There was a fair amount of options action ahead of the long holiday weekend. A massive amount of puts traded in the financial sector, more specifically, on the Financial Select Sector SPDR ETF (XLF). Some of the large trades could be setting up a hedge against downside risk through August.

One interesting trade in XLF appears to be a put butterfly, which is a cheaper way to profit if XLF drops into a range below the current price. Financial stocks could continue to come under pressure with interest rates stuck at ultra-low levels.