The crude comeback is far from over, according to Todd Gordon of TradingAnalysis.com.
"The crude oil market looks to have found a low and is ready to start moving up, potentially into the mid-$50s, and even into the $60s," said Todd Gordon, founder of TradingAnalysis.com, on CNBC's "Trading Nation."
Gordon's call on crude comes based on a divergence between momentum and performance. Gordon points out that the last two times the oil-tracking USO ETF has taken a leg down, the market's relative strength index, or RSI, has decreased as well. But when the crude plunged to its year-to-date lows in June, there was less downward momentum on the decline than in a previous drop in May.
"This is a clue that the market is ready to start finding a bottom and it's potentially ready to push out of this channel around the $10 region," Gordon said, referring to a level just above the USO's Tuesday closing price.
As a result, Gordon believes USO can return to $11, where the ETF sat at the start of the year.
In order to cash in from such a move, Gordon is buying the September 9.50-strike call while selling the September 10.50-strike call for a total cost of 38 cents, or $38 per options spread. This means that if USO closes above $10.50 on September 15 expiration, Gordon will make $62 as his maximum reward.
However, if USO closes below $9.50, then Gordon would lose the $38 he paid to make the trade.
USO is still down 16 percent year to date, although it has bounced more than 12 percent from its 2017 lows in June.