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 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.