, last week what did we get from a lot of these banks? management, q2 is not shaping up particularly great. yeah, they need a little volatility. they don't need the volatility that we saw in today's action in the nasdaq personally. i don't think they do. so when i look out to the 3.5%

move, the xlf the track the bank stocks here, i think it sets up as a really good opportunity to once again take profits or short and shoot against that $23 porte level. that's been in place since december. >> i think what was very interesting today is, we were talking about this before we came on is the fact that of course the market has not been very volatile. i think it is very fragile here. evidence of that emerged. we obviously saw that in amazon and the tech sector generally. that's something people need to be aware of. you should not be complacent simply because there is very little volatility or simply something going up continuously, that that means this is an opportunity to start getting long the sectors that happened to outperform on what was a dismal day for tech. >> you don't always have to have this sort of very packed sort of cliche of rotation. because it comes down, sometimes there is net selling in general in the equity market. so what we do know is rates didn't move as dan, especially at the long end and the banks are just coming offer six-month

lows. so what they bounced. it doesn't really mean a thing. >> i had two quick charts. can we run them? >> i think it's interesting when you go and look at that $23 level. it held it, carter likes to say on the chart. >> is there any -- go ahead. >> that is the low. >> and then look at this one, back to 2010. as to me, i think this is a target to the down side. it's the intersection from that uptrend in place from that european debt crisis low and the breakout in november. so. >> what's your trade? >> it's really simple here, because option premiums are relatively low right now, price the options. >> you want to do spreads, look out and place your bet? you want to define your risk. i want to catch q2 earnings and guidance. i think it will be a volatile environment over the course of the next few months. when stock was trading today, you could buy the september

puts, paying 75 cents for that. it evens down at 23, 25, right amove that big support level. to me, if we were to get a bit of a give back of some of this, that was the spread by selling possibly the september 21 puts against it. >> what do you think of trades? >> well, i mean, it's fairly clear that option premiums have been long premium especially in the indices and the sector groups like the xlf and ble is the best way to play these. today is all the evidence you need that that's the case. >> what would you say about that chart that dan has? >> the first one, first off, there are a couple things. first, they didn't hold their gain. secondly, dan just did a trade short goldman, their application, now after this bounce, in financials, making the bet that the bounce will end. few look at that first chart, there it is, that has all the maki makings of head and shoulders topped. it's very well formed. nothing has changed with this

little bit of strength. >> there you go, like a boss. >> it's more and his speed. >> all right. let's move on here, because everyone has been focused on the move in the nasdaq, quietly, small caps are surging the russell 3,000 up 3% in june, outperforming every other index this month. it's managed to set a record in today high chart masters says this could be the ultimate. how to trade right now. what do you see, carter? >> there is less excess here, excess in big names. it might be this rotation has some legs to it. so i got some charts. let's look at them together t. first setup as we know is over time and this is a point of this first chart, small caps outperform large caps. that's because new innovative things outperform big clunky things like ibm and procter & gamble. those numbers are the numbers. can you see quite clearly from kind of the spurs we are talking about. let's keep going. i want to point out the setup

maybe that makes this all possible. this is a two-panel chart. the top is the russell 2,000. at the end of 2015 and the bottom is relative performs to the s&p. so what's important here is while this is nowhere near it's low, absolute, the actual relative performs was at the financial crisis low. i mean, so bad was the performance the small cap to launch, that we were back to where we were in '09. then what happened of course is this. fast forward a. massive catch-up. then a little of a give-back. then the issue is, can we ultimately give back to relative highings ought subpoena svrp even as we made new highs. i think that's presumptively in the cards. let's take a look. here is the tight range of the russell 2000. it's act six months in the

making. it's only happened one other time this time a 7% range t. last time it was out by a huge explosion in the upside. in any event, can you draw the line that way and you can make the best at this standoff. we just peaked above it today. can you draw the line this way, with i is in technical parlance an ascending triangle or a wedge. anyway you draw it, i think you got a better bet here than you do with the extended super cap names and i think you want to be long iwm. >> you see this action in the small caps, carter, and have you this expectation for it to go higher. does that necessarily mean anything for the rest of the market or any other sectors within the market? >> now, to be fair, the easy pushback to this is say if the markets under perform. then you get into the big heavy utilities and things look proctor and safe steady names. >> that is something that has to be sort of known. but i think for now without any kind of crash for the market,

i'd rather be here than s&p. >> all right. you we heard the man. whiek am, what's your trade? >> i'm looking at the september. can you buy the 143 call for $4. that's less than 3% from where it's currently trading. i want to ask everybody the question, which is, do you think that the small cap index could move 3%, one way or the other between now and september? and i think the clear answer, anybody would provide is, it could easily move that much. it's very likely to move that much. and this is effectively equivalent f. you owned this in your portfolio, to insuring it with a put. but you don't need to can you commit a relatively small amount of capital. of course, if it does make that move, then will you have an opportunity to spread or take profit. >> just again sort of there is always the other side, one thing we know is that financials are a large component much larger than the isb. i argue again the financials, how do you get long? there is always that

