Tesla shares are revving up for a serious rally, according to technical trader Todd Gordon. And he has a plan to profit from the anticipated move.
Now that Tesla has broken through an important upside level, the TradingAnalysis.com founder says the stock could rally at least another 3 percent or so in the short-term.
"We have broken above the $320 resistance level," Gordon said Monday on CNBC's "Trading Nation" of the stock that opened Monday trading at $338.50. "It looks to be now serving as support that can act as the next launch pad up to about $350."
The trader is referring to what he terms a "parallel channel" in the chart of Tesla. By connecting all the lows and the highs from the past few months, Gordon determines that "Tesla should be able to greet $360."
So not only does Gordon see Tesla exceeding $350, he's betting that a rally of over 5 percent is possible for the automaker in the coming weeks.
To play for this run in the stock, Gordon is buying the June 23 weekly 350-strike calls and selling the June 23 weekly 355-strike calls for a total of $1.45, or $145 per options contract. If Tesla were to close below $350 on June 23 expiration, then Gordon would lose the $145 premium he paid for the trade.
If Tesla closes above $351.45, he will break even on the trade. And if Tesla closes at or above $355 on June 23, then Gordon would net a profit of $357.
Gordon plans to exit the trade if it starts working against him. Specifically, if the call spread loses half the value he paid for it, he will sell it and take the loss.
Tesla is currently up 61 percent year to date. In April, the company surpassed Ford to become the most valuable U.S. automaker by stock market capitalization.