we are live on a friday afternoon. the guys are getting ready behind me. why they are doing that, this is what's coming up on the show >> jack is back with shares about twitter and square are searching. plus, biotech is breaking out. it could spend the space higher. we'll tell you how to profit for less and -- the apple worldwide

developers' conference kicks off next week. we got a way to get the stocks for less than 6 bucks. it is time to risk less and make more the action begins right now. that's where we start with apple. the stock is closing at a record high today a worldwide developers conference i ckicking off on monday could this be the catalyst taking up to $1 trillion or beyond >> it is interesting just banging around in that level and so when you think of this event with tim cook with the keynote. option traders certainly don't and the implied move between now

and next friday is a little less than 2%. the stock is up 2% today expectations are not for some new hardware or anything particularly interesting i think you can have a scenario here where they talk about services and they talk about all different expanding operating system or ecosystem. these are the sorts of things that make people feel better about the services growth which made up of 15% of their total sales and the quarter they reported just a month ago. i think you set up for further consolidation in the near term in this event. what you set up for is iphone guidance that's what drive the stock and they're going to give it late july and early august. the stock usually trades in doors. i think you do a simple call calendar here. today the stock was trading at 190. you can buy the june/september, of 195 calls at 80 cents and

buying one of the september of 195 calls for 6,030 cents. your max risk is $5. you want to move it up towards that 195 and break out a little bit and have the june call and then you own the september one that's going to be near the money and you can turn it into the calendar and turn it into the vertical spread. >> you know it is hard for a company this size to make really substantial move especially if it is going to be something that's more ecosystem based rather than an update on how the biggest driver of their ongoing profits may be i do think personally the bloom is a little bit off of the iphone rose so to speak in terms of growth. the other thing i would nose is the call you are selling is not

an perspectiexpensive one. >> right, i just want to give it a little bit of room that's why i chose the 195 strike at the end of the day, if it goes to 195, this trade is profitable and you can roll out of that call i don't think owning premium ended in this week's event that's the most important thing. carter may have different views on it. >> i am in the breaking camp here now >> explosive >> it moves from 160 to 190 in a matter of eight sessions but, the break out and the tight range in about four years of two to three weeks >> through the developers' conference, that's not going to decay very much. there is some benefits for the

80 cents that you are going to collect to do it you are not offsetting that much decay really not in the grand scheme of how much the stock would cost. >> you would not go and buy it for $6.50. >> that's 3% of the stock price. i don't think that's such a bad play in you are incline and getting longer data calls. i think it is a good play. >> it is specific to apple but it is the mind set that's in the market now people are concerned and those stories are very much in question and financials and industrials not performing and google and apple and amazon, the things that have worked and money that's going there >> when you say break out here now, what's the upside here? >> ultimately, if you take a measure move of this tight range, it applies about what dan is saying, 195 once you are in of an all time highs, you can pick a number that you want. >> what mike is trying to say that i am being a little cute.

the fundamentals are going to be final next week but not surprise of the upside and you are excited of july guidance and the phones and you buy calls spread and you sell a put and you do something. i am just trying to be a little cute here and a lot of ways to do it. >> the options cheap >> last word >> there you go. >> imagine another big event next week. the super bowl for drugs the world's biggest drug conference happening in chicago next week. biotech stocks have been seeing a bit of resurgence. a break out ahead. >> a small cap/large cap thing, let's go see and figure it out we know one of the best areas of the markets of the whole small cap theme is small cap biotech or a different way to look at it, take a look at xpi in relations to its high from about three years ago.

and what we know is after contending with this prior high, we are now exceeding it and breaking out so keep that in your mind's eye and let's look at the ibb here is the difference celgene and gulliad. these are going to catch up with some of the small ones if we put those two lines together, here we have them. a lot of correlations and they diverge over the past year ibb is the way to play it. its got some upside here let's focus on the ibb top what i have here is relative to healthcare sector. relative to manage care and fvizer for the first time we broke

above the line and pull back and now we broken up again, the beginning of relative performance to its sector suggesting to me that there is more to go the chart itself, ibb and the channel that it has been in since the low. literally a personal channel and my thinking is that we are at this low end and we are headed to the high end. i want to be long ibb here spr pretty straightforward thesis >> how are you trading ibb >> several consistent stocks of ibb and the index are trading cheaply on a trailing basis. the name that you just mentioned and celgene and gulliad. we thought they were cheap when they were 10 or 11 times earnings b it out performed over the past

month but not over the past year or five years. if you look back at the history of this index, it doubled the total performance of the snp it has huge potential customer bases and caused a tremendous amount of money and we saw that with a hepatitis drug that came out and there was about none of them you can trade a call spread risk reversal to mitigate these options. 103 and 110 and 117 selling the july, buying the 110 call for 265 and selling the 117 call for 45 cents this is only going to cost you a little bit of a buck one of the things you can take a look and if you look at the same trade inj june.

this is not a trade that's going to decay very much if ibb were to pull back, you are not going to own it until it gets down other than the buck that you spent you do get participation from about 6% or 7% from the upside here >> you put in the market that's range bound even if they are cheap or whatever. in the worse case scenario you get down at 104 verses the stock that's traded at 110 and you get long on the upside that ratio, that makes a lot of sense to me and as far as carter -- the fact that it is banging down on that and you soo e a lot of room of high strikes and that's why he's selling at 117. over a month and a half or so would be nice. >> if you were to toss in, let's say 50/50. if we are going higher and money and it already started and it will flow to this lagger area. we have seen that in a lot of beaten up retail names

if the market is about to go to a big spin lower, i bet you a lot of the damages have already been done. >> does the xpi chart looked bad? the premise of the trade is the gap between bbi and xpi will be filled a lot of these baig cap biotech companies are -- >> it is the small caps. when you have nothing but dreams you can put in any valuations you want >> in need they do >> some of these companies are pairing off so you have celgene is pairing off and these are targeted therapy oncology drugs that have huge market potentials so you wantto spread your bets around >> you can sign up for our

latest news, more than 100,000 of you have. don't be the only one missing out. >> look at what's coming up next >> up in the sky, it is a bird or a plane >> no, it is a soaring share of twitter. relax, we got a way to get long for less than $2 plus, calling all action pants, reach into your pockets and tweet us your question at "options action," if it is nice, we'll answer it on air when "options action" returns. "options action" is sponsored by think or swim, by td ameritrade. >>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.

