A big institutional buyer bought calls in this ETF on Tuesday, Najarian reveals, which suggests the whole sector could soon go higher.

The traders discussed ways to play the news that Merrill Lynch (MER) plans to sell a large amount of its asset-backed securites and issue new stock to raise $8.5 billion. I’d buy puts on the Financial Select Sector SPDR (XLF) or I’d get long the ProShares UltraShort Financials ProShs (SKF) said Pete Najarian.

Options action in this name suggests the stock could move higher in September, explains Pete Najarian.

The buyers are institutional size buyers, adds Pete Najarian. There were massive orders coming in. I think there’s something going on, Najarian adds. Someone believes the price will be heading north sometime soon!