circumstance. the market. there are various signs in the market. so you can say, financial reading, which is oversize or the fact that the russell maybe catches up because the super cap. it is both. they are making a bet. >> yeah, i can't agree with your charts. >> that is constructive looking consol takes. it looks, i think the trade idea makes perfect sense. option premiums are low. you are not risking a whole heck of a lot. i guess my view is a bit similar to that of the bank stocks. you know, over the course of this year, we've seen a lot of these so-called trump trades come undone. you look at the dollar, treasury yields, commodities, oil stocks, you look at banks, since march 1st. to me this fits right in there. if this legislative agenda does get held up, then this group, which has been under performing the s&p this year, not from the november lows, is going to under perform. so to me it's actually another leg of the trump trade. i will make one other points. you have a great discussion on "fast money" about rotations out of these highly concentrated

sentiment names in technology. today the xlf closed on its highs. that was like a pretty good rotation with ugly action then ibm closed pretty well to me, i think you might have lost one leg of the stool today of the bullish thesis. i think you see it play out in summer. that's my view. >> that may very well be the case. they will run out, stel sell all these stocks, this is a a way you can maintain a position, hedge, commit a long amount of capital. >> i think it's important to remember. people run out and sell their stocks today. they did for the door at the same time. and you had some of the biggest stocks in the world down 4, 5%. >> that again. >> i think to be glib. >> but for anybody to be glib about that, unare making -- >> that speaks to fragility. it's whether or not you wanted to, the fact is you can't. what creates market fragility is a lack of bids. not basically an onrush of

sellers. you need to have somebody support the market. >> that's no person, simultaneously apple. the computers, we know that, right up, it was so synchronized, it just for whatever reason, people say, the computers have to move above it. >> all right. got a question out there. send us a tweet, for everything "options action," check out optionsactions@nbc.com. check out our newsletter, it will be so hot, so hot in fact you want to bring it to the beach. have a beer or two with this. that's coming up next. if you own stock, snap is a disaster. we've got a way to make money if shares go up, down, or nowhere at all. we'll break it down when options actions returns. get tomorrow's news today with the futures now newsletter. get latest news, real time

trade-up dates. stay ahead of the headlines and make today's events tomorrow's profits. sign up now at cnbc.com/futures. "options action" is sponsored by -- think or swim by td ameritrade. re yking re yking lemew u. okay. re yking lemew u. r thinkowim adg atrm aggregesll theptio ta y nee in o pla re yking lemew u. r thinkowim adg atrm anlets yli thatinrmation for anoptions sees. ha on a second. u even seehe antipangof a sck expectinrngs. u even seehe antipangof a sck prsive. what up,. optis da like ver bere th tor u even seehe antipangof a sck prsive. what up,.

ly amead oh hey john, i'm connecting our brains

so we can share our aming trading knowledge. that's a great idea, t why n't you just go to thkowim's chat rooms where you can share strategies, ids, even actual trades th market professionals and thousands of other traders? i ow. your brain told my brain before you told my face. mmm, bluebry? tap into the knowledge of other traders on thinkorswim. only at td ameritrad >> oh snap. no, i'm not quoting owe i'm talking shares of snap, inc., ma sureing above it's ipo price. julia boorstin is in los angeles. >> reporter: stocks fell 4%, bringing it down 22% over the last month. now the latest proceed, city citi lowered its ratings from buy to neutral.

heavy concerns about user and revenue growth as well as a pending lockup operation, looming at the end of jewel. this is the fourth critical analyst note just this week as investors become increasingly concerned about snap's ability to grow its daily active users in light of growing competition from facebook and instagram. an lests 'ut the reduced rating at a $14 price target. highlighting new data from a company sensor tower. >> that indicates decline in the number world wide downloads of snapchat app, the first two months of this quarter. oppenheimer weighed in about adoption after snapchat saying it's slower than expected but added that revenues should ramp up in the second half of this year. all of this is in sharp contrast, in contrast to this negative september imt on snap, today they issued a new note on facebook, seeing that facebook could triple its revenue by the

year 2022, with an overrating on the stocks, he says instagram revenue could increase from $2 billion last year to $22 billion in just four years. >> quite different views. thank you. snap basically is all over the place. what's a good options strategy to use to make money? >> the call to action. professor ko. >> this is a case arc definitelily a buyer beware type of stock. i was asked what would make a moderately bullish play? if you thought it was going to manage to hold that ipo price. so we're going to take a look at selling a put spread. this is a trade you will do when you are moderately bullish. you do this when you are selling premium when options premiums are high. they absolutely r. that's not surprising gifg given the more than 20% decline it is, finally, you want to do a quick spread, you are looking to minimize risk. you can see that in the chart the decline that julia was

describing. the trade we will look at. we will look out to july. we are selling the 18th 17 put spread. you can collect 50 cents for that wide now. this is basically a coin toss trade. if it holds here or declines slightly, can you collect that premium. obviously if it plummets, goes down to the $14 target we we heard about. you can only list 50 cents to the down side. this is one of those sixes where, you know, if you have a lot of questions, are you looking to make a coin toss trade and want to collect premium, you are look at a put spread like this. >> what do you think of the trade? >> it makes perfect sense. we talked about it last night t. low flows and the high cost to borrow before we bet to this lockup is causing put premiums to be elevated. it wouldn't take much for this stock to be a pretty i winner. i want to make one point about the sentiment. listen, it's gone from bad to worse. i'm not talking the way the stock is trading. it remind me a bit similar to

