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tv   Fast Money  CNBC  May 23, 2016 5:00pm-6:01pm EDT

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think we're data dependent here. >> who's counting? >> that does it for "closing bell." thank you guys so much. that does it for "closing bell." i just think i said that twice. "fast money" begins right now. "fast money" does start right now. i'm melissa lee, our traders are pete, david, karen, and guy. tonight on fast, worried about the fed in june? don't be. a top technician says even if the fed does raise in june, that's not the month to be worried about. he'll be here to explain. plus, oil hit 60 bucks a barrel. commodities, laying out two scenarios that could send crude skyrocketing. and hulu is worth $25 billion. where does that value netflix and hbo? we've got a back of the envelope calculation that you will not want to miss. we start off with a rise of
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apple, with many of the big suppliers seeing nice gains following reports of the iphone 7 production orders. the run out to a major release of the iphone model has been a great time to buy. take a look at apple during the 5 and 6 releases. huge gains into both. the market signaling that now is the perfect time to buy apple as we await the release of the iphone 7 in september. >> i think it is. we usually talk about apple, it's the negative news. negative, negative, negative. the reason the stock is going down. finally now i think you have absolute reason for optimism. now you have something to trade against. now you know what your down side is in terms of risk reward. now back up to the 110, 112. you've got great news on the supply chain, which we haven't seen in quite some time. talking about the opportunities there. pete talked about it for a long term. i think apple's interesting. i think this universal display
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is even more interesting. the symbol is oled. they came off a quarter, after a conference later this week. beta, oled, apple risk/reward sets up interestingly. >> what happened since the stock traded 90 bucks a share. today we've got a taiwan economic daily report. what was it? >> no change as far as i'm concerned. i think guy brought -- look. the indicating there's going to be a lot more built. you look at 70, what is it, 70 million, 70 to 79 is the range. your down side risk is 90 bucks. up side probably 115. look at the stock and say, there's no reason to invest in it for the long term. until the next product cycle comes out, unless something interesting moves the needle, you trade it.
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>> i don't know if it was buffett buying the stock. actually he would have been buying it before that. sentiment seemed to change. i guess that's what happens. it's too tight to think, if you back up the cash, 8.7 times earnings was the right number. and it's so low, that something else has to be going on here. i think sentiment changed. i'm in it because i'm excited about the 7 launch. but i'm certainly not the only one with that strategy. that's a little bit scary. but we've got time before it plays out. >> it seems the pendulum was all the way one way, and then swinging the other way. >> i remain bullish. i've always been talking more about the long term. this is not a trade for me, even though i agree with you. i think it's a great tradeable range in which it's in. i've been in the investment side for a long time. occasionally i'll get into the options and calls and actually add on the bullish side. very rarely have i been negative. i look at india as a monstrous
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catalyst. that's obviously the tim cook thing today. the berkshire bottom if you want to call it that in the last week and a half or so, that's interesting as well. it's the suppliers i get the most interested in. >> materials? >> news like that, and i look to the names that have the most beta. the most connected. i look at sirus logic. look at some of the others that feed into it as well. apple's a great trade. but i think the better trade right now, or the beta names off of that, some of these chip names, broadcom, or going towards micron right now, or going toward something like a sirrus logic. >> amazing story. a name we talked about in the show a couple weeks back when the stock was beaten down. look, if apple actually truly does put oleg screen in every phone in '17, it's a massive opportunity.
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we highlighted this in the last upgrade, $150 price target on the stock. what's interesting about today's action with the suppliers is it was all short covering. that's all we saw was short covering on the desk in the supply chain. you've seen a lot of derisking by hedge funds. it was short covering primarily not really long, or adding to positions in these particular -- >> does it matter? does it matter if the rally, or if this rise begins with a short covering rally? >> not to me. no. i don't think it does. >> i don't think it does either. it's been right to be negative since the beginning of last year. here's a stock that went from 130 down to 90. along the way, and it's happened a couple times now, you've had significant bounces off oversold conditions, which we could be on the verge of now. my point is this, against the $90 level, i think the opportunity sets up as best as it's had given the news we've seen over the last couple days. >> just to confirm that. i'm suggesting that the short recovering rally, you're right.
