Amazon shares are breaking out. Here's how much higher it could go

Amazon hit yet another all-time high Tuesday, and founder Todd Gordon says the charts are hinting the e-commerce giant could soon reach a new milestone.

"You can see that [Amazon has made a very nice uptrend in 2017]," the technical analyst said Tuesday on CNBC's "Trading Nation." "And if we were to draw a parallel channel, you can see that [Amazon] is moving towards the top end of the parallel channel just south of $1,200 ... It looks like we have room towards $1,160 to $1,180 here in the next one to two months"

That's another rally of as much as 5 percent for the stock, which is already up 50 percent this year.

What's more, Gordon points out that in the last few months, a cup and handle formation has formed in charts of Amazon, which he sees as a bullish signal that the stock will move even higher.

To take advantage of a rally in Amazon, Gordon wants to buy the December 8 weekly 1,135-strike call and pair that with the sale of the December 8 weekly 1,140-strike call for about $2.10, or $210 per options spread. This means that if Amazon were to close above $1,140 on Dec. 8 expiration, then Gordon could make a maximum profit of $290.

But if Amazon were to close below $1,135, then Gordon would lose the $210 he paid to make the trade. As a precaution, he establishes a point where he would get out of the trade.

"If the premium paid gets cut to about $1.05, let's go ahead and cut the trade," he said. "The trade is probably not working."

Amazon was trading around $1,122 on Tuesday.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


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