Harsh winter conditions that pummeled the U.S. Midwest and East Coast along with some tepid economic data points sent the SPDR S&P Homebuilders ETF (NYSEArca: XHB) to a first-quarter loss of 1.6%.

Now, some traders see the $2 billion ETF as a potential rebound candidate. With XHB heading for its first weekly gain since February, “investors are buying options betting that the rebound will keep going. The cost of bullish contracts has risen to the highest versus bearish ones in 2 1/2 years,” reports Corinne Gretler for Bloomberg.

Although XHB struggled in the first quarter, much of the damage was done in January. Since early February, the ETF is higher by 7.7%. XHB’s implied volatility “for three-month contracts with an exercise price 10 percent below the homebuilders ETF fell 23 percent to 20.96 since Feb. 3,” according to Bloomberg.

Bets on a rebound in XHB could also be a sign that traders are expecting the consumer discretionary sector to rebound. XHB is an equal-weight ETF and while it does hold shares of homebuilders, it also mixes in derivatives plays like USG (NYSE: USG), Lumber Liquidators (NYSE: LL), Whirlpool (NYSE: WHR) and Pier One (NYSE: PIR). That provides the ETF some exposure to the retail side of residential real estate, making the fund a discretionary play as well. [Homebuilders ETF at Key Juncture]

Other top-10 holdings in the ETF include Restoration Hardware (NYSE: RSH) and Williams-Sonoma (NYSE: WSM). Just three of the ETF’s top-10 holdings are pure play homebuilders.The consumer discretionary was adversely affected by the harsh winter as the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) posted a first-quarter loss of 2.4%, but the sector is now seen as attractively valued. [Attractively Valued Discretionry ETFs]