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This energy giant will surge even higher, and here’s how to play it: Trader

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Trader bets on this energy giant to surge
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ExxonMobil's Monday morning rally is only the start of a surge back to previous highs, says one trader who is making a bullish bet on the stock.

The oil giant is up more than 2.5 percent as of midday Monday trading, fueled by crude oil's surge on the back of an agreement to cut production, which was set by both OPEC and non-OPEC countries as speculation that CEO Rex Tillerson could be nominated for secretary of State has circulated. Exxon shares have struggled since hitting highs for the year in July, but Todd Gordon says the stock's latest breakout above $90 will actually take the oil company even beyond its 2016 peak.

"I like the bottoming formation in crude, but I think better opportunity rests in trading in the actual energy stocks," Gordon said Monday on CNBC's "Trading Nation."

While an "upside channel" on a longer-term chart of Exxon has Gordon thinking that the oil company "could [reach] all the way to triple digits," he is making a shorter-term bet that Exxon could rise another 4 percent over the next month. According to Gordon, the stock has broken through its past "resistance" of $89, and with that level now being "support," Exxon can move as high as $96.


To bet on an Exxon rally, Gordon wants to buy the January 90-strike calls and sell the January 95-strike calls for about $2 per share, or $200 per contract, set to expire on January 20.

This means that Gordon is risking $202, but if Exxon rises above $92 on expiration, Gordon's trade would return a profit. The maximum reward of $300 would come if the oil giant closes at or above $95 at expiration.

Exxon share are currently up 17 percent this year.