Netflix, Inc. (NASDAQ:NFLX) shares are a coiled spring about to pop. At least, that’s what the technicals suggest. That means NFLX stock is ripe for the picking. Let’s chronicle the recent action in the tech sector and identify how to best capitalize on the resolution of Netflix’s triangle formation.

Since reclaiming the high ground above the 50-day moving average, the tech-laden Nasdaq has been in a holding pattern. While the pause may be frustrating late-to-the-party-Charlies who chased internet stocks at their peaks last week, it’s actually a good thing.

Periods of consolidation allow the market to digest recent gains and build a base for the next ascent. Traders will be watching the $170 level closely in the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) because a break above it will signal a new upswing has begun.

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Source: OptionsAnalytix

Since notching a new record high in early-March, NFLX stock has been rangebound. Netflix bulls will argue the multi-month chop was desperately needed and has allowed NFLX shares to work off overbought pressures. I agree with the analysis.

Click to Enlarge Source: OptionsAnalytix

Rather than seeing increased selling aggression, buyers have continued to sally forth on dips. Their desire to enter at ever-higher prices has formed a series of higher-pivot lows. Couple these with the equal swing highs near $335 and we’ve got a bona fide ascending triangle pattern.

With this week’s pop, Netflix shares are now testing the high of the range once again. I think it’s just a matter of time before resistance is felled and we have a breakout on our hands.

Netflix Bull Calls

To prepare for such an eventuality, consider deploying bullish trades. Bull call spreads offer a high potential payout while giving the stock time to make its move.

Buy the July $330/$350 bull call spread for $9. The risk is limited to the initial cost and will be lost if the Netflix stock price slips below $330 by expiration. The max reward is limited to $11 and will be captured if NFLX rises above $350 by expiration.

It’s not a sure thing by any means but it sure beats gambling.

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out his trading blog, Tales of a Technician.