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Facebook could soon join a very elite club

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The $300 billion tech club could soon have a new member.

That's because if Facebook shares rise as much as the options market is predicting this week, the social giant will join Apple, Alphabet and Microsoft as the only other tech giants with a $300 billion market capitalization. That's nearly six times greater than the value of Netflix and just $50 billion shy of Exxon's market cap.

The stock is up more than 30 percent this year, but the options market is expecting Facebook to see a huge swing after reporting earnings on Wednesday. Using Facebook's at-the-money put and call strike prices, or straddle, options traders are predicting the stock to see a 6 percent move in either direction after earnings. That's nearly double its four-quarter average of 3.25 percent.

"We've had this massive move in Facebook in the last month," Dan Nathan said Friday on CNBC's "Options Action." Facebook shares are up 11 percent in that period. "I think the likelihood of a breakout like we saw in [Alphabet] or Amazon is fairly low," he added. "You may want to consider protecting your gains in a stock like this that's up more than 30 percent on the year."

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Looking at an options structure called a collar, Nathan outlined a strategy that could protect shares of Facebook stock at little to no cost. "If you don't want to sell your stock, this is a structure that will allow you to protect some of your gains and still participate with the upside," said the RiskReversal.com founder. "This strategy is essentially selling an upside call and using the proceeds to buy a downside put."

Nathan recommended buying the Facebook November 110/95 collar against 100 shares of stock at $102.50. He was able to put this trade on for no premium by selling the November 110-strike call for $1.30 and then purchasing the November 95-strike put for $1.30. This specific trade sees profits if Facebook shares are between $102.50 and $110 by mid-November. Losses are seen between $102.50 and $95.

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"I wanted to create a band where I can participate on the upside, while still knowing I have the potential for downside risk," he added. "I want disaster protection, and that's a collar."

Facebook reports its fiscal 2014 third quarter earnings on Wednesday after the closing bell. Analysts polled by FactSet are expecting the company to earn 52 cents on $4.4 billion in revenue.