Apple could rally to new all-time highs this fall, says trader

The Apple rally is about to get a whole lot sweeter, says TradingAnalysis.com founder Todd Gordon.

Apple shares have rallied more than 10 percent since its market cap crossed $1 trillion for the first time ever in August, and according to Gordon, the stock could get a bigger boost following its earnings report in late October.

"Apple is in a very solid technical position," Gordon said Tuesday on CNBC's "Trading Nation." He noted that on a chart of Apple, the stock has been trading in an upward parallel channel, now moving toward the higher end of that trend.

And while he points out the stock has been in consolidation for a bit, Gordon also believes that Apple is "awaiting an end to that consolidation" that will result in a "resumption to the uptrend." In other words, Gordon believes that Apple will break out of its current pattern and head toward the upper end of the channel, rallying to as high as $235 a share.

To play this predicted rally in Apple, Gordon plans to buy the Nov. 2 weekly 230-strike call and sell the Nov. 2 weekly 235-strike call for a total of $1.56, or $156 per options spread.

This means that if Apple were to close below $230 on Nov. 2, then Gordon would lose the $156 he paid for the trade. But if Apple were to rally and close above $235, as Gordon predicts it will, then the trader would make a maximum reward of $344.

Apple has rallied 31 percent this year. It closed on Tuesday at $222.19 a share.

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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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