One social media stock is blowing Facebook and Twitter out of the water this year, and could head higher on earnings

Shares of Momo, a Chinese social networking platform, are on fire. The stock has soared 70 percent this year, far outpacing its U.S.-based counterparts Facebook and Twitter, up 4 and 33 percent, respectively, in the same time period. One technical trader is betting on more gains when the company reports earnings later this month.

"We are heading into earnings on Aug. 22, and I'm seeing the overall Chinese market start to bottom. Momo looks solid here," said Todd Gordon, founder of, Thursday on CNBC's "Trading Nation."

Examining a chart of Momo, showing the stock's hefty year-to-date gains despite trading off its all-time high in June, Gordon identified technical resistance around $40 per share that's turned into a level of support.

He pointed out that the stock's implied volatility has started rising, a typical pattern around earnings events.

"Then, inevitably what happens, post-earnings, you get the implied volatility crush. We can use that to our advantage. We think implied volatility, the level of option pricing, the puts and calls, is elevated," Gordon said. He added that this, combined with a bullish price chart, creates a nice set-up ahead of earnings.

To express his bullish thesis on Momo heading into earnings, Gordon is choosing to utilize a bull put spread, rather than buy calls, which he calls "extremely pricey." Therefore, he wants to sell the Aug. 24 weekly 43-strike put, and buy the Aug. 24 weekly $41-strike put, taking in a $1 credit.

"What happens with this trade, is if it rallies post-earnings, that's great; we will keep most or all of that profit. If we go sideways, the implied volatility crush is going to hurt those $43 puts that were short much more than the $41 puts that were long. That creates a profit for us," Gordon said.

Momo shares rallied a little more than 1 percent on Thursday.

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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.

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