Call volume exploded on CVS Caremark Corporation yesterday, with activity surging to 30 times the norm in the wake of the drugstore chain's most recent earnings report. During the course of the session, traders on the International Securities Exchange (ISE) bought to open 26,051 calls on CVS, compared to just 6,393 puts. The stock's single-day call/put volume ratio of 4.07 reveals that bullish bets more than quadrupled their bearish counterparts.

The equity's 10-day ISE call/put volume ratio now stands at 2.85, as calls bought to open during the past two weeks have roughly tripled puts. This ratio ranks in the 79th annual percentile, revealing that speculators have snapped up calls over puts at a faster pace only 21% of the time within the past year.

Conversely, CVS' Schaeffer's put/call open interest ratio (SOIR) is hovering not far from an annual bearish peak, with the current SOIR of 0.95 lingering just six percentage points from a fresh 52-week high. However, it's worth noting that this indicator has dipped considerably from its Oct. 28 reading of 1.39, as traders have added more near-term calls than puts during this time frame. The drop in the stock's SOIR seems to confirm the rising optimism evidenced by ISE volume data.

The most active CVS strike on Thursday was the stock's November 30 call, where 50,037 contracts crossed the tape on open interest of just 51 contracts. Open interest here ballooned overnight, and now stands at a hefty 27,478 contracts. Now, the November 30 strike is the undisputed home of peak call open interest for the front-month series.

Meanwhile, on the put side, peak open interest consists of just 9,641 contracts, which are also resting at the November 30 strike. In today's session, traders appear to be adding a flood of new puts at the December 30 strike, where 6,199 contracts have changed hands on open interest of just 5 contracts.

Elsewhere on Wall Street, the number of CVS shares sold short jumped sharply during the most recent reporting period, rising by 15.4%. However, these bearish bets account for just 1.3% of the equity's float, representing a rather slim accumulation of sideline cash.

As noted earlier, yesterday's onslaught of option speculation was sparked by CVS' latest quarterly report. The retail chain reported a stronger-than-expected third-quarter profit, but the shares were hammered after CVS warned that its pharmacy benefits management business lost $4.8 billion in contracts for fiscal 2010.

The stock plunged on Thursday, giving up more than 20% of its value by the time the closing bell sounded. As a result, CVS is now poised to finish the week below support at its 10-week and 20-week moving averages for the first time since late March.

CVS also gapped below support from its 80-day moving average on Thursday, signaling a halt to its intermediate-term uptrend. The shares are recovering a bit today from their post-earnings pummeling, but they seem to be encountering round-number resistance from the $30 level -- CVS' intraday high currently stands at $30.03.

Unfortunately, the massive amount of November 30 calls that were added to open interest on Thursday could provide an additional layer of pressure for the beaten-down security. In fact, as expiration draws closer, this strike's popularity among call and put players alike could result in CVS being pinned to this round-number neighborhood. During the next several weeks, look for this stock to tread water as it attempts to recuperate from its substantial bearish gap.