Why This Trader Expects Financials To Rise At Least 2% In January

On CNBC's "Options Action," Tony Zhang said there were “sizable bullish bets” for the Financial Select Sector SPDR Fund (NYSE: XLF) on Wednesday.

The bets were for the January expiration and came on an otherwise very quiet day due to the holidays, Zhang said. 

Calls outpaced puts by around 1:6 and one traded accounted for almost 10% of the total volume, he added.

There was a buyer of 9,848 contracts of the January 39.5 calls at an average price of 62 cents per contract, Zhang said. This represents a $600,000 premium to control “a notional value of $38 million,” he added.

The trader sees Financial Select Sector SPDR Fund appreciating by at least 2.3% by January expiration.