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Netflix could jump 10 percent on earnings. Here’s how one trader is playing the stock

Trader sees a big bounce for Netflix on earnings

Streaming giant Netflix is set to report earnings after the bell on Monday, and one options trader is betting the stock could soar to new heights following the results.

The options market is implying a move of 10 percent in either direction for Netflix on earnings, and that's more than the company's 7 percent average move. Todd Gordon of founder says the charts are setting up for a move higher.

"You can see that we have a nice pullback going here in Netflix that really has retested prior resistance levels that are now acting as support," Gordon said Thursday on CNBC's "Trading Nation."

Gordon is referring specifically to a bounce back from the $280 level made in the last few days. "It looks like we should be able to retest at least $320 and possibly the old highs of around $340 if we have a good earnings report," he added. The move would represent a 10 percent jump in Netflix, which is in line with what the options market is implying.

Since the implied volatility, or the price of options, rises ahead of earnings events, Gordon wants to sell a put spread instead of buying expensive calls. Therefore, he is selling the April 20 weekly 290-strike put and buying the April 20 weekly 285-strike put, which gives him a credit of $1.50, or about $150 credit on the spread.

This means that if Netflix closes above $290 on April 20 expiration, Gordon would make the $150 credit on the trade. But should Netflix close below $285 on April 20, he could lose $350.

However, he doesn't mind the skewed reward-to-risk ratio because Netflix was trading at around $308 on Thursday, meaning he is well in the money for his trade heading into Monday's earnings.

The streaming giant has soared 61 percent year to date.