Trader sees a breakout coming for Netflix

It's time to binge on Netflix again.

That's according to TradingAnalysis.com founder Todd Gordon, who says the streaming giant is about to make a comeback. While the stock has given back gains it made on Tuesday thanks to an upgrade by Guggenheim, Gordon says Netflix's earnings report on Nov. 16 will drive the stock higher.

"We've been in a period of underperformance here in Netflix for some time, and I'm thinking that we might now have the catalyst to break this consolidation," Gordon said Wednesday on CNBC's "Trading Nation."

"[I think we will] get through this $375 resistance level, begin to move up and potentially close this gap that exists from around earnings, back at around $390."

To play or a nearer-term move up, Gordon suggests selling the October monthly 365-strike put and pairing that with the purchase of the October monthly 360-strike put for a credit of $2.58, or $258 per options spread. Gordon wants to sell a put spread because implied volatility, or the price of options, is on the rise prior to Netflix's earnings.

If Netflix were to close above $365 on the Oct. 19 expiration of the options, then Gordon would make the $258 credit on the trade. If Netflix were to close below $360 on the expiration date, then Gordon could lose up to $240.

Shares of Netflix closed around $366 on Wednesday, meaning that Gordon is well-positioned in his trade.

Shares of Netflix are still up 91 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 CNBCand 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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