Rising interest rates are seen helping U.S. banks and the related ETFs. The Federal Reserve has boosted borrowing costs twice this year and bond market observers widely expect a third rate hike when the Fed meets in December.

Higher interest rates would help widen the difference between what banks charge on loans and pay on deposits, which would boost earnings for the financial sector.

“Earlier today, it appears one trader upped the bullish ante on XLF, selling to close 20,000 now in-the-money weekly 12/29 27-strike calls in order to buy 20,000 January 28 calls, per Trade-Alert. If so, the trader rolled a bullish position up and out a strike, with expectations for the ETF to extend its journey north of $28 through January options expiration,” according to Schaeffer’s.

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