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the long only sort of activity is to follow. the supply chain could see more room to the upside. i'm backing up my support in the supply chain. >> more so than into the apple shares? >> i think we're probably going to get -- in july when the supply chain reports, you'll get data whether or not how their earnings are. we have to wait a little bit longer for apple to get confirmed data as far as whether or not it's impacting with the sales coming through. the orders are one thing. sales, very, very different. they can order whatever they want. if the sales don't come through, if they're light on the sales estimate, that stock's not going to work. >> the chance for a fed rate hike in june is in for a rise. the top technicians on the street. ari, what are you looking at? >> melissa, the market's got plenty of problems right now. but 9 fed hike in june is not one of them. using history as a guide would suggest that year two of fed
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tightening, more likely to see a major top in the market. here's what i'm talking about. here's a composite of all the fed titan cycles dating back to 1950. forget about the average. that's the middle line. let's just get the extremes. let's look at best performance from the fed tightening and the worst performance. let's look at bear case here. what's been the worst performance following the onset of the tightening. in the first 52 weeks, there's never been more than a 10% decline in the market. we had that 10% decline in the first quarter, january, february. i think worst case here is we're sideways. i'm okay with that risk/reward. best case/worst case, much more likely to see that major top in year two after the 52-week mark. so fed tightening isn't the issue. it's all about global growth. and one proxy for global growth we're using here is the german
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10-year bond year. it all really started in 2014. we see the big decline in 10-years. this was the monetary policy diversions. this is when the risk indicators peaked. credit peaked, leadership peaked, oil peaked. and i think we have to get to a point where non-u.s. interest rates start to bottom and move higher again. i think that would suggest that the worst has been priced in. and those global growth concerns are no longer a headwind for equity gains. just a little bit of a higher low here. most important indicator we're watching. so let's chart the s&p 500. and here we can see the big sideways range since 2014. we're not out of it yet. we'll get a little summer weakness, but ultimately we think you get the breakout move. this is a secular bull market. the s&p 500 relative to europe, here's the versus the europe stock index. breaking to the upside. on a relative basis, you actually want to be overweight
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the u.s., and to take the flip side, if you are bearish, got to sell europe. this is what's going to take us lower. sell europe. buy the u.s. >> all right. ari, thank you. ari wald of op en heimer. >> the one thing that gives me a little bit of pause is two years versus ten-year. the lowest since we've seen since december of '07, nine or so years ago. again, i'm not saying it's going to happen, but recall what happened in the months that followed. so two tens are telling you something completely different that a fed rate hike should tell you. i think the economy is weak. it could cause some pain. >> i'm with you. i agree 100%. that told the story today when you looked at that. also, we're out of sync with everybody else in the world. those periods that he's looking back on and reflecting on, it was a completely different time.
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i look at every other central bank in the world. keeping the rates incredibly low. we're going in a totally opposite direction. that, in my opinion, doesn't tell the story of a market that wants to rally in the face of a fed hike. >> one step further and take a look at the difference between twos and tens, and go to the financials. why should the financials -- why should we have seen any rally in the regional banks that we've seen given what's going on with the yield curve? >> i guess any banks -- >> any banks, yeah. >> the hope of a raise. >> it's like the front end of the curve but it's not doing anything to the back end. it just goes flat. >> i think there's the idea that we get back to some sort of normalcy at some point. and it starts with rates. a month ago, they would say the chance of a raise in this month, next month, june, july, was 10%. now it's a lot higher. >> right. but the thing is, ari was talking about the german ten-year bond yield with yields so low around the world, isn't
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there more appetite for debt here, which then keeps the ten-year yield lower on the far end of the curve, which keems the yield curve flat? >> you would think that. and i would agree. but i would think what you're talking about, karen, i agree with as well. look, people are just looking for the fed to do something. and finally get a little bit of movement. i think that movement obviously gives the financials a little bit of a bump. even if it's just optically. i think people are looking at that -- >> is that optical bump going to last. >> probably not. let's remember, we're coming off of zip. so the quarter point raise as much as we are looking at these and debating it, i'm not sure it's such a market moving event that we should be as concerned as i think we feel like we are right now. >> up next, credit suisse said hulu is worth a whopping $25 billion. so is that good or bad for netflix? we'll explain. the commodities king dennis
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garvin said crude will break $60. if two things happen. what are they? he'll be here to explain. later, the four stocks that hit 52-week highs in the past month. and are now tumbling. are any worth a buy right now? much more "fast money" right after this. network and the cloud. it's reliable uptime. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business. centurylink. your link to what's next.