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let's get to josh lipton on some news at palo alto >> actually, let's move on here, we'll get to that. cnbc's dom chu >> well, melissa, i may lack the monetary wealth of other folks but i would like to think that i made up for it in other ways jack dorsey has taken a good amount of heat the last several years. dorsey is coming outlooking pretty decent for his job, he's the chief executive of and the founder of as well if you thought you had a nice month of may does not compare to contador soy who saw his net worth increase by a whopping $733 million or there abouts twitter stock has flown right past the rest of the market gaining 14% just for the month of may meaning jack dorsey's

stake in the company gained around $65 million in value. not too shabby that means that his stake in square will account for the network of the month as it is sores for around 24% that stake gains $668 million during the month again, not too shabby. if you look over the past year, investors who have been a i llog for the ride have been benefited to some degrees. it is still up 88% over the last 12 months. square shares are up 50% and set a new record high earlier today 67 melissa, what will it take to keep things moving in the upward and ongoing direction for both of those companies, time will tell back over to you >> thank you, dom chu in the newsroom >> mike is over with the "call

for action." >> the stock is clearly quite volatile for twitter you don't want to buy out right options because the options are quite expensive. the structure we are looking at here is one that we are trying to use to limit our downside risk if we take a quick peek of how the stocks behave, it has a strong move and we are getting right back basically to these highs right here we can't start selling puts over here as a way to elect socollece premiums what's the structure we are taking a look at using i was going to july buying the 36 or 41 call spread you can spend $1.45 for that we get a decent amount of time until expiration let's take a look in how this

works. had i simply bought that call, the stock would have to get tupp to the $38 level just to break it even. >> there is a 76% chance would happen between now now there is a 93% between now and expiration stocks is going to get to my 37 break even here is the other thing. selling that 71 chance call, there is a 36% chance. this is a nice option to sale. >> dan, what do you think of the trade? >> i like the trade and i think mike lays out the probability very well. for me, i am driven so i look at what the event will be to c catalyze i like his strikes and his

target and the reward makes sense. >> you got a chart up there. >> yeah, believe that or i drew one. >> you drew a line >> so i have a twitter chart here, let's zero in on those that we have them. on march 14th, the stock is 36 and 60 today we push above those highs and 36 a new high and if you look at current set ups in relation to the five year bottoming out information. the implications are higher and aggressive or so >> that's a good point i think they report on the 27th which comes after july i am simply playing the stocks momentum here has been strong now for a couple of weeks. >> why the catalyst is important to me. last year they had negative sales growth since their entire history and is expected to be up of 19% year after year and nearly on a gap bases

profitability. if this quarter demonstrates of this revenue growth of better profitability and this stocks going right to my target but you may need that catalyst >> coming up, disney is flying so low, get it so low the stock is fallen 3% after "star wars" failed to impress the box office send us a tweet @options action. much more "options action" right after this "options action" is sponsored by think or swim by t.d by t.d. ameritrade re comfole. i could be up for that. that's taking options trading from wall st. to main st.

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which could save you $400 or more a year. it's a new kind of network designed to save you money. click, call, or visit a store today. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪ waxahachelcome back, we got news alert now with josh lipton.

nikesh arora is named as the new ceo of palo alto net a big name out here in silicon valley as a former chief business officer at google, palo alto network naming arora as their new ceo. melissa, back to you >> here is a huge hire and you are playing with strengths here and the stock is making an all time highs this company has doubled their sales. this seems to be the guy to do it >> time to take a look back at some of our open trades. disney is set to sore on its movie debut. >> the stock is trading historically cheap multiples i think this is fwoigoing to be success at the box office.

when i was looking at the stock, it was slightly up 103 i can collect a dollar or$1.70 t >> instead, it is so low >> one of the things when i point out when we put this trade on i was comfortable buying disney at the 103 strike the play was to hang onto those shares and look to over wrigride i think yielding almost 2% in terms of dividends and 13 times forward earnings i think they're going to turn around and i am comfortable earning the stocks at this level. >> this case is probably -- if you were to screen for stocks at lows in this environment something can't be right maybe your premise is going to change i rather wait for a few updates first.

>> you saw "solo" twice. >> the stock rallied 5% whether excitement or not. mike's point of selling the put, he was prepared to buy the stock and he liked the potential leverage and not too different of what he talked about in twitter here in a name like disney, it does make sense >> already, up in the cal rightt your tweets and the final trade. well, it's earnings season once again. >>yeah. "options action" is sponsored by think or swim by t.d t.d. ameritrade. 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.

(indistthat was awful.tering) why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. time for our tweets. our fans ask, can you explain a butterf butterfly. >> yes, the objective is you want the under line to run to the short strike where you are short of the two options >> karcarter

>> ibb law >> calling for reversal there. >> jim >> apple if you are bull bish. >> our time has expired. i am melissa lee, don' 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 save you some money. my job is not just to entertain but to educate and teach you so call me at 1-800-743-cnbc or tweet me @jimcramer. let's see, italian bonds spiked in the sky, it didn't fall we