we are live at the nasdaq market site. the game issal year. while they're getting ready, here's what's coming up. >> well, comes down to a few moments. >> and apple's moment is fast approaching with the release of its new iphone we'll tell you how to protect your shares while still profiting. plus -- ♪ that's what biotech stocks are doing and there's one name that looks ready to break out we'll explain. and -- reach out and touch someone far away

>> some investors wished they never touched telephone share, but if you lost money, we'll show you how to get some of it back using options the action begins right now. ♪ >> let's get to it one overlooked story this week, energy stocks come to life wit big oil getting a bounce from the weak dollar and irma's impending landfall exxon mobil up 3%. chevron, royal dutch shell, british petroleum all climbing 2% this is by a late day sell off in crude today energy still down over 14% year to date. the second worst performing sector in the s&p. so, do you buy this energy bounce let's get to the money now and find out dan? >> i don't think so. look at xle, almost 50% is three stocks we have a little bounce in that sector this week there's some reasons investors are looking to be a bit

contrarian there to me, i don't buy them. we have a one-year chart if you look at how this stock has traded from the 52-week highs in december, it is very well defined use carter's term down trend here and it's yet to break out from there so yesterday, when it looks like it was going to get going, it failed at the down trend i think it sets up for traders who want to be nimble. >> it's often the case, we have a storm like this we had in the gulf and now, the most recent one, these can be a short-term catalyst to basically propel a price change that doesn't mean the longer term secular head winds don't remain in tact i think they do. the demand side for crude in the developed world continues to decline. that's really the bigger story here >> here it is the reverse, at the bottom this down trend dan's talking

about, it's been characterized by counter trend there have been four of them, each about 5%. this is just another one which -- >> we have another chart the five-year chart. have you ever seen this chart? pull this one up look at that it's the convergence of the 2015 breakdown. that sets up for more favorable. does that look ominous to you? >> what's the trade? real simply, you have done a nice job catching those counter trend rallies a couple times this year. i think if history is a guide, you sell it. options are low in the xle look out for october expiration. you can look near the money put spread when stock was trading 64.5 today, you could buy for

about a dollar that's your max risk there it breaks down at 63 make up $3 between 63 and 60 if you do get a retest of the lows, those trading just about seven, eight days ago around 62 bucks. i think this is in play and you got it right where you want it o so to me, i like going the opposite way of looking down looking for a retest of 60 over the next six weeks, risking one dollar to make three >> you know, this is one of those situations where you know, i think a lot of people are wondering why we don't use credit spreads all the time. they make a lot of sense, but in situations like this, options premiums are low usually, when stock prices decline, options prices go up. from xle is, that hasn't been the case the exact opposite happened. option premiums are the lowest they have been i think a spread is a good way to make a play >> these levels. >> well, look, the key issue is

has something changed that's more permanent i think that's the case. think about going back in history. things like coal energy has lost its way. maybe we have integrated and permanently impaired >> i get that longer term trend you see is down and in terms of these counter trend rallies, are you worried we've not only got irma, we have jose and all these other hurricanes lined up. >> i think history will show these are all fades. we're in market here with the stuff that continues to work, lev tats, the stuff that doesn't is a sell on any rally >> all right energy's not the only sector on a tear health care stocks hitting an all time high this week both big pharma and biotech breaking out. chart master says there's one name set for a move higher

so, charter, what do you see >> amgen, health care, let's talk about the subject more broadly. first, look at amgen it is, if not the best performing stock of all time, one of the best. let's try to prove that. here's a 30-year chart on the s&p 500. it is what it is it's up. markets go up 70% of the time. let's add competitors. put in mcdonald's all of a sudden, s&p is up high r. keep going put in nike, now, mcdonald's is the piker. let's put in home depot. even better than nike. keep going apple. almost a trillion dollars. keep going apple is a piper nothing close. now, what's interesting is this great stock has done nothing for three years, so you have the set up of the greatest stock of all

time, then, here and now, i have the table, this is what happens if you put money on it you've got 150 grand, 11 that's the same thing as the chart. keep going this is the real set up. amgen has done ng for three years. nothing. the greatest stock of all time, having been dormant looks as though it is coming to life. well defined tops at a level you can see them they are well defined. over and over and over we are sitting here yet and the presumption is we are going to bust out in a big way. i'm making the bet we are going to get a nice breakout here's long-term chart here's how i would draw the lines. then put your arrow in and think about it >> coming to life. what's your trade? >> you know, i think this is an interesting situation. stock is relatively cheap compared to the parkt.