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we've got a news alert from john harwood. >> melissa, pete williams has confirmed that the fbi is investigating virginia governor terry mcauliffe for illegal campaign contributions. the investigation is believed to involve donations from a chinese businessman who does have a green card, from businesses associated with him. now, this is the second consecutive republican governor to face a corruption investigation. terry mcauliffe's predecessor bob mcdonald was convicted of corruption charges. those are now on appeal. mcauliffe is a close ally with both bill and hillary clinton. and so that adds an extra dimension to it. he's served on the board of the clinton foundation. which has been very significant
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in terms of criticism from hillary clinton, from her service as secretary of state. and fund-raising issues. so this is something to watch. no charges yet. but there is an investigation ongoing. >> would it not be far off base, john, to extrapolate that some of the possible campaign dorm nation violations were related to the clinton campaign? >> too early to say. we don't know. if in fact there are charges in this case, and if they're in any way connected to the clinton foundation, that would be very problematic for hillary clinton. but that hasn't happened. we're just going to have to watch and see how this develops. >> john harwood, thank you very much. john harwood in d.c. okay. could online video service hulu be worth a staggering $25 million? credit suisse saying it could have 10 million subscribers by 2020. netflix falling 2% on the day.
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there's also news that the disney agreement was going to start in september. in terms of the release of the new films from pixar and lucas et cetera. >> amazing number, that this moved from $15 billion to $25 billion. they're talking about subscri subscribe subscribers, like $40 a month type numbers. all kinds of things compacted into the note on what the catalysts really are. this does affect disney, it does affect everybody who has invested. comcast being another one, the parent company of this network. you and i were discussing whether or not they've gone too far based on what netflix value is right now at about $40 billion. is it really a potentially $25 billion? i think my side of it would be if they're able to reach the level they're talking about, with the subscriptions and that type of thing, even on the lower numbers, $10 million rather than the $20 million, seems like it's actually achievable to me. that's a big if, though. that's the if. if people are willing to pay for those services at $40 a month,
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when you're looking at hbo and some of the other things that are substantially less. >> if hulu is is that valuable, does that make netflix is less valuable? or is there more pie? >> i think netted flix is equally as valuable. i think the utility is going to be more in the end. but you look at the valuation and say netflix has roughly 80 million current subscribers. >> they're talking about a quarter. >> 50 million subscribers, hulu by 2020. that was the trajectory they said in that note. i think that's insane. >> i think it was 10 million up to 20 million. i didn't see 50. >> $20 million in the same time frame that would yield $35 billion valuation. >> it's crazy. i think they're valuing at 1 1/2 times. i believe the value of their 1 1/2 to 2 times versus what netflix subs are being valued at. the math to me just doesn't
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work. look at it either way, the math doesn't work. i think netflix is not overvalued, i think they're overvaluing what huhly is going to be. >> if i'm doing back of the envelope stuff and thinking, hulu is word let's say $25 billion -- >> for 10 million subscribers. >> i would say, look at what netflix has created. look at the infrastructure they've created. look at the distribution network. maybe netflix is worthy of a look. i know that sounds ridiculous. a $40 billion valuation given the conversation we've just had, given the -- this netflix dominates in just about everything they do. i think netflix should be worth at least $50 billion, which gets you back to about $110 stock. >> does that make it a buy right now? >> listen, it's been trading horribly the last six to nine months. but to answer your question, yes. >> traders are betting that one biotech stock could go as high
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as 60 bucks a share, as low as 3 bucks by thursday. steve just bought this stock. we'll give you the name. i'm melissa lee. you're watching "fast money" on cnbc. here's what else is coming up on fast. >> a number of stocks ha just hit a 52-week high are having a brutal week. yeah, just like that. but it might just be your best chance to buy. we'll explain. plus, dennis gartman said crude could surge above $60, if two simple things happen. and he'll tell us what they are, when "fast money" returns.
