A 'beautiful' move has one trader betting on a bounce for Halliburton shares

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.


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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.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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