Crude is now 10 percent up from its 2017 low in June, and while the commodity is struggling to bounce back to the important $50 level, Todd Gordon still thinks there's one energy stock that's set for a rally.
Commodities as a whole "have actually been acting very strong," Gordon said Thursday on CNBC's "Trading Nation." "So I think this weakness in crude oil is short-lived."
As a result, the TradingAnalysis.com founder is looking to trade Halliburton into the company's earnings on July 24.
"Halliburton has had a very nice move up and is certainly outperforming the crude oil market," explained Gordon. "[It has seen a] beautiful push up, and we've since retraced the push of the higher rally."
And because of the overall strengthening of the commodities market in general, Gordon is betting that Halliburton will actually turn around and pop off earnings, which are set to be reported on Monday.
To play Halliburton going into earnings, Gordon wants to sell the July 28 weekly 45-strike put and buy the July 28 weekly 43-strike put for a credit of 48 cents, or $48 per options spread. The $48 is the maximum gain on the trade if Halliburton closes above $45 on July 28 expiration, while a close below $43 on expiration would have Gordon losing $152.
Given Gordon's levels, he's not too concerned about the skewed risk-to-reward ratio. "We need the market to go sideways, slightly lower or higher to make money," explained the trader.
Indeed, since his trade on the now $45.38 stock breaks even at $42.52, he has built a bit of a cushion into his trade.
Halliburton is currently down 16 percent year to date, making it another energy stock that has suffered due to crude's 12 percent drop this year.