companies like this one, which used to be great stories are less now they are dealing with mature drugs. this is situation where like xle and dan's trade, options premiums are low we have made a fairly sharp move on a relatively short basis. so again, i want to use a long premium trade here i'm looking to december. the 185, 200 call spread you could spend $4.50 for that i think this is a decent way to make a play to the upside. you are going to be risk, 3% to make the bullish bet if that breakout takes place we're not really subjected to the risk if it fails >> there's two things i like about it the chart is fabulous. when you look at the long consolidation over the period of time, just breaking out. kind of quiet breakout unloved sector that will last what, 18 months, two years, when you look at a name like amgen, you look at option prices,

strategy and what you are risking. i like the defined risk way. >> one of the main reasons we saw this was gilead buying kite. >> they are all moving >> sure. sure >> to your point >> but the thought was that gilead buys kite and this opens the flood gates of the biotech money swatching around on the sidelines waiting to make a deal is that the presumption in terms of cowell help it move higher? >> we do see deals from time to time i see them more on the acquiring side than acquired for sure. one of the things, there was a point you made on "fast money" yesterday and it was a good one. which is companies with latent pricing power traded a premium ones exercising their pricing power, which is typically true do not that's one of the reasons why this sector has been trading at a big discount people have been expecting these drugs to result in persistently declining revenues and income. that's not what you're seeing here

you're not seeing declining revenues and they have a pipeline especially in the migraine space the discount probably isn't justified. >> also, if you were to go pre gilead news, it was still second best performing sector. which means it's been good all along. it has defensive characteristics. so if the market is going to keep going, if the market gets in trouble, the defensive characteristics, a third of it is in big pharma they don't crash >> right how does the chart look relative to amgen >> ibb was more damaged than amgen. it was really bombed out it is the name within the group. biotech all together looks

great. amgen is the biggest and safest. >> right forced to choose >> one of the drugs this year changed my life. fact >> i want one. if you're going to own something that isn't trading well, in an industry that is always growing, 17% of gdp, health care, this seems like a good prlace to have your money >> all right for everything options action, check our website. we've got the hottest news, videos and throughout the week and exclusive trades and while you're there, you can check out our super cool newsletter. in the meantime, here's what else is coming up. ♪ >> apple's getting ready to unveil its big, new iphone if you're worried, we'll show you how to protect yourself while still being able to profit plus, calling all options action fans reach into your pocket, grab

your phone and tweet us your question at options action if it's nice, we'll answer on air. when options action returns. >> logical 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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no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. steve, other than making me move stuff, i'm here at the td ameritrade 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. see options data like never before. with thinkorswim only at td ameritrade. welcome back i'm dominic chu. some traders are already jockeying for position around apple shares as we get ready of course for the big company event next tuesday where there's a lot of buzz about the anticipated

release of the new iphone. so, according to our data partners, the last five iphone releases have helped lead to some big price moves over the median term. now, in the 60 trading days following the release of the iphone 5s and 5c models, back in september 2013, the stock grow by 19% it was up 7% in that span following the september 2014 release of the 6 and 6 plus models it was down 6% in the 60 days after the september 2015 release of the 6s and 6s plus models and the march 2016 release of the se model, it was down around 14%. most recently after the september 2016 release of the 7 and 7 plus models, it was down just a mere 1.5% in 60 days. of course, it's all going to depend on just how much wow that event is going to generate

will people shell out big bucks for the phone, whether or not it's enough to drive an ever increasing market cap jet like apple, that remains to be seen back to you. >> thanks. iphone jitters weighing on apple this week. the stock down more than 3%. so if you've got jitters, too, dan's got a way to play offense and defense on this tech time. he's on the plaza for tech time. hey, dan >> you were talking about stlat ji using options called the stock up placement where you're really trying to replicate long exposure. i want to go through quick reasons why you might consider a stock replacement, there could be a volatile event or a period in time. to possibly lock in gains. because you think they're attractive it doesn't mean they are actually cheap, depending on the strategy you want to deploy. we have this one event next tuesday.

there's not only going to be the unveiling of it, but the launch of the prodetective, then an earnings event in late october so the way i look out for the next six or seven week, it can be a rocky period. the other thing, the stock is up 37%, so if there's a lot of this good news in the stock, that's another reason why you may want to lock in some profits. let's look at this chart right here i mean, obviously, it's clear. the up trend here. we have pretty good support in the low 150s that's where the stock gap is from after earnings in the beginning of august. to me, you probably have some good support at 150. air pocket down to 140 that's another reason why you may want to consider defining your risk. lastly, the point i made about option price, when we buy options, you want to make sure they're cheap and you earn out that premium, in this case, look at how implied volatility in apple has been moving higher well before the earnings, so to

me, that suggests that options prices have been kicking up and the stock just made a new 52 week high. a new all time high. so, you know, let's think about strategies here. the stock's down a few bucks from that all time high. today when the stock was trading at 159, i was thinking about not a long premium trade, i was thinking about i because i want to mitigate what i think to be slightly expensive options, but i want to get that long economic exposure. so i look at the call butterfly. i want to look at november expiration going to catch all three events. next week, the launch of the device, then the next earnings that are going to be guided. today, when the stock was trading at 159, you could buy the november 160, 170, 180 cal butterfly pay $2 for that. you're buying the november 160 call you're selling two of the

