Talk about a call beyond belief.
McDonald's announcing plans to test Beyond Meat's plant-based products in Canada didn't exactly come as a surprise to TradingAnalysis.com founder Todd Gordon, who told CNBC's "Trading Nation" last week that the charts were signaling a potential tie-up between the two companies.
Beyond Meat's stock rallied over 12% on the announcement, while McDonald's rose by less than 1%. Beyond Meat shares are up over 519% from the company's May 2 initial public offering.
Pointing to a correlation between the two stocks, Gordon said last Thursday that he believed "a perpetual bid in Beyond for the possible outlook of a partnership with McDonald's" was creating the connection.
"It was there in the charts to begin with," Gordon said in a new "Trading Nation" video on Thursday, recapping his earlier call.
Now, with Beyond Meat's stock holding well above the $145 level that Gordon flagged as key support, he sees even more runway for the public market newcomer.
"We're not yet through upper resistance, which is right around that $165 to $170 region," Gordon said. "We're still contained within this range. If there's any legs to this news story, I think there is additional upside, certainly through the range."
Investors shouldn't take this as an all-out buy signal, however, Gordon said.
"I wouldn't want to just buy the stock. I wouldn't want to buy a lot of calls," he said. "I'd like to mitigate our risk in a very hot news story like this with a call spread."
For his call spread, a bullish trade that represents a bet on a stock's moderate increase in price, Gordon bought the November $160 monthly calls and sold the November $170 monthly calls at a net cost of $1.60, or $160 per spread. Beyond Meat would need to rally at least 3% from its Thursday closing level for that trade to pay off.
And while this bull case "doesn't look like much in the chart, ... when you price it out in the options market, the return is pretty impressive considering the risk that we have to take," Gordon said.
As of Gordon putting on the trade Thursday, the maximum potential profit would be $840 "if the trade works perfectly," he said.
"Obviously we're looking beyond resistance in [Beyond Meat's stock]," the technician said. "Hopefully, there's more legs to this story and this stock can move up. Position-size appropriately ... because this is a hot story stock. This is why we like to use options that define the risk."