Dan Nathan Sees Unusual Options Activity In The Financial ETF

Dan Nathan spoke on CNBC's "Options Action" about a large bearish options trade he noticed in Financial Select Sector SPDR Fund XLF.

When the stock was trading at $26.15, there was a buyer of 146,000 contracts of the January 25/22 put spread for 30 cents. The trade breaks even at $24.70 and it can maximally make a profit of $2.70. The trader paid around $4.4 million in premium.

Nathan sees the trade as a cheap way to make a bet on a pull back, after a big move higher in Financial Select Sector SPDR Fund. He added that it also might be a hedge against a long position.