NEW YORK -- Energy has been rebounding, and a huge trade is betting big on the whole sector. 

OptionMonster's Heat Seeker program show that a print of 55,000 June 84 calls was bought for $2.70 in the SPDR Energy Sector Fund (XLE) - Get Report while an equal number of June 89 calls were sold for $1. Volume was more than 50 times the previous open interest in both strikes, and it was the largest option transaction in all of Tuesday's session. 

Owning calls locks in the price where they can buy stock in the XLE, while selling them will force him or her to sell shares if a higher level is reached. The investor now stands to collect $5 if the fund closes at $89 or higher on expiration, almost triple the $1.70 paid to initiate this bullish vertical spread. 

The XLE ended Tuesday up 2.74% to $79.99 and has finally started outperforming the broader market following a major correction since last summer. The exchange-traded fund hit resistance around $89 in November, in the middle of that drop, and the call spread is looking for a rebound to that level. 

The fund's big holdings include Exxon Mobil, Chevron, and Schlumberger. Its recent gains have occurred as crude oil rebounded on short covering and major drillers cut production plans. 

Overall option volume was eight times greater than average, with calls accounting for a bullish 73% of the total. 

-- Written by David Russell of  OptionMonster

Russell has no positions in XLE