The SPDR KBW Bank Fund (NYSE:KBE) is up near resistance again, and one trader is using a combination trade to bet on a breakout. (KBE) is down 0.54 percent to $23.76 in morning trading. It tested $22 last week and has bouncing between that support and $24 for the last four months,” Chris McKhann Reports From Option Monster.

McKhann goes on to say, “The average daily options volume is 3,800, but 20,000 trade this morning. All but a fraction of that went off in a June combination. A trader bought two blocks of 5,000 of the 26 calls for $1.20 and $1.25.  At the same time, they sold two blocks of 5,000 of the 21 puts for $1.15. The previous open interest at both strikes was less than 250 contracts.  The trader risks $0.10 if the KBE stays within the range of $21 and $26. Beyond those bounds the trade will have the risks and returns of long stock, generating huge leverage in both directions.”

SPDR KBW Bank ETF (NYSE:KBE)

The investment seeks to replicate the performance of the KBW Bank Index. The fund uses a passive management strategy designed to track the total return performance of the Bank index. It is non-diversified.

NYSE:KBE