Bullish options flow was evident in exchange traded funds indexed to the U.S. financials sector on Wednesday with relevant activity in both SPDR KBW Bank (NYSEArca: KBE) and Financial Select Sector SPDR Fund (NYSEArca: XLF).
It is worth noting that the top portfolio holdings of both ETFs are quite similar, with XLF taking a 9.4% position in JP Morgan (NYSE: JPM), 8.7% in Wells Fargo (NYSE: WFC), 8% in Berkshire Hathaway (NYSE: BRK-B), 5.7% in Citigroup (NYSE: C) and 5.2% in Bank of America (NYSE: BAC).
KBE has 9.2% in JPM, 7.5% in WFC, 6.7% in U.S. Bancorp (NYSE: USB) and 5.5% in BAC.
Obviously, BAC has been extremely volatile amidst headlines in the past month as has JPM, and generally, the financials sector has trailed the broad market, down 19.6% year to date versus the S&P 500 down only 4.2%. [Are Bank ETFs Finally Turning Around?]
For those looking to leverage a short term trade looking for upside in financials without using options, Direxion Daily Financial Bull 3x Shares (NYSEArca: FAS) may be a potential fit as the ETF is designed to provide three times the daily returns of the Russell 1000 Financial Services Index.
While not meant to be a long term strategy as the ETF is subject to the daily compounding effect, in a trending “up” market, the ETF will likely see a lot of traffic and interest. [Don’t Blame Leveraged ETFs for Market Swings]
Direxion Daily Financial Bull 3x Shares (NYSEArca: FAS)