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welcome back to "fast
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money." calls for $50 oil may not be bullish enough. our next guest said there are two key things that could push the prices up this year. what are these two factors that could push oil above 60? >> let's make sure, i don't think crude is going above 60. but you could get there if these two things happen. if venezuela continues to deteriorate, and clearly venezuela is deteriorating, it has become without question a failed state, and if the problems incumbent in southeast nigeria, where you have various factions, those of us who have been around for a while can remember the separatist movement that occurred there, now you have the group the nijel group avengers, you have the avengers bombing the pipeline, one after another. if these get out of happened, you could possibly, possibly
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take crude oil to $60. but i think it's going to be very difficult to get wti much past 50. especially since the market remains with a contango, one year forward wti, trading $53, almost any reasonably good fraccer is making a lot of money at $53. you could get to 60. but it would take a del terious, a very, very bad situation occurring in nigeria and venezuela. >> this is karen. >> hi, karen. >> how much output is from venezuela right now and if it deteriorates further, what could it go down to? >> always remember, venezuela is the largest -- has the largest reserves in the world and its production numbers, don't hold me to the numbers, but i think you're down probably a half million barrels from what they were producing. it could go down to, honestly you could get under a million barrels with no difficulty if things truly get out of hand. and they are getting out of hand. >> what is it, dennis, about 50
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bucks a barrel that seems to be the cap on crude right now? is it a cost of production for players out there? once they get there, they start pumping more, and prices drop? >> that's exactly what will happen, mel. look at the contango, the carrying charge for one-year and two-year forward. it sells at a contango, you can take $50 right now, and never underestimate the importance of big round numbers in almost any commodity. you have -- if you get close to 50, gives you 52, and $53 for one year forward. gives you 54 and $55 for two years forward. as i said, almost any good fraccer in the balken and down in the permian can make decent money at those returns. plus there's a huge amount of crude oil sitting in tankers outside of singapore, in the persian gulf and even in our gulf that could quickly come to the market. then you have an awful lot of crude oil wells that have been capped and can come back on.
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50 being a round number. it's going to be difficult to get through there. >> dennis, thank you. >> thanks for having me on. >> in a world in which crude remains at $50, what dennis is predicting, comes true, where do you want to be on the equity side? >> a lot of it is priced into the equities. i would be a seller of equities here. here's the theme in crude. everybody believes a bottom has been placed in. they're comfortable buying any pullback in crude. it's gk to have a hard time getting below $45 a barrel. so i look at it for the near term, the trade is, it ain't going to go above 50. there's a lot of hedging that occurs there. there's also the thesis that we've seen the bottom. people are willing to buy a pullback a little above there. i look at the equities and said they've had their run. i don't think it's sustainable. >> an interesting call from goldman sachs. >> schlumberger.
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big valuation. crude oil has to go a lot higher for schlumberger to get to the levels they have talked about. the good news is, pete can speak to this, the ovx is below 40. the last time it was at this level was back in november. it bounced from that. a bounce in the ovx should be bearish for the commodity. but the ovx has been grinding lower for quite some time. pete can talk about whether it holds or not. i think it bounces from here and crude does go down. >> thank you for the setup. i would say, i actually like some of the integrated names. i like the fact if we stay above 45, we're somewhere between 45 and 50, i think these integrated names continue to perform. >> such as? >> such as chevron, ex sxoexxon conoco philips. they are the most apt to be the best beta players. if we break through 50, i want to be backing conoco as opposed to the other two.
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>> i like those kind of names. i feel like you've got protection on the down side. if it moves. and if it really gets bad, they ultimately will be the beneficiary. it will be painful, you'll lose money, but ultimately -- >> last week, monstrous buying in haliburton for upside expectation. i have some position in haliburton. goes along with the slumber shay. the sumner redstone saga rages on. plus, from highs to lows. four stocks that just recently hit 52-week highs are tumbling. what's behind the moves. are any offering of the perfect buying opportunity. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests
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shoshow me more like this.e. show me "previously watched."
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what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. welcome back to "fast money." here's what's coming up in the second half of the show. redstone situation getting sticky.
