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Alibaba has doubled in the last year, and it has more room to run, says trader

Trader sees more record highs for Alibaba

Alibaba hit a new record intraday high on Thursday, and founder Todd Gordon says the stock will see even more new highs when it reports earnings next Thursday.

"The stock had been consolidating in September, October and right through the end of 2017," he said Thursday on CNBC's "Trading Nation." But in 2018, markets overseas are booming, he said. "We're seeing a nice push up."

This breakout of consolidation leads Gordon to believe the next leg up is upon us. He also noted that the stock broke above resistance at $190, which becomes support. He establishes this as a key level to watch into earnings.

To take advantage of the rising implied volatility, or the price of options, going into Alibaba, Gordon wants to make a bullish bet on the stock by selling a put spread. Specifically, he is selling the Feb. 2 weekly 192-strike calls and buying the Feb. 2 weekly 197-strike calls for $1.95 credit. This means that if Alibaba closes above $197 on Feb. 2 expiration, then Gordon would receive the $195 credit on the trade.

If Alibaba closes below $192 on Feb. 2 expiration, Gordon could lose $304. However, because Alibaba is already trading at $198.24, above the higher put strike level in Gordon's trade, he believes that the probability of the stock dropping by that much is small.

So far this year, Alibaba has soared about 15 percent.