History suggests that Netflix will keep flying: Technical analyst

Netflix hit an all-time high on Thursday, but Todd Gordon says the charts show more records are ahead for shares of the streaming giant.

The stock surged more than 5 percent on Thursday after an announcement that the company would be increasing the monthly price of its most popular streaming service by 10 percent. That, and the company's typical post-earnings performance, has the technical analyst and TradingAnalysis.com founder betting on an even bigger rally for Netflix.

"Prices are going up on Netflix, and so is the price of the stock," the trader said on CNBC's "Trading Nation."

Going back to September of last year, Gordon's chart shows that after every earnings report, Netflix has seen a big rally up before a smaller sell-off. And since the stock is currently in a "rally phase," Gordon expects Netflix to see the same big jump on its Oct. 16 earnings report.

But as much as Gordon is betting on a big surge for Netflix, he also wants to establish a position at which to stop out of his trade if the stock actually falls. He believes that "support" is $186.70 for Netflix, as he determines this to be the level from which the stock broke out to new highs Thursday, and therefore sees that as a point to get out of his trade.

Since he wants to go long on Netflix heading into earnings, Gordon is selling the October monthly 190-strike put and buying the October monthly 185-strike put for a credit of $2.15 per share or $215 per options contract, making that amount the maximum profit if Netflix closes above $190 on October expiration.

If the stock were to close below $185 on October expiration, then Gordon could lose a maximum of $285 on the trade if he doesn't manage to exit at the $186.70 level he previously determined.

With Thursday's rally, Netflix is currently up 57 percent year to date.


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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 CNBC and 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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