we're live for the very last show of 2017 it is ab solutely freezing outside but the guy business hind me are warming up here's whatter up on the show. ♪ >> crude oil just hit its highest level in more than two years and the chart master says it could create a boom he'll break it down. plus that's what volatility was like this year and it's created a phenomenon on the options market and later mike's figured out a

way to make money in apple if the stock goes up, down, or nowhere at all i don't believe it is that possible >> it is possible and he'll show you how to do it the action begins right now. >> after lagging the market are year, suddenly they're showing signs of life. surging 5% as oil hit 20 -- soicide you stick with energy heading to the new year? >> when you take a look at the entire space, you know, it's the integrative names at the top of the list they represent the largest constituents of that index and as oil prices rise, they're essentially a big bucket of oil themselves the oil service names, i like that space a lot i have even when oil prices were

lower because we've seen a lot of basicallythe fracking businesses have been able to make money, innovation in that space, helps it oil service companies more than anybody. >> i think you have two things going on in the oil business right now. we've seen crude get above $55 a barrel and so that's been a big boost once we cross that 50 mark, that's when xle and all the individual names start to take off to the up side with the brent and wti spread that we continue to see at $7 a part that is very good for u.s.-based companies to export that oil overseas and make profit there and obviously a bunch of those top 10 holdings are the kind of names you'd like to see get the prophetability with they expert. they did not move when oil first moved. now they're playing catch up with oil sitting at 60

i love names like occidental >> why don't you head over to explain. >> energy worst performer in 15. it's volatile stuff and if you get it wrong, it urts had. so you got two lines. they speak for themselves. so over the past five years this is tech and this is energy you're talking about -- well, almost a 10 bag or spread. let'szero in tighter here's the past five years and this is telling. lunch. not only lunch 40% spread on the year here comes the year to date chart and we'll look at a few

others this is -- well, this is the chart we just had. it's the same spread let's go on to the next and see what we pull up here so now we've got it year to date and this is incredible the question is what i think you're seeing here is a little bit of a hook down and a hook up and i think tats arer the beginning of something trarlts going to be more enduring. here is another way to look at that chart on top. and this is relative performance to the biggest sector to tech. energy on top. here we go again as all it look of a bot m bottoming out. not only is it going up, it's starting to out perform the very thing that dominated it market it's a bottoming out action.

here's a five-year chart we've clearly broken above trend and that's an important development. that's energy and now take a look at this and this is the whole story, right? you've got crude oil and you've got energy the presumption is energy stocks will go the way of crude i think you want to over weight this in 2018 >> you could look at the march 2 1/2 call, spend $2.50 for that the options are quite cheap here, a volatility off of an all-time low so the options are quite if had expensive. the other reason you don't reach out and buy the stocks is more tan 20% higher so we have this inverted curve

a lot of times people will say that is bullish when you start to trade than in a more normal tangle but the fact the elongated stuff hasn't gone up is why the integrated space isn't my favorite >> it's going in the oil markets. like i talked about over the $50/55 an a barrel oil spot, tease are going to do great. when had volatility is cheap and you want to play to the upside, it's a cheap premium to take a sought on that i think it's a real play i think there's a lot behind it. look still coming down the pipeline coming up they need the price of oil to be higher that's all been a boost. i think oil's here to stay above 55 >> and if you want to be more

aggressive, 40% weight, you go after halliburton or you fade vulairo which is at all time highs which is the defensive of all. >> yeah, last word >> you're spending 3% if it long end goes up higher and you can always spread. so if we get a rally, you spread. >> let's move on here. you hear that sound? that is the sound of volatility this year. in what as been a quiet year for the market hi, bob. >> one of the most extraordinary development was the continued low volatility a total of eight days this year in which it moved up or down more than 8% the s&p 500 had 78 such days

29 in 2014 with such low volatility it's no wonder the main vices averaged 11 that's it lowest on record the average in prior five years was almost 16. they traded under 10 a total of 92 sessions in 2017. so why exactly is volatility so low? you could partly site the fed and global bankers which had had kept rates low, you could also say strong earnings. there are also longer term forces that may be at work for example it's possible, likely even i think that the growth of passive investing is playing a part in tamping down volatili volatility overall trading volume has been lower than average for several years and happy new year to the whole gang >> so bryan is a volatility expert on the desk tonight how are you trading it >> i think what's going on is

really intertsing. he makes cases in the flow into the market that's limited some of the volatility. but i think it's the pension on the institutional side when you look at something called the skew index. the demand for puts on the down side relative to calls people are buying insurance despite the down abiliability ae get stuck in this range here and i think that's why we have such low volatility. >> when you talk about passive investing, one of the things that can cause it to decrease is one stock moves up and afther moves down passive investing doesn't work like that. it basically rising tide lifts

all votes. when i see that high skew index, what it tells me is when money starts to flow out of the market it will do it basically in a mass liquidation and you'll see an increase in correlation and i think that's what accounts for the fact that they're trading at a bigger premium >> and not so much in volatile actions and this one we've gone 286 sessions without one the third or fourth longest on record we know the 1973/1974 bear market started right away. you could easily get a calendar switch there's nothing wrong with pull backs. they're the only thing that allow a mark toot go higher. >> there seems to be an assumption that because volatility was low all this year, it's gone higher is that your thinking as well or

can it remain this low >> that's been it thinking for quite some time and it hasn't happened, right? what's going to happen is i think we need one or two quick shakeouts before we can get a more significant shot of the down side or reach to the calls to the up side we just haven't seen it leverage plays to the up side that would get people over leverage and shake us out >> one of the reasons people always think volatility is going to rise is because it's always been about 15% therefore it should go backing to where it yults usually is we're talking about fundamental changes which suggests the mean itself could go down so it wouldn't surprise me if we continue to see what historically we would characterize as unusually low volatility >> for everything options

action, check out cnbc.com how else would you ring in the new year here's what's up next. >> worried that could happen to amsha apple shares next year we have a way to buy protection. reach into your pocket, not your phone, and tweet us your question at options a. if it's nice, we'll answer it on air when "options action returns. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated.

