Trader sees a breakdown for the bond market, and that’s good news for the big banks founder Todd Gordon says the financials are finally catching up to the market rally, and a breakdown in bonds may just bring about an even bigger rise for the big banks.

"The overall market seems to have stabilized, the S&P is pressing the 2018 highs, and it looks like the financials are finally playing a little bit of catch-up here," he said Tuesday on CNBC's "Trading Nation."

On a chart of the long-term bond-tracking ETF TLT, Gordon points out that the TLT has tried to break through the $123 mark multiple times in the last few months. But its inability to do so leads Gordon to believe the ETF is headed even lower, which means yields are about to press higher, a move that will benefit financials.

To play for a move higher in the financial sector, Gordon is looking to the XLF, the ETF that tracks financials. He points out that the XLF is close to its May highs at around $28.50, and believes it could rally to its February highs — around the $30 mark.

As a result, Gordon wants to buy the September monthly 28-strike calls and sell the September monthly 30-strike calls for a total of 84 cents, or $84 per options spread.

If the XLF closes above $30 on the Sept. 21 expiration, then Gordon could make $116 on the trade. If it closes below $28 on Sept. 21, however, then Gordon would lose the $84 he paid for the trade.

The trade: Gordon is suggesting buying the September monthly 28/30 call spread in XLF for about $84 per options spread.

Bottom line: Gordon sees XLF rallying above $30 on Sept. 21 expiration.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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