Netflix shares have been buffering since the beginning of the year.
After spiking in January, the stock has held in a range between $340 and $380, unable to break through at either end. According to research firm Bespoke, this is Netflix's tightest trading range on record.
It could be about to break free of that channel, according to Todd Gordon, founder of TradingAnalysis.com.
"We've been in a long period of consolidation here in Netflix," Gordon said Tuesday on CNBC's "Trading Nation." "We've been big-time rangebound here since actually the last two earnings cycles, and I'm wondering if we're going to see finally a breakout in Netflix from this range."
The streaming service is also beginning to outperform major streaming competitor Disney, said Gordon.
"If you're looking over the last couple of weeks of Disney compared to Netflix — of course they're engaged in the streaming battles right now — the relative strength, if you divide Netflix into Disney, it's actually starting to increase, showing a little bit of outperformance," he explained.
Disney has blown Netflix away in recent months as investors flocked to the stock ahead of the November launch of the Disney+ streaming service. Disney has rallied 27% compared with Netflix's 2% gain. However, Netflix has started to turn upward relative to Disney since mid-June.
The next catalyst for Netflix could come when the company reports earnings after the bell on July 17. Netflix has surprised to the upside the past five quarters in a row.
"Heading into earnings, you are starting to see an elevation in the implied volatility. That's what happens inevitably prior to earnings," said Gordon. "What that means is options are increasing in price both in the put and call side."
To take advantage of any upside while protecting against any downside, Gordon is financing the purchase of a call spread by selling a put spread. He is selling the July 19 expiration $350 put and buying the $345 put; at the same time, he is buying the $395 call and selling the $400 call. This is a bet that Netflix can break out as high as $400 by expiration.