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Use Mastercard as a way to get a leg up in the financial rally, analyst says

Financials have surged to become the best-performing sector since the election, and one market watcher told CNBC there are more gains to be had.

But while many of the big banks may appear overstretched, Todd Gordon of TradingAnalysis.com believes that there's better way to play the space: Mastercard.

"The stock has been in a beautiful uptrend for the last several years," Gordon told CNBC's "Trading Nation" last week. Mastercard is up more than 200 percent since January 2012 and hit a new high on Friday.

It's that breakout to the new high leads Gordon to believe that the stock is going to take another leg up, and has him betting on the credit card company in the short-term.


In addition to the stock's performance of late, Gordon noted that earnings at the end of January help propel the rally. To get ahead of the move, Gordon used the options market.

Instead of buying calls—or the right to buy the stock at a specific price—Gordon wants to sell puts, or options to sell. This is because as Mastercard approaches earnings in late January, the stock's implied volatility, or the price of its options, will get more expensive.

Gordon recommended selling the February 3 weekly 109-strike puts and buy the February 3 weekly 106-strike puts for a credit of $1.10 per share. This is a bet that the stock will stay above $108 through the start of next month.


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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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