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one surprising retail stock is soaring. traders are betting it has a lot more to run. we've got the details later on. but first, let's start with the markets. even as the s&p 500 has fallen 2% in the last month, a number of stocks have hit new 52-week highs. tricky thing is, since hitting their respective highs, many of the names have severely underperformed the market. here to explain is dominic chu. hi, dom. >> well, melissa, i do my best and i certainly try to manage expectations. and speaking of those expectations, the current market has already taken a lot of the heat away from some of the hottest trades of the year so far. the stock drops have more than a few traders wondering if it's the real beginning of a trend reversal. we took a look at the s&p 500 large cap stock universe. about 100 have hit fresh 52-week highs sometime in the last month. that's not bad. here's where things get a little worrisome. 23 of those names have now fallen by at least 5% from those
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lofty levels. among those names on the short list, gold and gold mining stocks have been hot and no exception for newmont mining. but it's cooled off, down 5% from earlier this month. we know how hot mcdonald's has been. but it's now fallen 6% since then. retail a big focus lately. coach has been on the upswing since the year started. but it's now down 7% since its recent highs. some of the dividend staple stocks, campbell's, a high a couple of weeks ago, now the stock has fallen by 9% since then. so the big question is whether or not these are the early stages of a trend reversal for the hot stocks or just a pullback in a longer term bullish story. back over to you and the rest of the outperformers on the "fast money" desk. >> you're an outperformer, too. thanks, dom. so we've been asking the question for quite some time. these stocks have had horrid runs across the board
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year-to-date. was it simply a case of, market volatility ahead, let's take a little off the table? >> i think that's part of it. i think we talked about this on friday. i think it's an encouraging sign for the broader market. these names have gotten smaller and smaller. mcdonald's, campbell's soup, home depot, the list goes on and on. now people feel confident enough to get in other names. campbell's soup, $60 is where it traded today. i think it bounces. throw home depot in that list. i wish he could -- he probably had to get off the set. home depot, a great quarter. i think it's too much. >> does this mean, though, that the runs in these stocks are over? >> i don't know if it means they're over. i think it's part of the whole rotation. maybe it's a healthy rotation. maybe out of home depot, to lowe's. i look at mcdonald's.
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look at the valuation and say to yourself, wow, this name, 52-week highs. makes a lot of sense. i love the dividend, i love all the things going on. but you know what, it's time to maybe take some off the table. >> if not mcdonald's -- >> maybe they're rotating into something else. >> like? >> something in the foods space. maybe it's not wendy's, but some of the other names in the space right now. >> mcdonald's is a name that had its run. it's time to take it off the table. nobody's looking at this as a new money type of investment. i look at mcdonald's and say, this is a stock that will be very range bound. i continue to stay away from it. at least for the near term. >> looking at coach? >> i'm looking at coach. i think coach was hit with the whole retail space. i don't think it was anything specific to coach. although i have made my bet in the cores.
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>> maybe the run's been good, to pete's point, they rotate into a relative underperformer like a koors? >> they could. i would. i think the relative value of kors is so much better than coach and ralph and kate. >> shamrock shake. bring that sucker out this time of year. >> good mcrib. >> i understand what you're saying about mcdonald's. people wrote off mcdonald's, i was probably one much them, a year ago when they were floundering around 95 bucks. >> comps get tough. >> listen, great quarter for jack. did you see that? did you see the way the stock traded? >> yes, sure. >> still ahead, the sumner redstone saga continues. one top analyst calling it a toxic situation. he is saying now is the time to buy. he'll explain right after the break. we'll tell you the one $17
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welcome back to "fast money." viacom shares are rallying, despite a flurry of legal shots fired between the ceo and former chairman redstone. the latest installment in a season opera we're calling redstone and the restless. it is hollywood's favorite new show, a once revered titan reduced to a punchline involving sex and steaks. at the heart of the drama is felipe dauman who was born and raised in new york. a couple of months ago was redstone's health care agent. shari now appears to be calling the shots as well as redstone's former companion. instead they have a simple question to ask. what the heck is going on with my money. joining us with some answers, ryan has a buy rating on the stock, a $50 price target. brian, great to have you with
