After selling off last week, the financial sector saw a slight bounce, and one trader is betting over $1 million that the financials will move even higher in the next three weeks.
On Monday, the financial sector ETF (trading under the ticker symbol XLF) was up 0.3 percent. However, call options on XLF outnumbered puts by a ratio of 6-to-1. A call is a bullish wager giving the purchaser the right to buy a stock within a given time, while puts are bearish wagers giving purchaser the right to sell.
The transaction that caught the eye of many traders was an enormous purchase of the 24.50-strike calls expiring on April 17. This trade was for 68,000 contracts at a price of 21 cents, meaning the buyer is expecting XLF to move above $24.71 or almost 1.8 percent above Monday's closing price of $24.28, by expiration. Since each contract controls 100 shares, the total amount paid for this trade was almost $1.43 million.