Trading Nation

This chart makes the case for buying Tesla ahead of earnings

Share
VIDEO2:1102:11
More record highs for Tesla?

Tesla hit an all-time high Monday morning, but with the company set to report earnings on Wednesday, the stock's record-setting run isn't yet done, according to technical analyst Todd Gordon of TradingAnalysis.com.

"I really like how the stock's acting into earnings," Gordon said Monday on CNBC's "Trading Nation."

Gordon says the stock is moving higher in a "parallel channel" stretching from December of last year through Tesla's current trading levels. Tesla's 3 percent jump on Monday helped the stock break through what Gordon says is a "$315 resistance," and the trader believes Tesla could rally on earnings to hit the upper line on the channel.

"Looks like if earnings do come out as expected, which is quite strong, you could be moving up towards the upper end around $330 in Tesla," said Gordon.

In order to play for a move higher in the stock, Gordon bought a "call spread" on Tesla that will return maximum profits if the stock closes at or above $325 by the end of the week. Specifically, this entails buying the 320-strike call and selling the 325-strike call, both of which expire on Friday.

April was a record month for Tesla. Not only did the company's shares continue to make record highs, it also surpassed both Ford and General Motors in market capitalization.

So far this year, Tesla stock has surged more than 51 percent.