Trading Nation

As tech stocks surge, trader plays for more record highs

Trading Nation: Big tech stocks surge
The Nasdaq could see more record highs: Trader
Market rally about to go into turbo-drive?

As the Nasdaq 100 surged to a record high on Tuesday, one trader sees the big-tech index continuing to run in the month ahead.

To illustrate his point, Gordon looks at a long-term chart of the Nasdaq 100 ETF (QQQ) to show that the ETF has, as of Tuesday, exceeded its highs from back in March 2000 and finally broken out after rising gradually for the last few years.

But even more recent trends in the QQQ suggest that another leg up is in the works, according to Gordon. "We have a new floor, which is this old consolidation high of just about $119 in change," he said Tuesday on CNBC's "Trading Nation." "That's going to act as support, setting a trend for the move up."

However, Gordon also doesn't see QQQ rising beyond $125, which is about 3.5 percent above current levels.

To play for a move from current levels to $125, he is buying the QQQ January 120-strike calls and selling the January 125-strike calls for a total cost of $1.88 per share, or $188 per contract. The money Gordon spent making the trade is his maximum loss should QQ fall below $120 at Jan. 20 expiration, meaning that Gordon would lose the $188 should that happen.

If the QQQ closes at or above $125 on Jan. 20, Gordon will earn his maximum reward of $312, nearly tripling his money.