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Options Action: Financials

With Wall Street banks facing a much talked about insider trading probe how should you play the financials?

As you likely know, earlier in the week the WSJ reported reported that “Federal authorities are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation.”

On the news banks sold off sharply with the XLF turning lower and never looking back.

However, in recent days analysts have said that the FBI probe porbably presents more of a headline risk than it does a real concern for the stability of banks.

How should you game it?

Scott Nations of NationShares suggests an options trade.

He recommends buying the XLF March 15 call at 0.60 with stock at 14.50. “You can buy this outright or this works really well as stock replacement if you already own XLF, he says.

As you likely noticed that’s a bullish bet because Nations believes that although the FBI probe may change the way analysts work he does not anticipate a ‘horribly egregious violation that's going to really torpedo any financial firm.’

Learn more about this trade. Watch the video now!




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Trader disclosure: On November 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour Owns (AAPL), (BAC), (BX), (TSO), (HPQ), (FXI); Finerman's Firm Is Short (WAG; Najarian Owns (BAC); Najarian Owns (GDXJ) Call Spread; Najarian Owns (MS); Najarian Owns (NUAN) Calls; Najarian Owns (PFE); Najarian Owns (YHOO); Najarian Owns (CRUS); Najarian Owns (WLT) Call Spread; Najarian Owns (MEE) Call Spread; Najarian Owns (TEVA); Najarian Owns (CNI); Najarian Owns (AKAM) Call Spread; Najarian Owns (DO); Najarian Owns (DOW); Najarian Owns (FIRE); Terranova Owns (UPL), (C), (PEP), (VRTS), (OXY), (GS), (FCX), (IBM), (CRM), (MCD), (NKE), (AAPL); Terranova Owns (CRM) Puts; Terranova Owns (FCX) Puts; Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell 2000 Puts; Finerman Owns (AAPL); Finerman's Firm Owns (AEO); Finerman's Firm Owns (ARO); Finerman Owns (BAC); Finerman's Firm Owns (BP); Finerman Owns (BX); Finemran Owns (DYN); Fnierman's Firm And Finerman Own (HPQ); Finerman's Firm And Finerman Own (JCG); Finerman's FIrm And Finerman Own (JPM); Finerman's Firm Owns (M); Finerman's Firm And Finerman Own (MSFT); Finemran's Firm Owns (SKS); Finerman's Firm Owns (TGT); FInerman Owns (USO); Finerman's Firm Owns (WMT); Steve Cortes is short (UNP), (CSX), Nasdaq Futures, (AAPL) and corn. Steve Cortes is long 2 Year Notes, U.S. Dollar vs. Mexican Peso, Australian Dollar, Canadian Dollar. Steve Cortes Owns (TSN) and (K).

For Anthony Scaramucci
Scaramucci And Skybridge Capital Own (M)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
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Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SOA)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (GLD)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (RTH)
Accounts Managed By Kanundrum Capital Own (XLK)
Accounts Managed By Kanundrum Capital Own (SMH)
Accounts Managed By Kanundrum Capital Own (JJG)

For Simon Baker
Baker And Baker Avenue Asset Management Own (ODP)
Baker And Baker Avenue Asset Management Own (C)
Baker And Baker Avenue Asset Management Own (CTSH)
Baker And Baker Avenue Asset Management Own (IBM)
Baker And Baker Avenue Asset Management Own (GLD)
Baker And Baker Avenue Asset Management Own (GDX)
Baker And Baker Avenue Asset Management Own (PHYS)
Baker And Baker Avenue Asset Management Own (SLV)
Baker And Baker Avenue Asset Management Own (URBN)
Baker And Baker Avenue Asset Management Own (ANN)

For Jeff Klinefelter
Piper Jaffray Is A Market Maker In (HOTT), (WTSLA)
Piper Jaffray Usually Provides Bids And Offers For And Will Buy And Sell On A
Principal Basis (ANF), (ARO), (AEO), (GES), (GPS), (JCG), (JCP), (KSS)

For Scott Nations
***No Disclosures

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