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Behind The Trade: Pete’s XLF Play

Pete Najarian anticipates some big moves in bank stocks and he’s using the XLF as his proxy.

What’s the trade?

Najarian is making bullish bets on the bank ETF for the following reasons.

- He’s seeing some heavy bullish options action in the February 16 calls.

- He’s impressed with the sector’s ability to shrug off the recent estimates cut issued by influential analyst Meredith Whitney earlier in the week.

- Patterns in the chart of the XLF suggest to Najarian the stock wants to break higher.

- Credit Suisse upgraded Bank of America to ‘Outperform’ from ‘Neutral’ saying the banks decision to repay TARP "relieves a significant overhang on its shares."

* In case you're wondering how Joe Terranova is playing the space he's long Bank of America and shortComerica against it.




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Trader disclosure: On January 7th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kaminsky Is Short (QQQQ); Finerman's Firm Owns (GME), (MSFT), (PLCE), (WMT); Finerman's Firm Is Short (IJR), (SPY), (IWM), (MDY), (UNG), (USO); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (TJX); Finerman's Firm Is Short 30-Year Treasury Options; Finerman's Firm Is Short (TBT); Finerman Owns (AAPL); Terranova Owns (BAC); Terranova Is Short February Crude Oil Futures; Terranova Is Short (CMA), (SHLD); Terranova Is Long Copper Backwardation, Is Long May 2010 Futures, Is Short July 2010 Futures; Seygem Asset Management Owns (EEM) Puts, Seymour Owns (EEM), (AAPL), (AA), (BAC), (CHL), (FXI), (INTC)

Add’ls Disclosures for JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Jon Najarian
Jon Najarian Owns (APOL) Time Spread

Pete Najarian Owned (XLF) Calls Today

CNBC.com with wires