The Financial Select Sector SPDR ETF (XLF) rose on Thursday to its highest level since before the financial crisis in early 2008, rallying nearly 8 percent following Trump's victory.
But some experts warn that there's not much room left for the banks to run.
Banks have rallied to a combination of the massive rally in U.S. bond yields since Trump's victory — the 10-year Treasury yield has surged 23 percent since Wednesday — and the belief that the Donald Trump administration will bring less regulation in the banking industry.
In a note published Thursday, Michael Block, chief strategist at Rhino Trading Partners, wrote that the banks are "trading like Dodd-Frank and the Volcker rule have already been wiped out of existence and that we are partying like it's 2006."
Trump's presidential transition team said in a Wednesday statement that it would "dismantle" the Dodd-Frank Act, the legislation passed in 2010 that brought significant regulation upon the banking industry following the financial crisis.
In another potentially bullish sign, sources told CNBC's Kate Kelly that JPMorgan CEO Jamie Dimon has been considered for the role of treasury secretary under Trump.
But the notion that the sector will see less regulation and thus become more attractive doesn't make much sense to Dennis Davitt, managing director at Harvest Volatility Management, who said in an e-mail to CNBC that such an act would take "years."
"Even if they were to repeal Dodd-Frank tomorrow, for the banks to get back in motion … they've spent the last eight years growing out their compliance departments. They're not growing out their proprietary trading departments," Davitt said Thursday on CNBC's "Power Lunch."
Rather than owning the XLF outright, he suggests playing the banks more nimbly, by using options.
"There's real smart money out there buying upside inexpensive calls in the banks. If they continue to defy gravity, it's a great options to own. And if you own these banks, if you were fortunate enough to call this all right, buy some puts against your positions," he said.
The buying opportunity may lie in the coming weeks, according to Matt Maley, equity strategist and technical analyst at Miller Tabak.
"The group is up incredibly in the last three months, and it's getting very extended," Maley said Thursday on "Power Lunch."
Maley said the he wouldn't "chase" the group at this point, deeming them overbought, largely because the bond market is getting "incredibly oversold and incredibly over-hated."
Rising rates tend to help the banks, as higher yields generally mean that the difference at which banks can borrow and at which they can lend grows.