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 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.