Facebook shares could be on the road to new highs, trader says

Facebook shares are rising, and that has one trader hitting the buy button on the stock.

The stock is up 15 percent since reporting earnings Jan. 30, leading Todd Gordon, founder of TradingAnalysis.com, to believe new highs could come sooner than investors think.

"We have a gap that's yet to be closed, which is quite constructive in the underlying stock," Gordon said Tuesday on CNBC's "Trading Nation." "And it looks like we could go up."

In fact, Gordon believes that the stock is set to close a giant gap down in the charts from that July all-time high when the social media stock cratered from earnings. This means that in the short term, he believes Facebook could return to around $190, the lower end of that gap down in July.

But Gordon also believes that the recent consolidation in Facebook shares after its Jan. 30 earnings report could also point to more upside for the stock. He believes that the consolidation post-upward earnings gap means that "sellers aren't really interested" in getting in the stock, and it's now mirroring a consolidation happening in the market as well.

"Once the market does get through consolidation, I believe the next move should be up in Facebook," he added.

As a result, Gordon wants to buy the April monthly 170-strike call and sell the April monthly 190-strike call for about $5.34, or $534 per options spread.

This means that should Facebook close below $170 on April 18 expiration, then Gordon would lose the $534 he paid to make the trade. But should Facebook close above $190 on April 18, then Gordon could make up to $1,466 on his trade.

Thanks to its jump on earnings, Facebook has now risen 27 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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