Dan Nathan Sees Unusual Options Activity In Select Sector Financial Slct Str SPDR Fd

On CNBC's Options Action, Dan Nathan spoke about options trading activity in Select Sector Financial Slct Str SPDR Fd XLF. There was some bearish activity in the ETF as put options volume was 1.5 times higher than the average daily put options volume.

When the ETF was trading at $22.40, there was a buyer of 35,000 contracts of the October 30, 22 strike for $0.51. The trader paid around $1.8 million of premium and the breakeven for the trade is at $21.49 or around 4.5 percent lower of the stock's current price.

Nathan explained that this could be a protection trade because the financial stocks are reporting earnings until the October 30. He added that there is a lot of room for an increase in implied volatility if things go wrong for the banks.