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This stock could see crazy moves on earnings: Trader

Earnings kick into high gear this week with reports coming from Apple, Microsoft, Yahoo, Amazon, Chipotle, McDonald's and Caterpillar to name a few. But according to one options expert, there's one name in particular investors should be watching closely.

"I think the one name you should be looking at [this] week is GoPro," CNBC Contributor Mike Khouw said Friday on CNBC's "Options Action."

GoPro is slated to report earnings after the closing bell on Tuesday, marking the company's fifth report since its June 2014 IPO. "The average move in the past four quarters is 13.4 percent and the implied move this quarter is 10 percent," he added.

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By Khouw's account, the stock performance of late combined with a strong fundamental backdrop could push the stock sharply higher. "This is a stock that is trading at 30 times next 12 months earnings [and] is growing at 50 percent," he said. "So if they can continue to demonstrate that they can do that, this is a company that could break out to the upside," he said. The stock is up more than 15 percent in the last five trading sessions.

So to take advantage of the potential move, Khouw recommended a simple options strategy: buying a call. Specifically, he looked to purchase the July 24 weekly 56-strike calls for $2.65. Since purchasing a call allows one the right but not obligation to purchase a stock at a set price for a given time, this trade is profitable if GoPro shares are above $58.65 by Friday.

The price of those calls nearly doubled in early Monday trading, as Shares of GoPro soared nearly 5 percent. It was trading at $59.58 at midday.

In addition to GoPro, Khouw noted that three other names are expected to see wild earnings moves this week: Amazon, Chipotle and Yahoo. "Of all the companies reporting, these are the names people should be looking at," he said.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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