Some options traders are betting on serious upside for Facebook ahead of the social media giant's earnings report coming after the bell Wednesday.
Nathan said trading on Tuesday saw excessive bullish activity, with call options volume 2½ times that of put options volume.
Call options allow the buyer to purchase a stock at a set price on or before a determined date, and heavy call activity usually indicates sentiment that the stock will go up. Put options allow their purchaser to sell a stock at a set price on or before a later date.
Nathan said Facebook's implied move after earnings this quarter is 8.5 percent, more than two times the average move of the last four quarters of 4 percent.
"This is options market makers looking at that move in Google, looking at that move in Amazon and not wanting to get caught offsides here," he said.
Google reported earnings earlier this month, which was followed by a historic one-day rally for the stock that added $65 billion in market capitalization. After Amazon reported better-than-expected earnings this quarter, shares spiked as much as 18 percent in after-hours trading.
Facebook was up slightly Wednesday morning, trading above $95. Of 52 analysts covering Facebook, 87 percent have a buy rating, with an average price target of $99.62.
However, Nathan warned that owning Facebook could be "dangerous."
"The stock is universally loved, widely owned, at all-time highs and trades at what I think is a ridiculous valuation," he said. "The stock will likely break $100, but it is in uncharted territory."