facebook, back in 2012 after its ipo, this could get ahead of that lockup. you could see the thing in the mid-teens. you probably sponsor a situation where you will want to sell puts in front of whatever events. >> there is not a lot of price history. we know, obviously, we trade on the desk the gap on may 11th. you can make money. snapping back more broadly. this is a stock that came out of the gates and the only one that would be happy is the person that sold it to the public after shares, or the person that sold it two days later. it dropped from 30 days. it's had a 52-week low. it looks like this. >> there is also significant short interest. i want to make one ought point, rich, we didn't discuss here. can you use options to take a look at where the options market truly believe the stock is gentleman to be in the nut. we have 18th this in many other cases, the options market is not overwhelmingly optimistic about snap. the forward price is lower than it is right now.

that's a reason puts are so elevated. up next, apple having the worst day in over a year. dan has a way to limit your losses and lay it all out. the question to "options action," if it's nice, we'll answer it later in the show. more "options action" still ahead. [pony neighing] what? hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade. we rbut we are not victims.ack. we are survivors. we are survivors. we are survivors. and now we take brilinta. for people who've been hospitalized for a heart attack. we take brilinta with a baby aspirin.

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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. see options data like never before. with thinkorswim only at td ameritrade. >> we are back with some of our open trades, apple got smoked today. if you listened to dan last week, you could be in the clear. here's what we mean. >> if your longest stock closed around 155 today. you look out to that september expiration. you could buy the september 170, 140 collar for even money. you would be selling one against 100 shares of stock. the 170 calm, using the proceeds, 140 put. >> so, what's up, stan? >> here's the deal. this was a trade strategy against long stock into an event

widely known. my view very simply was expectations were kind of running very high here and there was really i didn't see anything coming out of it. i did not foresee a day like today t. idea of using september expiration is using time, 10% to the upside and protection down 010% or below that. so here's the deal the stock is down six bucks since then t. trade is worth almost 250. it's almost litigated half the losses. that's how you want to use options, the positions, when the other stock was up 22%. >> here's a question for quarter, on a day like today. did we see anything that caused concern, any damage in the charts that you see? >> i not specific to apple. right. we started a major -- it is across the board, which is, and particularly, surnames. but when you have a wide range, they call it outside dates, you make a new high, to close on the low and volume expands, it's usually a sign of an

intermediate top. by all accounts, a stock can be contained to one day t. presumption is lower. we know that apple is up 30 versus 15 for the fnasdaq year-to-date. >> that in and of itself. >> nvidia is getting crushed t. casi casino, despite the stock is up more than 40% in the last month. that's food news from mike ko. take a listen. >> you can see here, we bought the the sharp move up here. in fact, if you take a look, this drop that we just had this week stocks were more than $7 lower than it is right now. which is one of the reasons why i'm taking a look out to september and specifically i'm looking at the 10 140, 165 call spread. you can spend $7 for that when i was looking earlier today. >> mike, what was the trade? >> this is a situation where you have to take the profits. we had probably 415 perspread is

that you put on. that reversal we saw today looks disastrous, in fact, earlier today, you had a really good opportunity. >> that's what i was going to say, quick question, it went to your top short strike. if you saw that like was it the opportunity to take a profit? because at that point, do you have to wait for stept to get the full width of that call spread? >> no, i think the -- >> no, what i would have considered, i think you are short premium. if you thought it was going to mike great off at a steady pace, that would be one thing. it started to roll over and head towards that opening price and below, i think that's the opportunity you have to take to take your money off the table. >> this is the ultimate. number one, one year, three year, five year. it is a reversal. 92 million shares trade today. 15% of the float. >> these downside reversals in every market i traded. on the imax, commodities, equity, it doesn't matter, you see this thing. have you as to pull the rip cord and take a step back.

if there is an opportunity to get in, you will see it. >> final calls from the options 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.

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in-app chat on thinkorswim. only at td ameritrade. >> welcome back to "options action," time to take your tweets. joseph asks, hey, guys, how are you? carter, how are you? >> i'm okay. you know, you got to get your next trade right. >> i'm well, thanks. >> i think you are all right over there. >> i'm a bit agitated. >> that's your normal face, though, next from brian, he asks, what is the best what i to use vix options to hedge? >> the one you will be net short calls in the vix which will be disastrous if it took place and so i would avoid that as sexy as it might sound. >> time for the final call. carter. >> long iwm. >> mike. >> with options premiums where they are, i think september

calls are the way to play. >> mr. agitator. >> next week, we have these events, short. >> "options action" has expired. thanks for watching, i'm melissa lee, check out our website. . my mission is simple. to 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 "mad money," welcome to cramerica. other people want to make friends, i'm just trying to make you some money. my job is not just to entertain you but to educate and treat you, call me at 1-800-743-cnbc or tweet me @jimcram