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LinkedIn is getting ‘complacent’: Trader

Options Action: How to play LinkedIn

Ahead of LinkedIn's earnings report Thursday, options traders are predicting a smaller move than previous quarters, although the stock could still be in for a substantial swing.

"It's showing a little bit of complacency. Options prices actually seem very fair to sort of cheap here," Dan Nathan of RiskReversal.com said Wednesday on CNBC's "Fast Money."

Based on options action in the market, Nathan said traders bet LinkedIn will move about 11 percent, or about $30 up or down. The average move in the past four quarters was about 13.5 percent, he said.

According to Nathan's chart, LinkedIn's move on earnings could either mean a rise to pare losses from the previous quarter or a drop back down to a support level of about $195.

"[We're] expecting a very wide range. It's likely to move that much," Nathan said. "The last quarter was a disappointment."

LinkedIn shares plunged more than 18 percent after the company reported earnings in April. The stock has yet to recover fully from the drop and is down more than 11 percent in the last three months. LinkedIn has fallen more than 2 percent this year.

However, Nathan said the move could be an opportunity for those who are bullish on LinkedIn to hedge their bets.

"If you think that this level is technical resistance, you may want to consider selling some calls against it to add a little yield," Nathan said.

About 79 percent of analysts have a buy rating on LinkedIn with an average price target of $252. By early afternoon Thursday, shares of LinkedIn fell more than 3 percent to about $224.

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