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Now is the time to bet on Netflix—and here’s how: Trader

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With Netflix set to report earnings in less than a month, Todd Gordon of believes it's time to tune in to the streaming giant's shares.

A daily chart of Netflix shows that its stock has struggled to retake $130, a level just below the all-time high that it hit back in December of last year. But according to Gordon, Netflix is about to not only return to that level, but to break through it as well.

"You can see that we have tried the $130 area several times and it looks like with a solid earnings report and a continuing rally in the stock market, we should be able to punch through that $130 mark," the trader said Wednesday on CNBC's "Trading Nation."

To determine just how high Netflix could go, Gordon looks at the prices of the put option and call option with striking prices in line with the stock's current price. On Wednesday, the value of the 127-strike call was about $7.95 and the value of the 127-strike put was $7.80, which makes just under $16 altogether. This means that traders expect Netflix to close above $16 higher or lower on Jan. 20. A bull, then, could bet on Netflix $143.

Yet Gordon opts to make a milder bet by buying the January 130-strike calls and selling the January 130-strike calls for $1.93 per share, or $193 per options spread set to expire on Jan. 20. This means that Gordon is actually betting on a 6 percent move up for Netflix, and could make $307 if Netflix closes above $135 on that date. On the other hand, if Netflix fails to rise above $130, his trade will become worthless.

Trader takeaway: Gordon sees Netflix surging off of January earnings, so he buys the January 130/135 call spread for $1.93 per share.