Option traders are feeling unusually upbeat toward People's United Financial, Inc. (PBCT). The stock boasts a ten-day International Securities Exchange (ISE) call/put volume ratio of 89.79, as bullish bets have been nearly 90 times more popular than their bearish counterparts during the past two weeks. This ratio ranks higher than 98.2% of other such readings taken during the previous year, as traders have rarely shown a greater appetite for calls over puts.

In fact, on Tuesday alone, traders on the ISE bought to open 1,627 calls on PBCT compared to just one put. The day's most active strike was the January 2010 17.50 call, where 2,257 contracts crossed the tape.

About 86% of these calls traded at the ask price, suggesting they were purchased, and implied volatility jumped 3.6% as a result. Open interest at this strike rose overnight from 3,962 contracts to 4,943 contracts, confirming that new bullish bets were added at the January 17.50 call on Tuesday.

After sizing up the equity's price action, the preference for calls over puts is a bit puzzling. PBCT is down 11.3% year to date, and the stock has lagged the broader S&P 500 Index (SPX) by nearly 11 percentage points during the past 60 days. However, a longer-term look reveals that PBCT is very close to finding long-term support at the $15 level, so traders could be anticipating a rebound from this region.

Alternatively, it's also possible that short sellers are simply hedging their bets on the stock by snapping up long calls at an out-of-the-money strike. Short interest on PBCT rose by 2.7% during the most recent reporting period, and now accounts for 3.7% of the security's float.

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By Nick Perry of Schaeffer’s Trading Floor Blog