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us. >> thank you for having me. >> you still like the stock? explain that. >> i didn't say i had the answers. i can look at the scenarios. >> what scenario should shareholders be rooting for? >> at some point in time, the business is either improved or gets sold. those are of the most likely outcomes. the reason this is toxic is you don't know how long you're going to have to wait. there is risk that in the meantime the company gets effectively burned to the ground. that's probably not going to happen. but that's a bit of a risk. now, i've been of the view that although i understand most of wall street is not a fan of dauman, that the company probably wouldn't have been in a very different position under any other management. you could argue they've been pretty disciplined in not making wasteful investments in a lot of ways other companies did. the concerns about younger audiences, change in the media
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consumption, absolutely true. but viacom dominates traditional media consumption among younger audiences, has a place in music and other genres. so to the extent that that position is really unrivaled, if you believe they can at least hold on for however long this process takes to work itself through, and by that i mean, it could be years, then you'll see upside. but the problem is, that most institutional investors, my clients, they get judged on a quarterly if not an annual basis. that's a hard thing for a lot of people to stomach. >> i'm guessing it's a 12-month rating at this point. >> sure. >> so those people are still being judged in 12 months. why are you telling people this is a situation where we don't know really what the time frame is, yet i'm going to tell you to buy it? >> i have a hard time getting to a lower price target. i have to fight with my model, if you will, to get to the price target i'm at. it's really hard on a relative
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basis to not look at viacom and say it's cheap. if you have a positive view in the underlying dynamics of the business. >> this is karen. let's say it's not an elongated time frame. let's say if sumner dies or decides to sell it, let's say it's up for sale tomorrow, what do you think it's worth then? >> i think vefrt sentiment could spin on it very quickly and go very positive. i put a, what i call a toxicity discount into my cost of capital in this model. could you add something to it that's pretty significant? sure. the reality is, and i don't tend to look at models on a price target on a price earnings basis, i look at the value of cash on a risk adjusted basis, but many people saying this is dirt cheap, eight or nine times earnings. in a low interest rate environment, that's nothing. the risk is that it gets worse. the risk is that you still have to deal with governance
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problems, control issues, concerns about the management of the company itself. those are not non-issues. >> brian, we've got to leave it there. thanks a lot for joining us. >> thank you. >> you know what, for shareholders if you're dealing with all the governance issues, you'll simply be a bystander in all of this. >> no question. i view this, frankly, as a value, look at it eight times. this is a group that historically traded at a premium multiple to the market. now it's trading mid-teens multiple. but look at the assets. the assets are heavily rely apt on bundling economics. i look at their network and say, they're not necessarily the original content of choice. look at the studio business. could be a loss leader one year, a gainer the other year. there's a lot of moving parts here. i think their assets deteriorate faster than buying the stock here and expecting a positive outcome. i think lower levels. >> is there not a possibility that maybe there's a decision made that they actually maybe
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spin some of the assets out and that develops where they do find some value and then -- >> could be. that's a coin toss in my opinion as an investor. >> but it's 7 1/2 times forward earnings with a 4% dividend with a stock trading at half its valuation as most of its peers. this will go away at some point. i don't know if it's next week, or a few months from now. but it's absolutely going away. and you're left with viacom. which i think is an extraordinarily viable company. >> let's say things don't change. and philippe is still in charge. >> because you get activists like karen finerman coming in and saying -- >> no, i think- >> but you understand what i'm saying. >> but the voting truck tur, fast forward 40 years. when the original structure was in place, everyone was fine with it, right? as we are now. as i am now.
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it's interesting to see -- never in my wildest dreams looking at viacom then would i imagine it would deinvolve into the viacom now. >> i think it was 1979, i had surgery, i was in the hospital for a while, i got totally hooked, totally hooked. there's the music. victor newman, stud. stud today 40 years later. just saying. >> still ahead, one of our traders is pushing the buy button. he'll explain why right after the break. show me movies with romance.
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show me more like this. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. welcome back to "fast money." $60, or $3. that's exactly where analysts see sarepta going this week. not quite stock therapy, more of an outpatient segment with meg turrell. she has the details.