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or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. 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. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions.

one estimate. the earnings tool from td ameritrade. tech as been one of the hottest trades of the year but there are signs popping up there could be trouble in paradise hi, josh >> melissa, tech was the best performing sector in the s&p 500 by a long shot a gain of 37%. the silver goes to materials with a gain of 21% facebook, amazon, netflix all up more than 50%. apple up 46% alphabet tacking on more than 30%. but now attention turns to 2018 and some are betting on a fall take a look at the short sellers. they have painted a bull's eye on an absolute dollar basis. they say apple, amazon, intell,

netflix and facebook have some of the highest levels of no show short interest in the market they make money by betting against companies they taing are value. and the one stock that has seen its short interest rise it most is apple in the past 30 daysiliti s its interest bringing the total to 1.8 billion on an absolute basis. stratiests are underweight but they're concerned about crowded positioning among other worries. >> just to be clear these are absolute dollar terms. so the bigger the company is, like an apple, it more likely it will have a greater dollar amount of short interest, correct? >> that's correct. >> great reporting, josh josh lives in san francisco. if you're worried any of these

stocks could take a hit. and take it away, mike >> we're going to take a look at calling a spread number one they have a higher probability of profit than simply selling out right secondly they can have very attractive risk reward relationships and finally this is think is you can do whether you hold the stock or not. so the stock, here's your teaser on that is apple and we can see obviously here that the stock hasn't performed that well. this iphone 10, it iphone x is one of the reasons it assent done as well they thought of as exceptionally cheap and if this thing doesn't sell 50 million units, maybe weicide be betting against it here february you could sell the 170 for $5.80. buy the $1.75 for 360.

and that's a very nice risk/reward relationship because you're going to collect the 220 if it drops and eve. if it rallies and if it goes slightly higher than that. it is only above 172.20 you would see losses >> it make as lot of sense to look at some of these names that have such a great run in them and maybe make short bets to this so i'm looking at the 169 level as a key support level at apple to pay attention to. we break there starting it new year, maybe we do want to put this call spread on. because certainly there could be more down side to this thing tave ahey've had had had such g runs having said that you talked on "fast money. the u.s. technology sector is a place to be. i think that's why mike's doing a short call spread. >> and the thing about short

interest rate, it's it ratio of the shares outstanding if you look at apple, amazon, facebook, google, they're all below two and they're all about 1-2 to 1-7 they're just market shares the question is -- and we talked about it a little bit last night. apple is the market. if the market's in trouble, apple's in trouble and vice versa. in a way it's defensive play based on eval yaugds evaluation on its chart >> they have other tail winds behind them that apple does not possess. >> still ahead financials on fire someone at our desk has a warning sign for you end the year right with one of our traders answering your question live on national tv

see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome back to options

action riot blockchain ceo selling around 30,000 shares, cutting his stake in the company by 1/3. a biotech recently renamed itself to better reflect its new venture into blockchain. >> thanks. actually the information i have is that he owns 12,500 after selling 30,000 shares. so that's the majority of his stake. >> that's 12,000 shares too many >> less than half a percent total, even presale. >> the optics of this is that this company use ood be known as bioptics changed its name to riot blockchain the stock sky rockets. we've asked him to come on "fast money. they said that nobody talked to

him in days and now this comes out that he as sold the majority of the company he owned the day before new year's day. >> it walks like a duck -- don't touch this thing >> the optics on this are terrible shifting gears they warned of a bank break down >> and yet they've made no progress financials have not paid you obviously the tax sdwhz politics are good but they have this burden of a one benooirn inertest rate. >> i was looking at the spread in slf you can spend 35 cents for that. >> it's up about half a percent. >> well, you know this is one of the reasons when you were

looking at this. that's only 10 cents today and consequently is worth 30 now and considering it would be worth as much as two and we have until march, i say you stick with it >> the problem with banks is the rate environment is not on their side you can talk about the short and long end but basically they've underperformed all year until a spurt at the end and banks have underperformed i think it's dead money. >> shouldn't the inenvironment overall change next year >> if that's it case, if the market is thinking that, iticide be priced in >> and you talk about the fundamentals and yes, some of the regulatory if environment will be favorable for the banks here you look at it two year, 10 year is starting to narrow. and if we continue to get a rising interest rate

environment. you look at the reflation by the tax code that got passed now you got oil prices moving higher we get a couple good jobs numbers, you're going to see the front end of that curve continue to move up that will be bad for banks up next your tweets and the final, final call of 2017 from the options desk see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. welcome back to options action our first tweet is from mike who asks i bought out of it money mrk. >> i don't like mrk that much but if i was going to make a bullish call, calls are it way to go g. >> producer kristen and she's dying to know you drink on new

year's eve >> champagne and water >> long spain and spy. i think we got a little bit to go >> xle energy get along. >> call spreads on apple >> happy new year, everybody "mad money" is up next - [narrator] the following is a paid advertisement for the 3 week yoga retreat. brought to you by beachbody. - are you a woman of a certain age? if you are, pull up a chair and sit with me, because this is for you. i'm leeza gibbons and it was a big year for me, i turned 60, and i'm all about aging gracefully with empowerment, and all of that, but let's be real, there are some parts about getting older that are just hard. - all the symptoms of menopause from a to z, i have them. - my body is changing. - i'm not as flexible as i used to be.