All eyes are on banks stocks ahead of earnings next week, and the Street is split on whether financial stocks are attractive at current levels.

Blue Line Futures President Bill Baruch says caution is warranted, while Susquehanna's Stacey Gilbert says heightened volatility in the options market is a signal to buy.

"I'm very cautious right here with the banks. I think there's a lot of overhead resistance around the 25 area," Baruch said Wednesday on CNBC's "Trading Nation." He was referring to this chart of the XLF, an ETF that tracks the biggest banks:

Baruch said he wouldn't be buying the XLF because it's "running into the October lows" and "running into the 50-day moving average."

JPMorgan, Wells Fargo, Bank of America, and Goldman Sachs are among the banks set to report next week. Baruch doesn't recommend buying ahead of the reports since there have been "knee jerks higher on solid earnings" but then under-performance after that. "So I would be careful chasing anything," he cautioned.

Financial stocks are currently hovering around bear market territory, with the XLF about 19 percent off its 52-week intraday high of $30.33, hit on Jan. 29.

But if bank stocks take another leg lower, Baruch will be a buyer, specifically at the $20 level.

"I'm looking at a trend line dating back to 2009, and this comes in right above 20 bucks. So I think if you're cautious and it does get down there, that's going to be a great buy for the long term," he said.

The XLF closed at $24.43 on Wednesday, so it would need to fall roughly 18 percent to hit the $20 mark.

On the flip side, if the options market is any indication, now might be a good time to buy bank stocks, according to Susquehanna's Stacey Gilbert. She noted that while "volatility is elevated," which means traders are "pricing in a lot more movement," the overall sentiment is "certainly bullish."

According to Gilbert, traders are playing the bank trade through call spreads. So while they're expecting a move higher, they are also simultaneously protecting against the downside.

"When we look specifically to earnings, we are also seeing increased volatility setting up here, so I think investors are looking for more signs of what could possibly be going on. ... We continue to see upside call buyers ... but interestingly they're doing it through call spreads, so they're really saying that these tail upside moves are unlikely."

Baruch and Gilbert might disagree on the financial sector as a whole, but both believe Bank of America is a top pick among financials.

"If I were to look at a name right now I would like Bank of America. I think that's been very constructive and I think that can outperform," Baruch said. "And there is a nice uptrend line going back to the ... 2010 highs. It's been very constructive, breaking out above there and now holding that."

Said Gilbert: "Overall we've definitely seen an increase in upside call spread buyers, particularly in names like Bank of America."

On Wednesday UBS upgraded Bank of America to a buy rating. "We think the current share price offers an attractive entry point for a leading franchise with proven risk and expense discipline and above peer profitability," UBS analyst Saul Martinez wrote in a note to clients.

Shares of Bank of America are down nearly 15 percent over the last year, and the stock is currently trading in a bear market after falling 22 percent from its 52-week high.

Disclosure: Stacey Gilbert owns shares of Bank of America.