november 170 calls at 1.50 each, excuse me, $3 each for $2 each for a total o $6 then buying one way out of the money. november 180 calls that costs you $2. you make money between 162 and 178. you make up to $8 your max gain is at 170. it sounds complicated, but think about it this way. between 162 and 178, you can make up to $8 and your max gain, 8 at 170 it's kind of threading the needle i like this strad strategy as a defined risk, long premium way to play for a breakout to new highs with lots of events an mitigating my risk to a small amount of money. the other point i want to make, i expect option prices to come in that's why i'm looking at this butterfly strategy, rather than a straight call purchase or a call spread. >> like the trade, mike? >> i do like butterflies in some

cases. the issue i have is the longer data the butterfly is, the harder it is to thread that needle in order, if you're say thinking about a a 5% move into next week, you think stock is going to maybe move 5% by next week, that's one thing saying i think going to be up 7% and you have a couple of months to go, it's harder even if it runs up to that price, in the interim, it's not going to go to the maximum value of that butterfly, unless it basically lands there at the end. the one thing i'm less enthusiastic about, i think going into the catalyst looking ratio spreads like this make a little sense you could even consider usin the first two legs on the stock position to boost the gains rather than committing the -- >> the criticism about my trade strategy was the timing. i think that's a really important point when people consider long premium trades, specifically ratio spreads into an event you may get the move to 170 where this spread going to be worth its max value, but then you have to wait and make a decision what i look about this, the

premium is so cheap at 1.3% of the stock price, even if you've got a move to 170 in short-term, you're going to have a trade that's worth multiples of what you paid for and you're going to be happy about it and just take it off and not worry about that. >> the chart support this trade? >> it's a 50-50. last eight quarters, gapped up three times. gapped down. >> wow how do you feel? >> we're in the gambling business you know what i mean >> in terms of how it's going to react. >> sure. >> to me, it's about risk reward >> up next, at&t plumeting 7%. that's bad news for dan, but he's got a way to come back from his trade. more options actions, straight ahead. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me?

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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 last month, dan bet on a bounce for at&t >> so, today, when the stock was trading at 37.5, say you were to buy a 100 shares of stock, you'd like out to october expiration and sell one 100 shares one of the october 39 calls at 38 cents you have a buy rate on >> the stock has tanked almost

5% since his trade now with the premium from selling the call, losses are mitigated somewhat. dan, how are you managing? >> listen, this $2 drop really surprised me i started looking higher than these levels prior to their earnings i think you have a couple of cows okay. i think they're going to get news on the time warner deal and at this point, you probably want to look out to the 37 strike an do a roll as far as rolling down that short call strike, but i expect time warner news to be good news and i expect the stock to trade up. i'm long it, pretty happy staying long it these levels >> it's tough to try to cast on a stock that hasn't performed well going into the trade, but we are get tog a point now where i think both yield and valuation are starting to potentially throw a floor in for the technical view, we're going to have to go to him, but from a fundamental perspective, it's hard to see more damage before earnings. >> there was a gap like a bad day

>> and then some >> all right up next, final call from the options pits 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. see options data like never before. with thinkorswim only at td ameritrade.

hthis bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go!

the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade welcome back to options actions. time to take your tweets first question from peter. when selling to open call credit spreads or put credit sprerds, do you recommend closing early or wait until it expires >> i think it depends on how much the stock has moved if you sell for a percent of its value and it's worth 5 to 10%, yeah, you want to take the money. the otherwise, if it's just a little bit of a profit, no >> our next fan asks, sellin back november 15 puts for $2, good idea? dan. >> if you get it for 2, even sell it at 1.50. >> final call time carter worth >> important stock, amgen, very important level. buyer appropriate. >> mike. >> reasonable valuation and low

options premium, i'd by the 185. >> dan >> apple bulls, i think it makes sense to define your risk over the next six weeks. >> looks like our time has expired. thanks so much for watching. for more, check out our website. don't go anywhere. "mad money with jim cramer" starts now >> announcer: the following is a paid advertisement for tai cheng, brought to you by beachbody. >> two minutes, mr. van dyke! >> oh, hi! i'm dick van dyke. you know, back when i was doing "the dick van dyke show," audiences would laugh every week when i'd come in and tumble over the ottoman. today, that wouldn't be so funny. a fall like that can mean broken bones, loss of mobility, loss of your independence, or even worse. so, if the aches, pains and, you know, that funny balance thing are slowing you down, keep watching this show because i've discovered an incredible program