A couple large covered call trades in Financial Sector Select SPDR ETF (XLF) imply smart money is taking a moderately bullish position on financial stocks. There is likely a cap to how high financial stocks can go due to lower interest rate expectations.
However, covered calls are mostly considered bullish trades because they generally make money when the stock goes up. These long-term XLF covered calls provide some ability for capital appreciation, add a small amount of yield, and offer a small measure of downside protection.
