It’s time to bet on Coke shares: Technician

With the Federal Reserve raising interest rates this week, Todd Gordon of sees one classic stock that could be primed for a breakout.

"2016 looks like it's a year of dividends in a slow interest rate increase environment," Gordon said Wednesday on CNBC's "Trading Nation." "To kick it off, we're going to try to play those utilities, those staples, those dividend players to the top side, and Coke looks ready to go."

One of the strongest sectors going into 2016 should be consumer staples, Gordon said. Within that group of names, Gordon said Coca-Cola's stock looks like it's about to break through previous levels of resistance at $45.

Coca-Cola shares, which currently pay a dividend of about 3 percent, have risen almost 3 percent this week, closing Thursday at $43.50.

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To capitalize on the expected outperformance, Gordon recommends using an options trade known as a call spread. Specifically, Gordon is buying the January 44-strike call and selling the 46-strike call for 50 cents total. This is a bet that Coca-Cola's stock is between $44.50 and $46 by January options expiration on Jan. 15.

"Coke has a pretty strong chart on the top side ready to break," he said. "I think with the interest into the dividend stocks, we are going to break through."

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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.

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.

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