Deere shares have slumped 11% this month as the U.S. and China hiked tariffs against one another in an escalating trade war.
It could get worse for the farm equipment company, says Todd Gordon, founder of TradingAnalysis.com.
"The stock has been under considerable pressure here amid the Chinese tariffs — big heavy agricultural equipment related to farm-based commodities obviously is under pressure here," Gordon told CNBC's "Trading Nation " on Tuesday.
Deere has fallen more than 1% since the beginning of the year, missing out on the S&P 500's 13% advance. Gordon sees it in a precarious spot ahead of its earnings Friday morning.
"The stock is in a technically vulnerable position," said Gordon. "You can see that we're coming off pretty significant double top up here around $170. This comes back to early 2018, and we've come off fairly sharply. It looks like if this trade war is to rage on, we could go back to retest the lower end of this range, inevitably down around $130."
A drop to $130 marks 11% downside from current levels. It would also push Deere into a bear market, putting its decline at more than 20% off a 52-week high.
Gordon is not expecting that kind of slump post earnings, though.
"The options market is indicating that we could see a $6 move lower from current prices. We're at $147 now, so that's the minus one standard deviation," said Gordon. "Options markets are expecting if the news is disappointing all the way down to $140.77, so I want to execute the trade right around that level."
To take advantage of any volatility post earnings, Gordon is putting on a butterfly spread by simultaneously purchasing a $145 put option, selling two $140 puts and buying a $135 put with May 17 expiration.