It’s time to bet against IBM—here’s how: Technician

As stocks struggled to eke out gains on Thursday, one particular company weighed heavily on the Dow Jones industrial average.

IBM, which has tumbled more than 10 percent year to date, was the biggest Dow laggard on Thursday. And according to one trader, it's about to get a lot worse for the tech giant.

Todd Gordon of said IBM's underperformance in relation to the S&P 500 over the past two years is a troubling sign. In September, the company's stock entered a downtrend channel, which is pointing to further losses, he said.

"In mid-2013 you saw a divergence. The S&P continued higher, while [IBM] started to move lower. That's a key warning sign," Gordon said Thursday on CNBC's "Trading Nation." "Now, as we get a sign that the S&P is starting to pull back, IBM should really be hammered on the downside."

Read MoreWhy IBM could be the next HP

In an attempt to capitalize on this thesis, Gordon is selling the IBM November 145/150 call spread for $1.83. In other words, Gordon is selling the November 145-strike call and buying the November 150-strike call, which will allow him to keep the full $1.83 per share, so long as IBM is below $145 at November expiration. IBM shares closed Thursday at $143.67.

Meanwhile, if IBM does rise to $150 or above, Gordon stands to lose $3.17 per share.

"It's not a great risk-reward, but all we need the market to do is not go into this [$145-150] zone ... and we still have the ability to make money on this trade," Gordon said Thursday.

Want to be a part of the Trading Nation? If you'd like to call in to our live Wednesday show, email your name, number and a question to


Trades to Watch

Trader Bios


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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more