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>> this is the week for the big decision for sarepta. by thursday the fda is set to decide on whether to approve the muscular distrophy drug. this has been a roller coaster ride over the last four years for this stock. the decision could come anytime up until then. analysts are putting the outer limits of where the stock could go at $3 and above $60. probably going to be somewhere in between there. won't necessarily be one or the other. most analysts don't think this drug gets approved. in that case, they think the stock goes below $10. if it does get approved, put people it at 15% to 20% chance of approval, they see it going to $50 or $60 a share. if there's something in between where they say there's a little bit of a delay but there's a path forward, maybe in the $20 to $30 a share range. some think it goes higher than that. this is giving everybody whiplash, even in the last year. look at some of the moves on the
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fda events. when they get the green light, it goes up 60%. there's a snowstorm, and the fda meeting got delayed, then they put out a second set of documents. the stock tanked again. at the end of april, that meeting happened where hundreds of patient advocates came out to really plea for this drug to get approved. they're saying the data are good. the fda said it was only 12 patients and we just don't know and the vote was negative. >> we were talking about the unusual swings we saw in the stock, apparently no news leading up to this meeting. >> you saw another one today. i think it was down 8%. in the after-hours, it's been moving as well. i've been talking about analysts, what's going on? nobody can peg where this should be right now. any buying or selling is just moving it wildly. that might happen up until we
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get the fda approval. >> 47% short on this stock? even after the decline that we saw. >> i have a question, if you can explain something to me. is it possible the fda comes back and said 12 is not a big enough sample, why would they have presented a sample of 12? >> their argument is, it's about the data i think at the end of 2012, the fda said they actually asked for a bigger placebo controlled trial. this was a study that was done just giving the kids the drug, and then used a historical control. what you might see in the disease otherwise. it wasn't a direct comparison. the fda had asked for a placebo controlled study. they said they didn't have enough money to make the drug. by the time they got the drug, they said we're not rolling out a placebo controlled study and risk our kids getting a sugar pill, essentially. they basically think the data are strong enough to file for
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approval on, this is a rare disease, as the argument is, a small population of a rare disease, you can't run large studies. a lot of analysts say it is too small of a trial. >> meg, thank you. pete, you're actually in this trade? >> i am, as of today. i'm on the upper side of the extremes. for a variety of reasons. i just -- what i'm looking at right now, it's incredible volatility. this is the old days of biotech, like we talked biotech still on this desk. i like to define it as you've got the big biotechs that are the pharma types, and biotechs like this that it's all waiting on what's to come. in march it was about 100 implied volatility. in other words, how much movement are people expecting. in april it was 250. and then suddenly you get into may and it's over 300s. the weekly options are trading at an 800% implied volatility. what does it mean?
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$17 stock looking for a $12 movement either direction right now. so you could either see the stock under $5, you were talking about -- or you could see it trading somewhere north of $30. if you look and see where the paper's been trading recently in here, the may 20 calls, pretty active in there. pretty large open interests developed along there. looking today even up to the 30 strike calls. i think the way you would want to manage this if you're involved in this name, and i'm not saying it's the greatest idea in the world, but if you want to be involved in a name like this, you've got to spread off some of that risk. di a 20/30 call spread. on friday. this is supposed to break at some point this week. we'll see how this whole thing plays out. it's a one way to be in here and you have control of how much you risk. >> this stock will first take 50 bucks, i think, and possibly even higher. i look at it from a compassion
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perspective. i couldn't understand why they would look at this and say compassion approval and give it approval and get maybe -- ask for more information. or data as they go along. of course, they could shut it down at any point in time. it looks to me in such a smat data set, i understand why, but i look at the amount of kids that are suffering from this, and say to myself, compassion use, that would be the best case scenario, you would see a $50 stock. >> sticking with options here. shares of the gap falling more than 20% in the last month alone. the traders are betting big that the stock gets a boost by the end of the week. mike, what are you looking at? >> a lot of unusual activity in the weekly options expiring this coming friday. the 18 strike calls were active, over 12 times their average daily volume midday. over 30,000 trading for about 70 cents. another 15,000 or so have actually traded since then. these are people making bets that the stock is going to be above $18.70. it's already up since they
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started trading it. >> check out the full show 5:30 p.m. on friday. up next, we've got the fin"fina trad trade". 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. td ameritrade. mountains, and racetracks.ve conquered highways, and now much of that same advanced technology is found in the new audi a4.
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pack for a little fast, but certainly not least. you may have noticed the snapchat filters were taken over by the x-men apocalypse movie today. we decided to have a little fun with the app. yours truly as the night crawler. that's pretty funny. >> i like the hair. >> the hair. time for the "final trade." >> crm, very unusual activity out in july. buying the 90 call. somebody thinks it's going higher. >> buy allergen. i love the stock here. i want to give a shout-out to goal for kids. a charity this wednesday night 6:30 to 9:00 downtown.
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>> tribune. don't buy it. >> xon. >> i'm melissa lee. see you back here tomorrow at 5:00. "mad money" starts right now.. 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 finds it. "mad money" starts now. hey, i'm cramer! welcome to "mad money." welcome to cramerica. my job is not just to entertain but to teach and coach. so call me. 1-80 1-800-7 1-800-743

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