This biotech stock is about to break out: Trader

Biotech stocks are taking a bit of a breather.

The Nasdaq Biotech ETF, which is up more than 24 percent year to date, has dropped nearly 6 percent from its recent high set on July 20. But as some investors may view the pullback as reason to flee the space, one trader has his eyes set on one of the ETF's biggest holdings: Amgen.

"I really like Amgen ahead of earnings," technical analyst Todd Gordon said Wednesday on CNBC's "Trading Nation." Amgen is slated to report its fiscal 2015 second-quarter earnings results Thursday after the closing bell.

Read MoreHere's what's weighing on this biotech stock

"Amgen consolidated for much of 2015 and we've recently broken out of this range," added Gordon, founder of Amgen shares have rallied more than 13 percent in the past 30 trading sessions. "The stock has also broken through this resistance level at $166, and that should serve as support."

For Gordon, if that support level holds through earnings, the stock could move sharply higher. "Ultimately I think we can get up to the $180-to-$190 range in the stock." That's a 5 to 11 percent move from the current price of just under $172 a share and puts the stock at all-time highs.

But as the Biotech space proves volatile, Gordon recommended using options to get long the stock. Specifically, for investors looking to capture earnings, Gordon suggested selling puts at the 165-strike. And for longer-term investors, he recommended buy calls.

"Longer-term I think this is a stock that wants to break out and could go as high as $200," he added.

Amgen reports its fiscal 2015 earnings report Thursday after the bell. Analysts surveyed by FactSet are expecting the company to earn $2.43 per share on $5.3 billion in revenue.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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