Tony Zhang Discusses $6M Options Bet Against Financials

On CNBC's "Options Action," Tony Zhang said there was massive trading in Financial Select Sector SPDR Fund (NYSE: XLF), the ETF that tracks the financial sector. The trading volume was 1.4 times the average daily trading volume, with 250 million contracts being traded.

He pointed out, however, that 30% of the volume was represented by a single trade, with a buyer of 70,490 December 36 puts at 89 cents. With this, the trader bets over $6 million the ETF will lose at least 9% over the next two months.

The trade represents more than $250 million in notional value, if this was a protection trade against a long equity portfolio, he added.

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Although it's unclear whether this was a protection trade or a bearish bet on the banks, the trade reflects concern over a pullback in financials, Zhang said.