How Microsoft can help this trader make five times his money

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Microsoft is set to surge after it reports earnings, predicts one trader who could make more than five times his money off a Microsoft bet.

Microsoft has surged more than 19 percent since its Brexit low in June. And though the stock has traded in a range for most of the summer, Andrew Keene of AlphaShark sees good signs in the charts for the tech giant, especially with earnings as a "catalyst" for Microsoft.

"It has rallied five of the last eight quarters on earnings," Keene said Tuesday on CNBC's "Trading Nation." "Combine that with the chart, and I think Microsoft is going higher."

On a daily chart of Microsoft, Keene says that the stock has consolidated since jumping off of the company's last earnings beat in July. While Microsoft has been trading in a range of $56 to $59, the stock has generally managed to stay above its 50-day moving average, which indicates to Keene that this smoothing mechanism is serving as support.

Meanwhile, Microsoft's weekly chart shows what Keene terms a "bull channel," and based on that trend, Keene believes that Microsoft could be headed to $62.50. In other words, Keene sees Microsoft climbing more than 8 percent in the short term, especially if the company's past earnings trends repeat.

To take advantage of this expected move, Keene is buying the November 60-strike calls and selling the November 62.50-strike calls for a total cost of $0.45 per share, or $45 per options spread. If Microsoft closes at or above $62.50 at the trade's expiration on November 18, this "call spread" will be worth $250, meaning that Keene will have quintupled his money.

"We have that measured move target to $62.50, so I think this is a great reward-to-risk set-up in Microsoft playing into earnings," said Keene.

Microsoft is currently up 4 percent year to date and closed Tuesday trading at $57.66. The tech giant is expected to report earnings on Thursday after the closing bell.