Here’s how one trader is playing the market for new highs

Markets rebounded on Monday, and one trader believes it's a sign the bull market will rage on.

"We've seen volatility on the heels of this escalation in tensions with North Korea, but I think it's buyable," said Todd Gordon of, referring to the dip in the markets seen last week as tensions escalated between President Trump and North Korea's Kim Jong Un.

On CNBC's "Trading Nation" Monday, Gordon took a look at the Nasdaq-tracking ETF (QQQ). According to Gordon, the QQQ just made what he calls a "two-step pullback" similar to one that occurred in June. Gordon describes the trend as two pullbacks in succession that were followed by big rallies.

In other words, the trader believes that the market rebound has room to run.

To play for an even bigger rebound, Gordon is looking to buy the September monthly 144-strike call and sell the September monthly 148-strike call for $1.70, expiring Sept. 15. This means that Gordon believes QQQ can rally as high as $148 on Sept. 15 expiration.

If QQQ does close at $148 on Sept. 15, Gordon could make a max profit of about $230 while risking $170, the premium he paid to make the trade. But Gordon only needs QQQ to close above $145.70 to make money on the trade.

The Nasdaq rallied more than 1 percent on Monday, its best day since June 28.


Trades to Watch

Trader Bios


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.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more