Credit-sensitive financial ETFs outperformed the market in the first quarter but have lagged the S&P 500 since April. A big options trade in the largest financial ETF on Monday suggests the sector could see volatility this week as investors get the Federal Reserve announcement and the July employment report.

Financial Select Sector SPDR (NYSEArca: XLF) is up 14.2% year to date, while iShares S&P 500 (NYSEArca: IVV) has gained 11.6%, according to Morningstar.

However, the bank-heavy sector fund is down 4.1% for the trailing three months, while the S&P 500 ETF is flat.

XLF, which is among the most actively traded ETFs, can see big swings in price on shifting perceptions over Europe’s debt crisis and the U.S. economy.

The Fed statement on interest rates and the economy crosses Wednesday afternoon, followed by the July nonfarm payrolls report on Friday.

Reuters reports a sizable bearish option trade in XLF Monday “indicated concern on Monday that bank stocks could see another round of volatility and a pullback in shares by the end of the year.”

The XLF put spread was possibly a hedge “ahead of a week full of event risk.” Options volume in XLF was over twice the daily average on Monday, according to the report.

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